Mosaic Brands is undertaking a $32 million capital raise to strengthen its balance sheet, after returning to profitability in FY21.
The AFR reports that Spotlight Group is taking up a $10 million slice of the capital raising, while Alceon Group is expected to subscribe for approximately 36%, and the balance set to be offered to existing shareholders on a pro-rata basis.
Mosaic Brands' securities were placed in a trading halt by the ASX yesterday, and will remain in the halt until either Friday 03 September or when the retailer releases an announcement to the market.
The capital raise comes as the retailer looks to strengthen its balance sheet given the ongoing uncertainty in the market due to COVID-19 lockdowns and restrictions across the country.
The move follows the release of the Group's FY21 results, which saw Mosaic report EBITDA (excluding EziBuy) of $48 million compared to -$45 million on the prior corresponding period (PCP).
Mosaic Brands CEO Scott Evans welcomed the results.
"Notwithstanding significant ongoing disruptions to our business throughout the year, including numerous lockdowns and store closures, we are incredibly pleased with the results we have achieved and the return to profitability due to the actions we took to reset the entire Group for the future," he said.
Actions in the business' reset plan - which includes a stock holding reduction and improving the lease portfolio agility - resulted in a $43 million reduction in cost of doing business in FY21 compared to the PCP.
"The benefits of those actions became evident in the fourth quarter, which delivered our second most profitable Q4 on record with comparable sales growth of 27.9% and comparable margin growth of +133%, against a backdrop of subdued sentiment amongst our core customer group due to COVID-19," Evans commented.
Meanwhile, the Group's digital strategy continued to deliver strong results in FY21.
During the period, Mosaic reported record online sales of $111 million, up 19% on PCP, with digital sales representing 19% of total revenue.
In the last 12 months, the business has increased its online SKU count to 1.5 million, up from 150,000.
This wider range is attracting new customers, Evans said.
"Within the last year approximately 200,000 in-store only customers moved to also shop online and the Group acquired 200,000 new online only customers as a result of its expanded category and product ranges," he said.
"We expect this trend to continue and this underpins our focus for FY22, being big stores, big brands, and an even bigger online range to meet our customers' shifting purchasing behaviour," Evans said.
For the year, the Group's comparable store sales declined 8%, with margin up 7% on PCP.
However, trading in the second half improved, with Mosaic reporting a 5% lift in comparable sales and a 37% margin increase on PCP.
Mosaic reported gross margin delivered an additional $37 million on the PCP, while group margin lifted 59.4% on PCP.
Mosaic Brands closed the period with net cash of $25.1 million compared to $3.6 million in FY20.