Mild weather-driven disappointments affecting apparel retailers shouldn’t put investors off of Moss Bros (MOSB). Forecast risk is to the upside at the men’s formalwear specialist, with store refurbishments and online initiatives set to pay dividends.

Next (NXT) and N Brown (BWNG) have both bemoaned sales lost to unseasonably warm temperatures. Admittedly, Moss Bros’ jacket and overcoat sales may have struggled, though the £97.4 million cap is relatively less geared into weather as suits, shirts and ties are in demand all year round.

With £22.8 million net cash at the interim results (22 Sep), Moss has the firepower to invest in competitive advantage. E-commerce sales doubled in the first half yet still speak for only 6.8% of total sales. Acceleration in stores closed for refits could crimp second half profits, though refurbished stores should benefit future business. Buoyed by a good reception to its Autumn/Winter range, Moss’ retail like-for-like sales have positive momentum and its hire business is set fair for the eveningwear season.

Peel Hunt has a 140p price target implying almost 50% upside. For the year to January 2015, the house broker forecasts £4.4 million profit for earnings up 6.5% to 3.3p, ahead of £5.7 million and 4.3p in 2016. Based on a 5.2p dividend estimate, Moss offers an attractive yield of 5.6%.

The pullback from north of 120p in May to
93.5p looks fully played out. We agree with the bullish consensus.