Shares in Mosaic Brands have been suspended on the ASX after the troubled fashion retailer informed the market it would not be able to lodge its annual financial report by 31 August and will kick off urgent consultation with stakeholders to find a strategy to cope with current market dynamics.

The group, which owns brands such as Noni B, Katies, Millers, Rivers and Rockmans, was placed into compulsory trading suspension this morning due to the non-lodgment of its FY24 results by the required date. The intention now is to provide an update to market along with the finalised full-year results by 30 September 2024.

In a letter to the ASX, the company said it had resolved more time was needed to resolve several matters prior to finalising the results. In a sign of the difficulties the group is in, Mosaic Brands also said it's now planning to consult and work with relevant stakeholders plus senior leaders through the next 28 days to find a way forward for the group.

"During this period, Mosaic also intends to consult and work with all relevant stakeholders to accelerate a strategy to realign operations to be more reflective of current and anticipated market dynamics," the statement read.

Earlier this month, Mosaic Brands was forced to respond to against media reports suggesting the company had entered a 'safe harbour', saying directors had continued to take advice from advisors on their fiduciary obligations and had also been taking the advice of Deloitte on refinancing considerations.

In recent months, the company also revealed it's been suffering from operational issues that had adversely impacted trade, but said its senior secured creditor remained supportive of the business. These have put pressure on working capital, which have affected stock intake and trade.

One of the disruptions has been delays in migrating to a new integrated logistic supply chain and distribution system with a newly appointed global partner.

The company is in fact the subject of live proceedings instigated by the ACCC alleging multiple contraventions of Australian Consumer Law for misleading consumers on delivery times for goods ordered on its various website.

"The implementation disruptions experienced by Mosaic were greater than anticipated, delaying the delivery of inventory leading into the key Mother's Day trading period. This, combined with softness in consumer spending, severely impacted revenue and earnings in the fourth quarter. As a result, the Group now expects the full year result for FY25 to a marginal loss at the Operating EBITDA* level," Mosaic Brands stated in a release to market on 21 June.

Mosaic Brands has been on a share price decline for the last six months, falling from $0.15 per share to $0.03 at the time of suspension. on 31 July 2024, the company advised the market that while accounts were yet to be finalised, it expected an operating EBITDA loss of $5m - $10m, while an EBIT loss was expected to sit between $15m-$20m. In July, the company said it had net cash inflows of about $6.6m, while outflows hit $19.8m.

The group is under the stewardship of former CEO of The Iconic, Erica Berchtold, who was brought on as CEO in April following the retirement of Scott Evans.

In its first-half FY24 financial report, Mosaic Brands reported a 10% drop in revenue to $254.45m, and a $600,000 dip in EBIT to $13.1m. Net profit was however up 38% to $5.4m year-on-year. It also highlighted strong efforts to improve its balance sheet by reducing inventory intake by 33% over the half, a fact that led to comparable in-store sales decreasing by 6.6% but overall led to a $13.5m improvement to net current assets.

The company has about 700 stores in Australia and New Zealand.