Mosaic Group, the operator of budget clothing brands Noni B, Millers, Katies and Rivers, saw its shares drop by up to 20 per cent on Friday after the company posted a marginal loss for the 2024 financial year, despite a strong first half of FY24 with an EBIT of $13.1 million.

The second half of the year has proven challenging for Mosaic and the discretionary consumer sector, with the company adversely affected by disruptions during its transition to a fully integrated logistical supply chain and distribution system with a new global partner. These disruptions were more significant than anticipated, causing delays in inventory delivery and severely impacting revenue and earnings in the fourth quarter.

Mosaic expects a recovery in the first half of FY25 as issues with the new logistics model have largely been resolved and inventory is normalising across the Group.

According to Mosaic, the first half of FY25 will benefit from a 20% increase in inventory intake at a 10% lower cost price compared with H1 FY24. FY25 will also see material annual cost savings associated with the new logistics partnership.

In the meantime, Mosaic is managing its working capital position and progressing the terms of a refinancing or extension of its outstanding convertible notes. The Group will provide a full update when it posts its full year FY24 audited financial results in August.