N Brown "comfortable" despite H1 profit fall
Online, catalogue and stores retailer N Brown said it is comfortable with current market guidance for the full year after a double-digit drop in first-half profit came in line with company expectations.
For the 26 weeks ended 27 August, total group revenues (which includes products and financial services) edged up 1% to GBP429.4m (US$527m), from GBP425.3m in the same period last year. Product revenues rose 0.6% as the company continued to see an increase in online penetration, which was up five percentage points year-on-year to 68%.
However, the company booked a 19.8% drop in adjusted pre-tax profit to GBP31.6m, from GBP 39.4m in the prior year, although this was ahead of consensus expectations.
Within the group's so-called "power brands", Simply Be and Jacamo sales were both up year-on-year, with product revenues rising 6.2% and 3.3% respectively. JD Williams' performance remains strong, the company said, with 11% product revenue growth, but was dragged down by the inclusion of Fifty Plus title (the addition of which meant JD Williams revenue was only up 0.3%).
The retailer added its autumn/winter season has started in line with its plans.
"I am pleased with the progress we made during the half, as we continue to change to a digital business model, with an emphasis on agility and innovation," said CEO Angela Spindler. "Spring/summer was challenging for the entire retail sector, and we were not immune to this, but we demonstrated our flexibility as we improved revenue performance through the season whilst controlling our costs well.
"Our power brands continue to outperform the wider business, and I am particularly encouraged by the 11% revenue growth of the JD Williams brand. At this stage we are comfortable with current market expectations for the full year."
Nivindya Sharma, senior analyst at Verdict Retail, notes the retailer's product gross margin was down 190bps year-on-year to 55%, as it resorted to higher levels of promotional activity to stimulate consumer spending.
"N Brown's third-party brand expansion to include contemporary brands such as Vero Moda, Religion and Ann Summers, alongside its ongoing initiatives to reduce product lead time by sourcing closer to season and from locations within Europe, will enable the company to be more weather and trend-responsive while offering its customers a compelling reason to shop and return again," she adds.
The company also said it is seeing "continued progress" with its digital transformation and current trading is on track following the recent launch of its new US website.
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