Figleaves will now sit in the N Brown stable of brands

Figleaves will now sit in the N Brown stable of brands

N Brown's shift from catalogue specialist to online retailer took another step forward today with its acquisition of lingerie, underwear and swimwear website Figleaves for GBP11.5m (US$16.9m).

But while the two companies could hardly be more different in their target markets - Figleaves offers fashion and designer ranges to more affluent customers while N Brown is best known for its plus-size and value brands - industry observers believe the two businesses are a good fit.

"The tie up would make sense from a demographic perspective," Michelle Strutton, head of UK beauty, fashion & household research at Mintel, told just-style.

For its part, N Brown says the deal will consolidate its position as the UK's number one online lingerie retailer, as well as expanding its brand portfolio to appeal to more 'premium' shoppers.

But Strutton also notes the age profile of Figleaves website visitors "is slightly older than average," which is in line with N Brown catering to the older and plus-sized market.

"This can only be helpful to N Brown if they want to tap into this market - which does seem to have been more cushioned from the recession," Strutton says.

She also points out that Figleaves has extended its reach into loungewear and other clothing areas, "so N Brown is able to look at its various catalogue ranges to see which ones best suit the Figleaves shopper."

A positive step
The move is also seen as a good one by Carly Syme, retail analyst at Verdict Research, who describes the acquisition as "a positive step for both companies."

 She says they each offer a wide range of sizes which are not readily available on the high street. Figleaves, for example, sells over 100 brands in sizes ranging from AA to K cup and 28"-56" back size.

Though N Brown already sells underwear on several of its sites, including which offers mostly underwear, she told just-style: "Figleaves provides an opportunity to expand on N Brown's existing customer base and increase its share of the market."

Financial backing
The lingerie retailer was founded in 1998 by Daniel Nabarro and is currently headed by chief executive Julia Reynolds who joined from Tesco where she created the Florence and Fred brand.

The company sells more than 100 brands online, has over 1.2m visitors to its website each month, and delivers to over 100 countries including the US.

But while it is forecast to generate a turnover of GBP23m for the year to June 2010, it made a loss of GBP5.8m in the year to June 2009, "partly due to investment made in developing and sourcing its own brand products, and improving its web platform," Syme explains.

"With N Brown's financial backing the retailer will be able to focus on driving sales and should be able to reduce costs through economies of scale."

So not only will the home shopping firm benefit from an extended customer base and a more advanced knowledge of international markets, but Figleaves will "have the financial support of a large business to drive further growth."

At N Brown Group, Figleaves will sit alongside more than 30 brands including Simply Be (which targets younger customers aged 30-45 years); JD Williams, Ambrose Wilson, Fifty Plus, Oxendales and Marisota (for midlife customers aged 45-65 years), and Julipa (for the over-65s).

It also operates the High & Mighty stores and website which it bought in September 2009, and ranges designed by celebrities such as by Mica Paris.

Rising sales and profit
Earlier this year the company unveiled plans to expand into the US market towards the end of the summer, after posting a 2.2% rise in profit to GBP97.6m (US$148.8m) for the year to 27 February.

Sales grew 4.2% to GBP690m - with online revenues jumping 21% to GBP272m or 39% of the total, helping the firm secure its spot as the "number one for ladies clothing in size 16 and above and for ladies underwear sold over the internet."

Indeed, the internet consistently seems to out-perform bricks-and-mortar stores in terms of growth rate, prompting N Brown to say that it is now "at the centre of all our business development."

But although it's an increasingly popular way of shopping, the industry's online growth rate "is from a lower base and it only accounts for 10% of clothing spend," Mintel's Strutton points out.

But "with better choice of online retailers, improved websites and delivery options all helping online to increase sales," today's deal points the way to a buoyant future.