Mainstream fashion and plus-size are a goldmine for N Brown, but US sales slump

By

Sandra Halliday

Published
Jun 20, 2017

Bonmarché’s annual results may have suggested a difficult time for the most mainstream and 50-plus segments of the clothing market in the UK at present, but a trading update from N Brown on Tuesday morning painted quite a different picture.

The company targets a raft of customers from the more mature fashion shopper and those who like their fashion with just a hint of trend, to trend-driven specialist sizes across both women’s and menswear, as well as lingerie. And it said the 13 weeks to June 3 (Q1) looked pretty healthy.

Given that the period included many weeks of Brexit-linked shopper caution made worse by a few weeks of election-linked shopper caution, the fact that group revenue rose 5.6% has to be seen as very good news.

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Also good news, average selling price, average units per basket and purchase frequency all increased year-on-year.
And ‘product revenue’ (which excludes financial services) did even better than overall group revenue as womenswear strength drove it 10.2% higher. But financial services revenue was down 4.9% as expected, further underlining that UK retailers that have relied on their credit ops to drive profit may not be able to do so in the future.

Back with the good news. Online sales did well - they rose 16% and the firm now gets 71% of its revenue from e-sales, up 4ppts year-on-year.

That powerful online growth means N Brown’s physical stores are really having to prove their value to stay open and it’s no surprise that up to five lossmaking Simply Be and Jacamo dual-brand store closures were announced on the back of weak footfall.

But with those stores excluded, the company continued to improve the performance of the remaining 10 Simply Be/Jacamo combined stores. During Q1, revenues from its store estate were slightly up year-on-year, but with the dual stores seeing mid-single-digit growth.

The company didn’t specify any figures for its Figleaves online lingerie operation but said that the Secondary Brands segment it forms part of (along with High & Mighty and Marisota) rose 5.4% in Q1. Meanwhile Traditional Brands, which include Ambrose Wilson, Premier Man, Julipa and House of Bath and largely target older shoppers, rose a strong 10.7%.

MORE GROWTH AHEAD?

So, with total active customers on a 12-month rolling basis up 4% (or up 5% at its Power Brands JD Williams, Simple Be and Jacamo), it looks like the company is well positioned for future growth.

Those Power Brands really are powering ahead and are contradicting some of the assumptions we’ve been making about the UK fashion market. One point is that while Jacamo menswear rose a healthy 5.5% in the period, the firm’s main womenswear brand JD Williams did much better.

Menswear may be seen as a stronger growth market than womenswear in the UK at present but for N Brown, the women’s JD Williams brand rose 12.2%. And women’s plus-size specialist Simply Be was even stronger with a 20.5% surge. Fifty Plus, which is being integrated into JD Williams, rose only 1.3% but the integration looks set to spur more sales in this area.

CEO Angela Spindler said Simply Be has enjoyed a good response to its spring/summer offer and its ‘We Are Curves’ campaign, and this has helped it make further market share gains. The JD Williams' ‘Spring into Summer’ campaign has also scored well, she said.

ONLINE AND INTERNATIONAL

Of course, it’s clear that the gains the company is making are largely coming from online trading. Its online metrics continued to be encouraging in Q1 with overall traffic up 34% year-on-year. While that figure of 71% of revenue now being generated online is impressive, for new customers, online penetration was actually a high as 78%.

This is being helped by the company’s major investment in its online platforms. The new High and Mighty site will go live shortly and N Brown is on track to have all brands re-platformed by the end of the summer next year.

Meanwhile, m-commerce from smartphones has already tipped over into being the firm’s biggest online channel. Smartphones accounted for 51% of all sessions, up from 42% last year, with mobile devices as a whole accounting for 74%, up 5ppts. That said, the conversion rate was slightly down overall due to the continued increase in share of traffic from smartphones, as expected, with mobile phone visitor traffic being as much about browsing as selling.

On the international front, revenue rose 10% but on a constancy currency basis it fell 2%. revenue from Ireland wasn't to blame as that rose 17%, or 9% at constant currency, driven by womenswear strength.

But the US appears to have been a problem market. Revenue from there was up only 4%, and was down 9% on a constant currency basis. Following the delivery of the firm’s new technology platform, a step up in marketing investment is planned in Q2 to drive new customer recruitment.