N Brown's sales stay weak in Q3 with a Q4 repeat expected
So how is N Brown tackling what it calls “a soft and highly promotional market”? Facing up to the UK's ongoing macroeconomic pressures, the digital fashion retailer said Q2 retail performance continued into Q3 with sales “in line with trends and management expectations”.
And after a weak Q2/H1, that means trading numbers continued their downward trend across the board for Q3 ended 31 December.
Product revenue fell 9.2% to £166.4 million and was down 7% to £377.6 million year-to-date; strategic brands (its main focus and including JD Williams, Simply Be and Jacamo) fell 5.5% to £120.9 million (down 3.7% to £271.5 million year-to-date); with heritage brands falling 17.6% in the quarter (down 14.4% to £106.1 million year-to-date).
Add in financial service revenues dipping 4.2% and 3.7% the Q3 and year-to-date periods, respectively, and total group revenues tumbled 7.6% to £249.2 million for the quarter and by 5.9% to £580.7 million year-to-date.
And its outlook? Fiscal 23 earnings are also in line with market concensus and it’s planning for 2023 UK discretionary consumer goods market conditions "to be soft".
“With peak season behind us, we expect Q4 to be softer than Q3, in what are typically our quietest months of the year”, it said. Importantly though, it added that the business is backed up by a strong balance sheet, with significant liquidity and positive unsecured net cash.
“Our customers have been more intentional in their spend during the period, buying what they need or what they love, with a greater focus towards either the value or premium end of our ranges. We have also seen the impact of the cold weather, moving outerwear demand later in the season”.
It said product mix, returns rates and credit arrears rates have also broadly returned to pre-pandemic norms.
“We expect the market for UK discretionary consumer goods to be soft in calendar year 2023, particularly in the first half. This, together with the difficult trading environment in FY23, means we will commence FY24 with lower active customers year-on-year”, N Brown explained.
Chief Executive Steve Johnson added: “Although we are cautious about the macro environment over the next 12 months, we remain confident in the resilience of our business and in the strategic investments which we are making for the long term."
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