N Brown hails womenswear progress despite profits drop, inks deal with Tesco Direct
Womenswear was the star category for fashion retailer N Brown in the year to March 4 with the company’s online ops outperforming and the second half seeing sales accelerating. But its margins and profits fell, dragged down by discounts, a very tough first half and over £25m of exceptional costs linked to to the mis-selling of payment protection insurance. And the firm said the market remains challenging.
Yet almost buried in the big sales and profits headlines was a new deal with supermarkets giant Tesco to sell a capsule collection of its women’s and men’s Simply Be and Jacamo lines on Tesco Direct.
Coming in the same month that Tesco rival Sainsbury’s announced an online sales deal with Russell Athletic, it highlighted the major moves supermarkets are making at the moment to boost their share of Britain’s overall clothing and accessories spend.
Little detail was available on that Tesco link-up but it’s clear that such exposure should be good news for N Brown in the new financial year.
Not that its profits fall meant that last financial year was completely short of good news. The company, known for its specialist fits and for its brands that target consumers aged 50-plus, said womenswear revenues rose 4.2% for the year and 10.4% for the second half alone. That was its best performance since the 2008 financial year. And it also said it made “significant market share gains”
Its ‘power brands’ (JD Willimas, Simply Be and Jacomo) saw a 9.2% sales rise and almost 10% increase in active customers as JD Williams revenue rose 12%, Simply Be 9.9% and Jacomo 4%.
It also said its online penetration was up four percentage points to 69% while online penetration to new customers rose even more, to 77%, and 71% of its traffic now comes from mobile devices.
But now for some not-so-good news. Given that the last financial year had 53 weeks, the company also released 52-week figures to give a better comparable picture. On this basis, group revenue was up only 2.5% to £887.7m, with product revenue up 3.4% £627.2m and financial services revenue up a tiny 0.4%. The company said this represents “a good result against what continues to be a challenging period for the sector.”
But product gross margin was 54.7%, down 150bps year on year, in line with the firm’s guidance range and primarily due to the promotional stance it took in the first half and the continued exchange rate headwinds.
Adjusted trading profit before tax was £80.6m, down 8.7% year-on-year, with the company saying this came as it continued “to invest in its customer proposition and its infrastructure to drive future growth.” And statutory pre-tax profit plunged 23% to £55.6m as it absorbed those one-off costs linked to the PPI issue.
CEO Angela Spindler stayed upbeat, despite the falling profits, and highlighted cost controls, the better performance in the second half and the buoyant womenswear trading.
She said N Brown “delivered the best performance for almost a decade as we gained significant market share. Our customer satisfaction rating is also now the second highest in the sector and our online metrics remain strong, with over 75% of new customers coming to us online.”
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