Shares in N Brown Group were up by more than 8% this morning (20 June) as the online, catalogue and stores retailer reaffirmed its full-year expectations despite a drop in first-quarter revenue.
In a trading update for the 13 weeks to 1 June, N Brown said it its guidance for the year remains unchanged amid a 3.8% fall in total revenue and a 5.4% decline in product revenue for the quarter.
The group, which last month announced plans to move away from its traditional ‘Power Brands’ description to simply ‘womenswear’ and ‘menswear’, reported a 3.3% drop in womenswear revenues but a 7.7% rise in menswear.
Within womenswear, JD Williams delivered 5.9% digital growth, meaning 78% of revenue is now digital, while Simply Be increased digital revenue by 4.6% in the quarter. As previously highlighted, Simply Be’s growth rate is expected to be lower in the first half of this financial year as N Brown moves increasingly to customer lifetime value modelling.
Its Ambrose Wilson brand, meanwhile, delivered strong digital revenue growth of 10.1% in the quarter and 56% of its revenue is now digital, an increase of 13ppts year-on-year. Menswear digital revenue increased 8.8% in the quarter driven by a good performance from Jacamo.
“In line with our strategy, we delivered digital revenue growth across JD Williams, Simply Be, Ambrose Wilson and Jacamo as we continue to improve our customer offer whilst managing the decline of our legacy offline business,” says CEO Steve Johnson. “The retail market remains challenging, but we have a clear strategy to deliver profitable digital growth and our full year expectations are unchanged.”
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By GlobalDataLooking ahead, N Brown continues to expect full-year product gross margin to be flat to minus 100bps, while net debt is forecast at GBP440m-GBP460m, although the retailer noted half-year net debt will be in the range GBP475m-GBP500m given continued customer redress and tax settlement payments.
James Yacoub, retail analyst at GlobalData, notes the appointment of new chief band officer, Kenyatte Nelson, is “a step in the right direction for N Brown, as Nelson can help it to grow its profile and brand awareness within the clothing market.”
He adds: “CEO, Steve Johnson has adopted the common excuse of a “challenging retail market” to justify N Brown’s decline in sales, however, its competitor Next released positive results for a similar period with its sales rising 4.5%. N Brown is losing market share to more well-known players who are offering comparable credit opportunities as well as a more varied, multichannel proposition.
“Overall N Brown’s proposition needs refining as it continues to innovate, focusing on digitalisation. Although N Brown is wise to move away from offline retail, the brand risks alienating part of its mature, over 50s target market. It should, therefore, focus on retaining customers through the enhancement of its loyalty schemes. Simply Be offers a delivery saver scheme which is a step in the right direction, however, its Perks loyalty scheme is unclear and needs to be improved.”
