N Brown returns to profit after digital transformation
Shares in N Brown jumped 7.8 per cent this morning after the plus-size retailer reported it returned to profit in the first half.
The figures
The retailer reported a statutory profit of £18.8m, up 169.4 per cent from a loss of £27.1m last year.
Earnings increased four per cent from £52m to £54.1m in the 26 weeks to 31 August.
However, group revenue fell 5.4 per cent to £432.9m and net debt was up 14.5 per cent to £481.6m.
The company announced an interim dividend of 2.83p, flat on last year.
Why it’s interesting
N Brown, which owns Simply Be and Jacamo, has implemented a turnaround plan, focusing on growing its digital presence, applying data to its marketing strategy and focusing on its core UK business.
The company said that 84 per cent of its product revenue is now digital as it pursues a transformation of the business.
Operating expenses declined 9.5 per cent due to a more targeted approach to marketing and the closure of physical stores.
Russ Mould, investment director at AJ Bell, said: “Cynics may argue that revenue is still falling, net debt is rising and the dividend is not growing. However, there is a sense that Johnson has quickly stabilised the business and put it on a stronger footing to fight back.
“N Brown has advantage over many other UK retailers in that it is catering for a specific niche so there isn’t excess competition. It targets people aged over 50 and requiring size 20+. If it can offer good products and a pleasing shopping experience then there is a good chance that its customers will stay loyal.
“There are still plenty of challenges to overcome, including a reduction in relatively large levels of bad debt. A fairly chunky part of its profit comes from financial services and so it needs to reduce the risks associated with this source of earnings.”
What N Brown said
Steve Johnson, chief executive, said: “We announced our new strategy in May to return N Brown to sustainable profit growth and we have made good progress over the first half of the year.
“In particular, we have delivered on our strategy of growing digital revenue across Simply Be, JD Williams, Jacamo and Ambrose Wilson.
“This has been achieved by taking a more targeted approach to marketing and customer recruitment. The retail environment remains heavily promotional, but we are concentrating on continuing to improve our customer proposition and ensuring we operate as efficiently as possible, which has led to an increase of 4 per cent in adjusted EBITDA for the period.
“We remain focused on implementing our plans and the board’s full year expectations are unchanged.”
Main image credit: Getty