N Brown warns on profit sending shares tumbling
The company said it expected full-year profit before tax to be in the range of £70 million to £72 million, which is down from the previous guidance of £78 million to £84.1 million. Shares tumbled by almost 27% on the back of the announcement (at the time of writing) to 103.8p.
In the 18-week period to 4 January product revenue was down 4% as N Brown continues to manage the decline of legacy brands. Digital revenue was up 2.5%.
In womenswear, Simply Be delivered a strong performance with digital revenue growth of +13.1% and overall revenue growth of 12.1%.
The performance was driven by increased sales of "party tops" and its athleisure range which it said had benefitted from closer to home, more reactive sourcing with lead times reduced by four weeks. This was complemented by the Simply Be App with demand penetration increasing by 76% year-on-year.
In menswear, JD Williams digital revenue edged up 0.4% but total revenues were down 4%. Jacamo digital revenues were up 3.2%, against strong comparisons, and overall brand revenue up 2.5%. Ambrose Wilson digital revenue was up 7.9% while brand revenue was down 9.6%.
The so-called "Product brands" revenue declined in the quarter by 14.9% and, due to regulatory changes in the financial services market, its revenue in this area was down 4.6%.
As a result of the decline in financial services and a "highly promotional" market, N Brown said it had revised down its profits forecast.
The business has transitioned away from physical retail, closing all of its high street stores, to a pure online focus.
“Our work so far has highlighted the need to have a tighter brand portfolio, a sharper focus on product and a cost base appropriate for delivering sustainable digital growth," said CEO Steve Johnson.
“At the same time, we will continue to proactively address the accelerating and cumulative external factors which are anticipated to reduce the size of our financial services business over the next two years.
“These will significantly influence the way we will operate our financial services business and we are taking proactive measures to ensure that the change is managed appropriately. This is in line with our strategy of becoming a digitally focused, retail-led business."