As home shopping giant N Brown revealed a dip in pre-tax profits in its half year to September 1, Gemma Goldfingle speaks to chief executive Alan White about the retailer’s performance.

Sales were up in your half year but profits were down. Why so?

There has been an improving revenue trend throughout the year but our gross margin has been affected as we’re trying a number of things. We’re doing online promotions like 3 for 2 or outfit building which has been positive for revenue but negative for gross margin. In home and leisure it’s worked. We cut prices and saw big uplifts.We were +22% in electricals in the first half. However, in ladieswear we took prices down but we didn’t see the uplift we were expecting. So the product mix changed.

Is the margin decline expected to continue in the second half?

It’s getting progressively better. The guidelines we’ve given to analysts is up 100 to 150 basis points in the second half.  Our stock’s in good shape and we’re not about discounting.

Do you think discounting will be as prevalent this year as it was last Christmas?

Last December everyone was slashing prices; with the mild autumn everyone had poor stock and were on full scale Sale by November. We were offering 10% and 20% promotional offers online.

My expectation is that it will be back to normal [this year]. Our current trading is strong and our stock’s in good shape - we’re buying tighter. Everyone has been a bit more cautious on that front.

Have customers now become used to looking for discounts?

In my opinion yes. You can never put that back into a box. It’s about managing it rather than doing blanket sale. It’s like Debenhams do with their Blue Cross Sales. You put together a package of promotions for a planned time. It’s behaving more like a trader.

You’re making some change to your German operation. Why so?

We use an open invoice system at the moment where we ship the product before we get the cash and customers either pay or return their things. They order more but return more, but there are more returns than we anticipated. We’re moving to upfront payment to simplify the cost structure. It’ll mean sales are smaller but it will be more profitable.

When will the overseas business make a profit?

Not this year. We’re 18 months to 2 years from profit. I’m confident we will, all the metrics are in order.

N Brown’s younger brands seem to be the star performers over the half. Why is this?

There’s an element of that being self-fulfilling. They’ve performed well so we’ve invested more in marketing. It’s a combination of that and a strong proposition. With Jacamo, the Freddie Flintoff tie-up has worked well. He started as our face and has now done a range which is very popular.

Are you happy with the performance of the Simply Be physical stores you have opened over the past year?

Yes. The Jacamo and Simply Be branded stores are doing particularly well. 40% of the store sales are Jacamo, showing that couples are shopping together. The out of town shopping centre locations seem to be better for us. We’ll be patient and wait until Christmas. I’m absolutely convinced that if we build on the things that work, we’ll get there. There’s clear evidence that the stores are helping to build online sales. Sales in the Northwest are up 8% but in Liverpool [where it opened a store] sales are up 14%. They’re up 12% in Bury [where it has another store] too.

How are you feeling approaching Christmas?

Pretty optimistic. The economy is a little bit better than a year ago. We can’t be in recession forever.