N Brown’s good results put a lid on City fears

Chief executive Alan White said that its shoppers’ debt rose 13 per cent over the year to£389 million because of allowances made for new customers, but said the underlying rate of default remained flat.

Ahead of the retailer’s results, increased bad provision at home shopping retailer Findel spooked investors, which feared it might be replicated in other companies.

But White assured: “We have a different customer base to Findel – older and more conservative – and we have a big team and provisions in place to track changes.”

Landsbanki analyst Paul Deacon said: “While we do not dismiss the possibility of rising bad debts, we believe they will be well-contained by a very sophisticated credit-monitoring system and older customer base.”

N Brown’s older base has also helped it defy the credit crunch, because fewer of its customers have large mortgages or other debts. Its 45- to 65-year-old customers represent 68 per cent, or£415 million, of its sales.

The home shopping specialist’s pre-tax profits rose 19.4 per cent in the year to March 1 to£78 million, slightly ahead of market expectations. Sales rose 16.6 per cent to£610.9 million for the period.

White said that N Brown’s differentiators, including its plus-size fashion and footwear offer, also kept revenues up despite the consumer downturn. “The specialists will outperform the generalists and, even when things get tough and people don’t go shopping, they are still receiving our catalogues and being tempted by our offers,” he said.

Last year, N Brown launched three brands: Jacamo in menswear, Marisota in ladieswear and Simply Yours lingerie. The brands helped the group generate a 15 per cent rise in sales from newly recruited customers. N Brown will double its investment in the three brands in the next year.

N Brown has also begun a feasibility study to take its plus-size fashion label Simply Be to Germany in spring 2009.