Home shopping group N Brown’s sales growth slowed in the 18 weeks to July 3 when customers were weighed down by uncertainty in the run-up to the election and subsequent emergency Budget.
Chief executive Alan White said that the stream of “negative rhetoric” surrounding the election and Budget had influenced customer behaviour. Sales across the group rose 1.1% and like-for-likes by 0.1%.
“Because our customer is older than average, uncertainty preys on their mind more than most,” said White.
However, he maintained: “In practice, those people will feel it is not quite as bad as expected. Now there is certainty.” Although he did not expect a spending “boom” soon, White said he thought trade will return to more “normal” levels.
Investec analyst David Jeary said: “Management believes that the Budget measures should be a small net positive to its customer base. This is because of pension increases, the return of the earnings link for pensions and the £1,000 increase in the personal allowance.”
He said that Investec is likely to modify forecasts. “Gross margin is down 20 basis points compared with guidance of a 30 basis points decline, with cost savings expected to offset this,” said Jeary.
“We are likely to make a small precautionary cut in our pre-tax profit numbers of 1% to 2%, awaiting next news of the impact of bad debt management on turnover and gross margin.”
Panmure Gordon analyst Jean Roche said: “We continue to rate N Brown a buy due to the company’s exposure to a niche market and its increasing exposure to online clothing sales.” Online sales now account for 41% of N Brown’s total sales.
White said many areas of the business are being developed.
Its international operation is being rolled out: Simply Be goes live in the US next week and 1 million catalogues will be sent out in late August.
Its recent acquisitions of menswear offer High & Mighty in September and etailer Figleaves last month also offers growth opportunities, he said.
N Brown has just relaunched the High & Mighty website with a new logo and integrated it with its web platform so it can take advantage of cross-selling opportunities with its other brands.
The retailer has also added a home and electricals offer to the site, which it says has been successful with its other menswear brands such as Jacamo.