N Brown’s full-year profits have taken a hit after it invested in its change programme and was impacted by weak autumn trading.
- Statutory profit before tax fell 21.2%
- Earnings hit by disruption of three year digital change programme
- Confident on outlook despite flat sales
The plus-size fashion retailer’s statutory profit before tax fell 21.2% to £76.3m in the year to February 28. The three-year change programme involves it transforming from a catalogue retailer to an online business.
N Brown Chief Executive Angela Spindler said: “This last year was an important one for our company. We are comprehensively modernising the business in terms of organisation, capability, infrastructure and processes to adopt a digital-first mindset and to ensure that we are fit for the future of retail.
“Step-changing the way the business operates and goes to market in some key areas proved more disruptive than anticipated and this, combined with a weak autumn trading period across the sector, led to a profit performance below expectations. We are, however, improving the sustainability of future profit growth and look to the year ahead with confidence.”
N Brown’s said it has identified a “number of weaknesses”, including merchandising, the value for money of some of its products, its brand awareness and an “under-invested” systems infrastructure. “We have made progress in all of these areas, and will continue to focus on them going forward,” N Brown said.
N Brown will invest £65m in its systems, which it said will result in “significantly” improved speed to market, cloud-hosted technology, a new international web platform, new financial products, improved personalisation, a new customer contact centre system and a real-time single customer view.
The retailer said it aims to “maintain” its strengths including its “extensive” customer file, CRM and its credit book.
Total group revenue was flat at £818m. Current trading is in line with expectations.
Simply Be and Jacamo sales up
Sales from its Simply Be and Jacamo stores were up 64% to £13m in the year. Operating losses increased from £1.6m to £1.8m, “which we view as a strong performance against the backdrop of a significant store-opening programme”, the retailer said.
N Brown operates 15 stores, of which 14 are dual-fascia. Its most recent store opening in Exeter in March is its best performing new store to date.
The retailer plans to have a total of 25 stores, which it said will cover 85% of the population.
“We continue to see a positive halo effect from our store portfolio and they are also important in terms of serving customers and building brand awareness,” he said.
N Brown is conducting an efficiency review of its stores focused on logistics. “We believe our operations could be further optimised in this area. We will update the market on this review at the interim results in October,” it said.
The retailer reported share gains of 20bps in the 16-plus ladieswear market and 10bps in the menswear market in the second half. “Whilst encouraged by these small gains, we believe there is significantly more growth potential here,” N Brown said.
“The UK retail sector is changing at a significant pace, and we are changing even faster”
N Brown statement
Its active customer file increased by 2.4% and 23% of demand came from new customers.
Online active customer numbers were up 4% for the year, accelerating to 11% in the fourth quarter.
Conversion rates increased to 5.5% at the year-end, “well ahead of the industry average”, N Brown said.
N Brown said its performance in the US was “pleasing”. Operating losses were reduced from £4.7m to £2.5m.
“The UK retail sector is changing at a significant pace, and we are changing even faster as we modernise the business so that we can thrive in the new online-first world,” N Brown said.
N Brown chairman Andy Higginson said: “The scale and pace of change required to modernise the business put a great deal of strain on our performance in a difficult year for the clothing sector. The fall in profits was nevertheless a disappointment. However, we laid important foundations for profit recovery and long-term growth. We have now bedded in many of these changes and this year will see us push on with executing our strategy.
“The Board remains confident in the outlook for the business, and we believe that we have the right strategy in place to drive sustainable profitable growth.”