N Brown to focus only on key labels as sales and profits fall, but recovery starting
Jun 25, 2020
Fashion retailer N Brown’s full-year results and Q1 trading update on Thursday came with a refreshed strategy designed to return the firm “to sustainable growth” that will see the end of its smaller brands.
And the Simply Be, JD Williams, Ambrose Wilson and Jacamo owner certainly needs a new impetus to get back on track after a year in which revenue and profits fell and debt rose. And that’s even more the case after a quarter in which the lockdown sent its performance tumbling further.
First, the full year. In the 12 months to February 29, group revenue fell 6.1% to £858.2 million with product revenue down a wider 7.2% to £567.7 million (its other revenue from financial services when customers buy on credit). Adjusted EBITDA dropped 16.6% to £106.7 million and adjusted profit before tax was down 28.8% to £59.5 million.
It saw a “material increase” in statutory profit before tax to £35.7 million from a loss of £57.5 million a year earlier, but this was due to significantly lower exceptional charges rather than an improved performance.
And in the latest quarter, group revenue has fallen 22%, with product revenue dropping as much as 28.8%, although in the last three weeks there have been some signs of recovery with product sales down ‘only’ 21%. Apparel sales have started to recover from mid-March levels and demand for Home & Gift, supported by the launch of Home Essentials on April 1, “has remained well above the prior year”. Product sales have been stronger in brands more resonant with younger customers (Simply Be is down just 16.2%) compared to its brands serving more mature customers (Ambrose Wilson is down 44.4%).
The last year was a critical one for the firm as it closed stores and moved to a mainly-digital focus and it said that 85% of FY20 product revenue was generated through digital channels, an increase of six percentage points. Within this, both womenswear and menswear were up 5.5%. Additionally, 98% of Simply Be revenues were digital, Jacamo was at 97%, JD Williams 81%, and Ambrose Wilson 60%. In the latest quarter, 91% of sales were digital.
The company has moved quickly to cut costs across the business and while its debt rose during its last financial year, it has reduced its debt level by almost 10% since then.
And the refreshed strategy? There are five growth pillars that include: offering distinct brands to attract a broader range of customers; improved product to drive customer frequency; a new Home offering for customers to shop more across categories; enhanced digital experience to increase customer conversion; and flexible credit to help customers shop.
The company is now a top 10 UK clothing & footwear digital retailer and has been through a lot of change in recent years with its exit from stores and work done to identify the areas in which it’s been under-achieving.
Its digital capabilities have been enhanced, the executive and senior leadership team has been refreshed, with a clearer strategic focus and the cost base is “now more appropriate for a digital retailer, with further cost saving opportunities identified”.
Having come to the conclusion that it needs “distinct brands”, the question therefore is: what happens to its other brands such as Marisota and Fashion World? “Our other brands will either be folded into our main brands or closed down,” it said.
CEO Steve Johnson said the business has “responded strongly to the challenges posed by the Covid-19 outbreak, highlighting our resilience”. And he added that while “the crisis will cast a lasting shadow over the sector, we are confident that our agile approach and attractive brand offerings, with clear target customer segments, position us well to navigate the issues and emerge as a stronger business”.
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