Revenues fall at retailer as it looks to move online

Revenues fell by 1.6% in the last three months of the year at retailer N Brown.

The Manchester-based group, which includes the ‘power brand’ JD Williams, Simply Be and Jacamo businesses, has been hit by the downturn on the high street and has been moving to online sales.

The firm issued a trading statement this morning.

The company also admitted defeat in a long running battle with the tax man which will cost it an extra £9m a year.

Chief executive Steve Johnson said: “The group delivered robust online Power Brand growth and a stable margin performance in what was a challenging and highly promotional peak trading period.

“We continue to manage the anticipated decline of our legacy offline business and remain focused on improving our customer proposition to drive profitable online growth.

“Trading over the Cyber and Christmas periods was relatively consistent and in line with our expectations, with the group benefiting from a more targeted and efficient approach to its promotional activity.

“Based on maintained margin guidance, continued strong financial services performance and improved operating efficiency, our full year expectations remain unchanged.”

A statement to the Stock Exchange said: “Our transformation into a digital retailer continues, with total online Power Brand revenues increasing by 6.4% during the period.

“The group’s digital sales now account for 78.5% of Product revenue compared to 71.0% for the same period last year.

“As anticipated total quarter product sales (excluding stores) declined by 6% as the group continued to scale back its expenditure on offline marketing and recruitment, consistent with its stated strategy of focusing on online growth and improving its marketing efficiency.

“This mainly impacted revenues in its traditional and secondary segments, which were down 22.9% and 5.2% respectively.

“While Power Brand revenues were flat, within this Simply Be and Jacamo continued to grow despite the challenging market conditions.

“Although JD Williams declined 3.3%, having been impacted by the headwind from the migration of Fifty Plus, excluding Fifty Plus it was up 4.2%. For online sales only, JD Williams was ahead by 6.9%.

“The group is currently re-evaluating its proposition for JD Williams and will provide further details at its full year results later in the year.”

The final ruling on the firm’s dispute with HMRC with respect to the VAT recovery of certain marketing costs has been received and it is consistent with the draft ruling.

As a result, the group continues to expect that its marketing costs will increase by £6m to £9m per year on a full-year basis from next year.

There will also be a non-cash exceptional charge relating to the partial impairment of the existing VAT debtor asset. The group is still considering its position with respect to an appeal.