N Brown fashions record figures and looks to high street

HOME shopping group N Brown said it is to trial stores for its successful Simply Be brand as it revealed a 10% hike in annual profits – the firm’s seventh year of growth.

The Manchester company, which has recently launched Simply Be home shopping businesses in Germany and the US, already has 17 stores having bought menswear specialist High & Mighty last year.

Chief executive Alan White said the trial concept stores would be in the North West – and should open by the autumn.

“Simply Be is targeted at women in their 30s, who are maybe happier to shop for clothes on the high street. The thinking behind this trial is to see whether we get a bigger slice of the cake if we have stores as well as catalogues and online.

“We have appointed property agents to find the locations. From a practical point of view, considering where our warehouses are, the stores are likely to be in Manchester and Liverpool in good locations.”

He said the units would be ‘multi-channel stores’ which would allow shoppers to order there and have goods delivered at home and also offer collections in-store after orders were placed online.

“The trial will tell us whether the incremental sales we get from new customers will out-weigh the investment and added costs.”

In the year to February 26th N Brown – the name behind JD Williams, Figleaves, Marisota and younger menswear brand Jacamo – grew revenues by 4.2% to £718.8m, up 1.4% on a like-for-like basis.

It said sales growth had been somewhat restricted by a more conservative approach to credit on higher value items, but this had led to a fall in bad debts and an improved gross margin.

Sales over the Internet continued to power ahead – up 19% to £324m in the year and now account for 45% 

Pre-exceptional profits rose 10.3% to £94.5m while the dividend was raised 15% to 12.41p.

Mr White said he was not “aggressively seeking” acquisitions as given the tough trading backdrop he does not want any distraction from the core business.

“Our key focus this year will be to expand our home shopping business, both in the UK and internationally, particularly by further developing our online activities. While the current year will be challenging, I am confident this strategy will deliver another good result this year.”

With surging cotton and labour prices in the Far East, higher prices are being passed on to the consumer N Brown said.

Chairman Lord Alliance said: “The UK consumer is facing rising costs and falling incomes in 2011, but we anticipate a slow but steady rising trend in disposable income thereafter.

“The cost of goods from the Far East has risen sharply as a result of increases in labour costs and commodities, such as cotton. We are doing everything we can to cushion our customers from these rising costs but inevitably, in line with the entire clothing retail sector, there will have to be increases in selling prices.

“Furthermore we anticipate an increased level of targeted promotional campaigns may be needed to stimulate sales activity at various times during the year.”

Sales for the 10 weeks to 7 May 2011 are 4.8% up on last year or up by 1.5% on a like-for-like basis.

N Brown said it had signed a £200m, five-year securitisation facility with current lender HSBC. to: “to avoid the risk of any turmoil in financial markets at a later date, albeit at a higher interest margin than we were paying previously.”

Mr White said he was pleased with the progress of High & Mighty, which now has 17 stores nationwide – including a new site on King Street Manchester.

A further three stores will open this year with the optimum number being around 25. High & Mighty was bought out of administration last year.