N Brown downgrades profit forecasts
MAJOR changes to its business model including a pricing and credit policies and clearing stock have been blamed for a a second recent profit downgrade at plus-size fashion retailer N Brown.
Shares fell 60p or 14% to 348p on the news.
Chief executive Angela Spindler, said that while it was “disappointing” the Manchester company’s annual profits would be “slightly below” would current market forecasts of £88m, there were a number of reasons to be cheerful.
“Fundamentally we are creating a new business model, more focused on retail and less dependant on credit. There’s a lot of moving parts, but there is clear evidence that what we are doing is working .”
She said the group’s three power brands, Simply Be, Jacamo and JD Williams were all growing, JD Williams, for the first time in seven years.
N Brown cut prices to stimulate sales in the 13 weeks to February 28, its fourth quarter. Sales rose 3.6% following two consecutive quarters of decline.
Mrs Spindler said the company had “invested more in price”, which proved successful, with product volumes returning to double-digit positive growth for the first time in many years.
Reflecting on the lower profits, she added: “Whilst we are disappointed by the slower than anticipated progress from a profit perspective, this is because we are taking the right decisions now – in some areas earlier than anticipated by our previous profit guidance – in order to build a better business for an online world.”
She said the company had previously been a “solid performer”, but its strategy was outdated for the digital world.
“Sometimes you have to go backward to move forwards. I am pleased with the momentum.”
N Brown, which has its headquarters on Lever Street in the city centre, said it was closing one of its catalogue brands, Gray & Osbourn.
This will lead to exceptional costs of up to £13m in full year 14/15. At least £8m of these exceptional costs are non-cash, the company added.
The company said it had begun to extend its warehouse in Shaw near Oldham.
