Margin dip takes shine from N Brown sales rise
SHARES in home shopping giant N Brown fell 5% after the company said profit margins had been hit by higher bad debt charges.
The news of a 1.5% fall in margins – caused by increased levels of sales to younger customers who are proving less willing to pay their bills – overshadowed a positive trading statement from the Manchester-based company.
N Brown also said it is pressing ahead with its international expansion plans and opening its websites to shoppers on the Continent.
It said a higher proportion of sales were coming from the Internet. Online sales for the 19 weeks to January 10 have soared by 34% on last year and now account for 35% of sales.
Overall, group sales in the period increased by 8.8% and N Brown said sales from new customers were level with last year.
However, it said that margins have fallen by 1.5%, following an increase in the charge for bad debts some of which is because of the higher proportion of sales from younger customers who produce a higher credit risk.
N Brown said that its financial position remains stable and its current banking facilities of £320m are secured until March 2012.
Chief executive Alan White said N Brown is investing £1m into its international expansion plans to launch Simply Be in Germany next month as well as opening up its English language websites to a number of European markets.
He added: “We fully recognise the difficult economic environment in which we will be trading in 2009 and have adopted a cautious stance on customer recruitment, credit management and stringent control of overheads and cashflow.
“The remainder of the financial year will be determined by the customers’ response to our spring catalogues but at present the board is confident we can deliver a full year performance in line with our expectations.”
N Brown’s catalogue titles include JD Williams, Simply Be, Gray & Osbourn, Oxendales, Premier Man and Jacamo. Its niche market is catering for people requiring larger sizes.
