Transformation reaping rewards in strong first half by N Brown Group

N Brown Group, the Manchester-based online fashion and homeware retailer, doubled half year profits during a strong six month period for its strategic brands, it reported today.

The owner of the JD Williams, Simply Be, Ambrose Wilson and Jacamo brands issued results for the six months to August 28, which showed revenues virtually static, at £346.8m, but a 100% increase in pre-tax profits of £28.2m.

The group’s five strategic brands grew product revenue 14.9% as the benefits of the group’s transformation accelerate, it said.

Overall product revenue grew 3.3%, reflecting the ongoing managed decline of legacy brands.

There was an increase in active customers of 1.1% quarter two on quarter one, demonstrating the impact of improving product offer and marketing outreach.

And there is a step-up in marketing activity to support new campaigns, with several high profile partnerships, including Amanda Holden and Davina McCall signed as brand ambassadors for JD Williams, and Frankie Bridge and Nicki Bamford-Bowes for Home Essentials.

In the financial services division, revenue declined 5.7%, as a result of a smaller debtor book at the start of the financial year, while bad debt provision rates remain similar year-on-year.

Today’s figures showed net cash of £41.9m, with a further £57m of cash utilised in the period to reduce draw down on the securitisation funding facility, to deliver greater balance sheet efficiency and interest savings.

An adjusted net debt of £268.3m compared with £301.1m at the end of February 2021. The net customer loan book of £509.6m significantly exceeds adjusted net debt.

Looking ahead, the group said, as a result of its improved product and branding, it has taken the decision to focus on profitable growth, rather than promotion-led sales.

As a result, product revenue is now expected to grow +1% to +4%. The financial services rate of revenue decline is expected to improve in the second half of the financial year and to be approximately minus five per cent for fiscal year 2022.

Overall, N Brown expects group revenue to be broadly flat. As a result of the focus on profitable growth, it reiterates its expectation for adjusted EBITDA to be in the range of £93m to £100m.

Chief executive, Steve Johnson, said: “Over the last six months the consumer environment has been volatile.

“Nevertheless, momentum has continued throughout the business, with customers responding well to our improved product ranges, particularly across our five strategic brands.

“This is testament to the restructuring work we have done across the group and the investments we are beginning to make to support our refreshed strategy. None of this would be possible without the talent, drive and commitment of our team, who have responded incredibly to the uncertainties we face.”

He added: “Our mission is to be the most inclusive retailer in the UK, across both fashion and home.

“We’re excited to see new brand partnerships resonating with both existing and new customers, bringing this mission to life, including Amanda Holden and Davina McCall on JD Williams, and Frankie Bridge and Nicki Bamford-Bowes on Home Essentials.

“We continue to deliver on our plan and are feeling well prepared for peak trading.

“EBITDA remains in line with our expectations, and we are looking forward to exciting our customers with our new ranges as we head towards the Christmas peak. However, we do so with the backdrop of continued uncertainty around consumer confidence.”