Weaker consumer confidence hits online retailer N Brown

Simply Be is an N Brown brand

Manchester-based online fashion and homeware retailer, N Brown Group, saw first half revenues and profits decline, and warned of further pressures in the second half of its 2023 fiscal year.

Shares in the group plunged by almost 20% on today’s announcement, but have begun to rally, standing at 21.60p per share just after 9.30am, an 11.18% fall on the previous night’s close of 24.32p.

In the 26 weeks to August 27, 2022, group revenues fell 4.6% to £331.5m, while pre-tax profits plunged 74.6% to £7.2m. However, adjusted next debt was reduced from £268.3m a year ago to £243.5m.

Looking ahead into the current trading period, the group said, based on the assumption that macroeconomic uncertainty and inflationary pressures continue through the second half of the year, it has revised its assumptions for second half product revenue and now expect it to decline in line with the year-on-year decline seen in the second quarter and September.

It added: “As a consequence of the above factors, we now expect FY23 Adjusted EBITDA in the region of £60m before growing again as the group’s strategy is executed.

“At the end of FY23, we expect the group to maintain a strong unsecured net cash position and for net debt to be below FY22’s closing position, whilst continuing to have full access to the £100m RCF, allowing us to further progress our transformation strategy.”

N Brown blamed weaker consumer confidence on its declining revenues, while it said the profit reduction reflects exceptional Financial Services profitability in the same period a year ago.

It said it has a strong balance sheet, with unsecured net cash of £47.2m. It has additional £45.5m accessible cash voluntarily undrawn on the securitisation funding facility and access to a fully undrawn RCF of £100m, with total accessible liquidity in excess of £200m.

Chief executive, Steve Johnson, said: “In a difficult period of weakening consumer confidence, we’ve balanced our objectives between disciplined trading – with a focus on upholding margin – and delivering on our long term strategy to transform the business.

“Our teams have worked relentlessly to launch Simply Be’s new website, and early indicators give us confidence in the wider benefits for all our customers when we roll this out more widely across our other strategic brands.”

He added: “We anticipate continued softness in trading over the second half as macroeconomic pressures continue to weigh on consumers, despite government support.

“We will, therefore, maintain our focus on tightly managing both our costs and margins. At the same time, given our ongoing confidence in our strategy and the strength of our balance sheet, we will continue to invest in our digital transformation to deliver sustainable profitable growth.”