City round-up: N Brown; Norcros

First half trading at Manchester-based online clothing and footwear retailer, N Brown, has been hit by unseasonal weather, but prospects have improved for the second half, it revealed today.

In the six months to September 2, 2023, the group saw its revenues fall 10.4% from £331.5m to £297m.

A pre-tax profit of £7.2m for 2022 has become a pre-tax loss of £4.1m this year, but the group said this included adjusting items of £4.5m relating to restructuring activities to right-size the cost base.

Adjusted EBITDA of £17.5m was down from £27.9m the previous year, but the group said this was in line with expectations, supported by disciplined management of areas within the business’s direct control.

Full year adjusted EBITDA is expected to be in line with market expectations of £44.7m.

Adjusted operating costs were reduced by £4.7m, with volume-related savings and management actions more than offsetting around £7m of inflationary pressures.

N Brown said proactive moderation of intake and clearance of older stock items has driven a reduction of around 20%, equating to £20m, in stock balances compared with the previous first half, improving working capital efficiency.

During the reporting period, the group completed the successful launch of a new mobile-first website for its Jacamo brand, the second of its three strategic brands to have transitioned to the new platform, and a key transformational priority.

Also, the group achieved net cash generation of £13.6m in the period, after further investment of circa £9m in the transformation of the business.

It says it has a strong balance sheet with significant cash and cash equivalents, and total accessible liquidity of £133.1m. The rolling credit facility and overdraft remain undrawn with limits of £75m and £12.5m, respectively.

Trading during the first five weeks of the third quarter reflects a further improvement over the second quarter run rate.

Macro-economic challenges of a high inflationary environment and low consumer confidence are expected to persist throughout the 2024 fiscal year, but benefits from cost actions taken in the first half, and planned for the second half, are expected to mitigate the impact of slightly moderated full year revenue expectations, with the H2 24 adjusted EBITDA margin expected to be marginally higher than achieved in full year FY23.

The full year 2024 year end adjusted net debt is expected to be better than FY23’s closing position. Strategic investment will continue to be self-funded through carefully managed cash flows, the group said.

Chief executive, Steve Johnson, said: “We expected external market conditions to remain soft and for the first half of FY24 to be particularly challenging. In response, we acted decisively to adapt to the trading environment and maintain real focus and discipline in areas which we can directly control, remaining on track to deliver full year adjusted EBITDA in line with the board’s expectations.

“Alongside this, we’re pleased with the delivery of our strategy as we position the business for medium term growth. Our investment across JD Williams, Simply Be and Jacamo has led to new commercial partnerships and technology upgrades to drive performance.

“We have a clear set of transformational priorities in train and expect to continue to deliver further progress during the second half of the year.”

He added: “Good work by our teams, including more efficient stock management, has helped generate cash and further improve our liquidity position in the half, providing a solid base for the continued investment in our priorities.”

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Norcros

Norcros, the Wilmslow-based bathroom and kitchen supplies group, said it delivered a robust first half performance, despite the challenging demand environment, reflecting market share gains driven by successful new product launches, the strength of its customer proposition and the breadth of its distribution channels.

In a trading update ahead of its interim results covering the six months to October 1, 2023, on November 16, the group revealed an eight per cent reduction in overall revenues or approximately £202m, affected mainly by its South Africa business which was subject to national energy supply constraints impacting home market demand.

Norcros said its Triton and Merlyn brands performed particularly strongly. However, it revealed it will be reducing manufacturing capacity at Johnson Tiles (UK) by approximately 50% in response to lower UK tile demand. Costs associated with this of circa £1.4m will be reported separately as an exceptional item.

The group said its performance in the first half of this financial year continues to reflect the strength of its in-house product development capabilities, leading brands and excellent customer service proposition. It expects to report an underlying operating profit in the first half of the year of no less than £21m, compared with £22m the previous year.

It said the balance sheet remains strong with net debt of approximately £48m on a pre-IFRS16 basis (net debt of £58.9m as at 30 September 2022 and £49.9m as at 31 March 2023). The group has committed banking facilities of £130m maturing October 2026.

Norcors also announced, today, the appointment, from January 2, 2024, of Helene Roberts to the executive committee of the Norcros Group as managing director for the UK and Ireland. She succeeds Thomas Willcocks following his appointment as chief executive this April.

Helene joins from Robinson, the European plastic and packaging manufacturer, where she was CEO for four years. Helene brings extensive leadership experience and a strong track record in sustainable product development and sourcing.

The board said it remains confident that its experienced management teams and consistent execution of strategy will continue to deliver market share gains for the year ending March 31, 2024, and expects full year operating profit to be in line with market expectations of £43.4m.