Profits fall as N Brown puts digital first
PLUS-size, multi-channel fashion business N Brown, has reported a sharp fall in profits during a year of “step change” as it moved away from its direct mail roots to digital.
The Manchester company, which owns brands such as Simply Be, JD Williams, Jacamo, Figleaves and High & Mighty, saw pre-exceptional profits fall 13.4% to £86.2m on revenue largely flat at £818m (2014 £818.9m) in the year to February 28.
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Chief executive Angela Spindler told TheBusinessDesk that the business, based on Lever Street in the Northern Quarter, had done “the heavy lifting” in the past year, and is now more flexible and better able to respond to the market place.
“Of course we acknowledge the last year has been more painful from a profit perspective than we would have liked, but I am very pleased with all we have achieved.
“We have asked ourselves whether we should have gone slower, but a step change is something you either do or you don’t do. This industry is on fast-forward, and pausing to reflect and not adjusting a model that was not sustainable in the long tem, did not at any level feel it was the right thing to do.”
Having changed the process in the organisation, the way stock is mananged and the way products are marketed, Spindler said the “forward indicators” were positive.
In the fourth quarter, online sales were 62%, compared with 59% in the rest of the year. The active customer base had increased 2.4% too, the company said.
In the current year, the group said it expects to invest between £50m to £60m, mostly on its ‘Fit 4 the Future’ programme to transform its systems. N Brown also plans to upgrade and extend its warehouse in Shaw near Oldham to support future growth.
The company said the total cost of Fit 4 the Future would be £65m over the coming years. The benefits of the programme include significantly improved speed to market, cloud-hosted technology, a new international web platform, new financial products, improved personalisation, a new customer contact centre system and a real-time single customer view.
Reflecting on the past year, and looking ahead, chairman Andrew Higginson said: “The scale and pace of change required to modernise the business put a great deal of strain on our performance in a difficult year for the clothing sector.
“The fall in profits was nevertheless a disappointment. However, we laid important foundations for profit recovery and long-term growth. We have now bedded in many of these changes and this year will see us push on with executing our strategy.
“The board remains confident in the outlook for the business, and we believe that we have the right strategy in place to drive sustainable profitable growth.”
