N Brown profits slump amid year of transition

N Brown has announced that its profits before tax plunged 28.8% to £59.5m in the year ended 29 February 2020. 

This was largely driven by lower gross profit and “lower than expected” IFRS9 provision benefit, according to the group.

In the same period, group revenue was down by 6.1% to £858.2m while adjusted EBITDA was tumbled 16.6% to £106.7m.

In its latest trading update, the retailer also revealed that revenue was down by 22% in the first quarter of its 2021 financial year, with trading impacted by Covid-19.

Product sales were down by 28.8% while its financial services revenue was down by 8.3%.

Nonetheless, the group noted that apparel sales have “started to recover” from mid-March levels, while demand for its home and gift products have “remained well above the year prior”.

In the same first quarter period, 91% of product sales were digital following the group’s transition to become a digital retailer.  

The group said it was a “critical” year for this transition, with 85% of product revenue in its full-year results generated through digital channels, up 6% against the year prior. 

Digital revenue was also up 5.5% in both womenswear and menswear as the group initiated a “well-progressed” strategic plan to reduce unprofitable non-digital and digital sales.

Looking ahead, the group detailed a “refreshed strategy” to support sustainable future growth.  

This includes an improvement on products to drive customer frequency, the launch of a new ‘Home’ offering in order to provide more categories for customers and an “enhanced digital experience” to increase conversion. 

Steve Johnson, CEO of the group, said: “The crisis will cast a lasting shadow over the sector, but we are confident that our agile approach and attractive brand offerings, with clear target customer segments, position us well to navigate the issues and emerge as a stronger business.

“In a year of restructuring for the group, Simply Be, JD Williams, Jacamo and Ambrose Wilson all grew digital revenue and following further progress in the first quarter of this financial year, 91% of our product revenue now comes from digital channels.” 

He added: “Trading in the first quarter of this financial year was impacted by Covid-19 but sales in recent weeks have shown an improving trajectory and cash collections have been stable. Operating costs are significantly lower than last year and net debt has decreased.

“As we move forward, we have refreshed our strategy, evolved our key pillars of growth and are pushing on with further work to streamline our brand portfolio, improve our product, create a brand new Home proposition whilst improving our digital capabilities and developing our financial services offer.”