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N Brown has seen its pre-tax profits plunge 74.6% to £7.2m in the first half of the year, as weakened consumer confidence led to a “more challenging” online retail market and subdued half-year revenues.
Revenues dipped by 4.6% to £331.5m in the period, while the online retail market was down by around 7% overall.
Product revenue fell by 5.2%, from 0.6% in Q1 to 9.4% in Q2, with this trend continuing into Q3. With challenging market conditions expected to continue, the group expects H2 product revenue to decline at a similar rate to Q2.
Meanwhile, strategic brands product revenue was 2.2% lower, with heritage brands 11.8% lower, while its Financial Services revenues were down by 3.5%, reflecting a smaller debtor book at the start of the year.
Elsewhere, Adjusted EBITDA plummeted 46.9% in the period ended, largely driven by its prior year Financial Services performance.
In its latest update, the group said it has seen “significant volatility” in trading trends in the second quarter and into the third quarter of FY23, including both pre and post the 19 September bank holiday.
It noted this, combined with other macroeconomic conditions, makes visibility on revenue trends “difficult”, yet assuming the current uncertainty and inflationary pressures will continue into H2, it has revised its assumptions for product revenue in the second half, and now expects it to decline in line with figures seen in Q2 and September.
Overall, it now expects FY23 Adjusted EBITDA to be in the region of £60m.
CEO 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.”
