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N Brown FY16 revenues up 3.5 percent, focus on Fit 4 the Future for growth

By Prachi Singh

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Business |REPORT

Total group revenue at N Brown Group for the full year to February 27, 2016 increased 3.5 percent to 866.2 million pounds (1,244.8 million dollars). Product revenues were up 4.1 percent and financial services revenue increased 2.1 percent. Underlying operating profit excluding exceptionals was down 1.3 percent to 92.6 million pounds (133 million dollars) and underlying profit before tax was down 2 percent year-on-year.

Commenting on the company’s annual performance, Angela Spindler, Chief Executive, said, "It has been a very busy year for N Brown as we continue to transform the way we operate as a fashion retailer - from being mail-order led, to a business that puts digital first. We are mid-way through this journey and are delighted to see the benefits coming through, importantly delivering 11 percent profit growth in the second half of the year.”

Brand performance during the year

The JD Williams' product revenue was 151.2 million pounds (217.3 million dollars) in FY16, up 4.7 percent. Brand’s online penetration was up 6ppts to 51 percent, and online penetration of new customers was up 13ppts to 65 percent.

Simply Be product revenue was up 15.6 percent to 103.9 million pounds (149.3 million dollars). Jacamo product revenue was up 14.6 percent to 62.8 million pounds (90.2 million dollars).

While the company doesn’t consider it to be a future growth driver, the traditional segment remains relevant to the Group's overall portfolio. As previously announced, traditional titles witnessed a disappointing revenue performance during FY16, with revenue down 5.5 percent.

Cuts loss in USA, revenues rise 29 percent

The company’s revenue in the USA were up 29 percent to 14.3 million pounds (20.5 million dollars) and 20 percent in constant currency terms with operating loss reduced significantly, from 2.5 million pounds (3.5 million dollars) last year to 1 million pounds (1.4 million dollars) this year. In H2, the company made a profit for the first time on a constant currency basis, of 0.2million dollars compared to a loss of 0.9million dollars in H2 FY15.

Ireland business delivered a good performance in FY16, with revenue growth of 4 percent in constant currency terms. In sterling terms Ireland revenues were down 7 percent year on year. Sales from stores were up 18 percent. The company has 14 dual-fascia Simply Be and Jacamo stores and the company plans to ultimately have 25 stores in total.

Focus on Fit 4 the Future for growth

The company said that Fit 4 the Future is progressing well. During the half, it launched Simply Be Euro website, the first phase of its global multi-channel release and Powercurve. This August, N Brown plans to start the roll-out of its new web platform and new financial services systems, initially to the USA, and then to a number of smaller UK brands in September and the main brands will move onto the new systems in early 2017.

“This year will be a very important one for the Group. Our new IT platform will be implemented, bringing necessary and significant improvements to all areas of our business. However experience suggests that a programme of this scale will bring some unexpected bumps in the road. A huge amount of effort has gone into planning and preparing to mitigate these risks. Our Group is strong, with loyal customers and good margins. Once delivered, Fit 4 the Future will give us the robust platform we need for growth in the future,” added Andrew Higginson, Chairman of the company.

N Brown anticipates challenging FY17

In the fiscal year 2017, N Brown expects product gross margin to be down 50bps to 150bps driven by buying in gains, more than offset by FX headwind, clearance of aged inventory and tactical price activity to drive share growth in a challenging market. Trading since the year end has been subdued, with sales lower year on year due to challenging market conditions since January.

“Looking forward, whilst we face challenging market conditions for the fashion sector overall, and trading since the year end has been subdued, we remain confident in our ability to make further progress this year. This is based on the strong appeal of our specialist fit proposition, continuous improvement in the customer experience and changes in customer shopping behaviour, driven by targeted marketing," added Spindler.

N Brown