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N Brown's focus on digital growth boosts H1 profits

By Prachi Singh

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Business

N Brown Group plc reported revenue decline of 5.4 percent to 432.9 million pounds (529 million dollars), driven by product revenue decline of 9.3 percent and financial services revenue increase of 2.9 percent. Adjusted EBITDA for the period increased by 4 percent to 54.1 million pounds (66.1 million dollars) and adjusted EBITDA margin increased by 110bps to 12.5 percent. Adjusted profit before tax was 31.8 million pounds (39 million dollars), up 3.9 percent, while statutory profit before tax was 18.8 million pounds (23 million dollars), a 45.9 million pounds improvement on last year. Adjusted earnings per share were 8.87p and statutory earnings per share were 4.95p.

Commenting on the first half trading, Steve Johnson, the company’s Chief Executive, said in a statement: “We announced our new strategy in May to return N Brown to sustainable profit growth and we have made good progress over the first half of the year. “In particular, we have delivered on our strategy of growing digital revenue across Simply Be, JD Williams, Jacamo and Ambrose Wilson. We remain focussed on implementing our plans and the Board’s full year expectations are unchanged.”

Highlights of N Brown’s first half results

The company said, product revenue declined as a result of the continued managed decline of the legacy offline business, the shift in focus away from USA and the impact of the closure of store portfolio in the prior year. Excluding stores and USA, product revenue was down 6.2 percent. Womenswear revenue was down 3.4 percent in the period as the company continued to scale back unprofitable marketing and offline recruitment, womenswear digital revenue increased 4.6 percent in the half.

JD Williams revenue was down 3.7 percent, but its digital revenues improved 4 percent increase compared to the previous period. Simply Be grew revenue by 2 percent during the period excluding stores and reported a 4 percent growth in digital revenue, while Ambrose Wilson revenue was down 14.4 percent but digital revenue increased 10.5 percent in the period. Menswear, which is the Jacamo brand, increased revenue by 5.5 percent and delivered digital revenue growth of 6.6 percent in the period.

In the last six months digital revenue grew by 1.5 percent compared to H1 FY19 and was ahead by 5 percent for womenswear and menswear brands combined. As the Group focuses more of its resources on growing its digital revenues, it expects a continued double-digit decline in offline revenue in the second half of this financial year. Product brands revenue declined 14.3percent in the period with digital revenue down 5.7 percent. Strength in digital revenue growth at Oxendales, 21.6 percent and Figleaves 15.5 percent was more than offset by the managed decline of House of Bath, Premier Man and High & Mighty.

The Group’s gross margin was 53.5 percent, down 70bps compared to H1 FY19. This was as a result of a 140bps improvement in the financial services gross margin to 57.4 percent, offset by a 190bps decline in the product gross margin rate to 51.5 percent. The company’s board is declaring an interim dividend of 2.83p per share, which is flat on last year’s interim dividend.

Picture:N Brown media gallery

jacamo
JD Williams
N Brown
Simply Be