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N Brown disappointed in first half, US sales fall

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today Oct 11, 2018
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With UK retail in its current fragile state, every results announcement is being jumped on for signs of a potential recovery, which made N Brown’s interim figures on Thursday of particular interest.


JD Williams



And is a recovery on the cards? Not yet. It was headlined "good growth in financial services, disappointing product performance in a challenging market," which just about said it all.

Group revenue actually managed to rise 1%, reaching £457.8 million in the 26 weeks to September 1. But that was mainly because financial services revenue was up 12.7%. Product revenue fell 3.1% to £304.5 million.

The result was that “adjusted” profit on an Ebitda basis may have risen 6.1% to £52 million, but adjusted pre-tax profit fell 5% to £30.6  million. And statutory pre-tax profit was actually a loss of £27.1 million (albeit slightly better than the £27.6 million loss of a year ago).

Was there any good news? Yes. The company said it’s continuing its transformation into an online retailer and its online Power Brands saw revenue rising 8.6%. Some 77% of its product revenue is now online and for its new customers, it’s 84%.

But why did overall product revenue fall? Well, the company can't blame it's soon-to-close stores as they were excluded from the figures. And it can't blame plus-size brand Simply Be either as its revenue rose 8%. Menswear brand Jacamo also acquitted itself well with a 2.7% increase. 

JD WILLIAMS AND US WOES

Traditional segment revenue fell 11.2% and Secondary brands dropped 6.9% excluding stores. But the biggest problem seems to have been at JD Williams, the brand that targets customers aged 45+, which was down 3.1%. But even that was up by 7.5% excluding its legacy offline brand Fifty Plus. The company is taking measures to address the JD Williams weakness and is currently airing a more contemporary TV ad campaign in the UK. 

It said its research showed more than half of women aged 45+ are unhappy with what the high street has to offer their age group, despite 60% of them having more to spend on fashion now than they did in their 20s. It has responded with that new campaign and events such as JDW Midster Live AW18. The event kick-started London Fashion Week and was live streamed on jdwilliams.co.uk with a click-to-buy functionality.

It’s also taking wider action to address its disappointing performance and is increasing the choice of third-party brands on its websites, many of which are extended to larger sizes on an exclusive basis. Recently added brands include Apricot, Club L London, Kate Spade, Valentino, Guess, L'Oréal, Barry M, Peter Werth, Schott and Berghaus.

This seems to be paying off as on a rolling 12-months basis its UK market share in womenswear (size 16+) was up 30bps at 5.6%, with gains across all age ranges except for 60+. Its larger-sizes menswear market share also improved, by 10bps to 2.7%. 

But the UK market isn't the only issue. It also said on Thursday that it has “taken measures to address poor international performance.” Its international revenue was down 7.9% to £15.3 million due to revenue from the US falling 16.7% (11.2% in constant currency), to £6.8 million, while Ireland was up 0.6% (down 1.8% in constant currency) to £8.5 million.


Simply Be


It all goes some way to explaining the unexpected departure of CEO Angela Spindler last month. In her place, chairman Matt Davies, Chairman, said of the results: “Whereas much progress has been made transforming the business into an online retailer, we have not yet achieved the growth in product or international that we would have hoped for.

“We are now in the process of searching for a new Chief Executive to take the Group forward through the next phase of its development. In the meantime, we are pleased that [interim CEO] Steve Johnson [currently CEO of the firm’s Financial Services business] will lead the business. We have a strong base on which to build. Our goal of becoming a world class digital retailer remains unchanged.”

Johnson added that the company expects offline sales to continue to fall as it focuses on online Power Brand growth and that “while first half trends seen in our product business are continuing into the second half, the positive outlook for Financial Services and scope for further efficiencies mean that our full-year expectations are unchanged.”

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