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N Brown trims full-year forecast despite 'resilient' Christmas

By Abigail Townsend

Date: Thursday 20 Jan 2022

N Brown trims full-year forecast despite 'resilient' Christmas

(Sharecast News) - N Brown nudged its guidance for full-year earnings lower on Thursday despite "resilient" trading during the crucial festive season.
The online fashion retailer reported a 5.5% jump in revenues from its five core brands - which include JD Williams and Simply Be - in the 18 weeks to 1 January 2022, to £149.0m. The managed decline of the remaining brands saw their sales fall 30.5% to £32.2m, while financial services revenues eased 3% to £86.4m.

As a result, group revenues declined by 3.3% in the third quarter to £267.6m.

N Brown said it had entered the peak trading period "well prepared, with good product availability". Total active customers returned to year-on-year growth, at 2.91m compared to 2.87m a year previously, while clothing and footwear grew by 18% during the quarter, driven by increased demand for dresses, formalwear and outwear.

However, that was offset by a 19% fall in home and gifts, which N Brown said contributed to group revenues easing 1.7% in the year to date to £614.4m, slightly below internal expectations.

Looking to the rest of the year, annual adjusted earnings before interest, tax, depreciation and amortisation are now expected to come in between £93m and £96m, at the lower end of the previously guided range. N Brown said it reflected "online market conditions and a slightly higher level of project spend now being expensed rather than capitalised".

As at 1130 GMT, shares in the AIM-listed firm were off 3% at 40.19p.

Chief executive Steve Johnson said: "The business has performed resiliently over the peak period.

"Against the backdrop of Covid uncertainty, a volatile consumer environment and well-documented supply chain issues, the continued growth of our strategic brands has been particularly pleasing, as has a return to growth in active customers.

"Looking ahead, [we] will continue our strategic investment to transform the business, supported by a robust balance sheet."

Shore Capital trimmed its EBITDA forecasts for the current year by £0.6m to £94.5m. But it strengthened 2023 and 2024 earnings per share forecasts by around 1% to 8.4p and 9.7p respectively.

It said: "N Brown has been through challenging times and still faces into headwinds from legacy brands that are expected to materially ease from the first quarter of 2023 onwards. Legacy system work will follow through thereafter.

"Looking beyond that, we expect robust sales growth from strategic brands to be more fully reflected in the group performance, while a return to sustained sales and active customer growth should underpin a return to growth in the financial services activities."

Shore Capital is N Brown's broker and nominated advisor.

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