N Brown on 'hold' after half-year profit slump, Investec says

Investec on Wednesday retained its ‘hold’ rating on N Brown after the fashion and home shopping retailer reported a decline in half-year profits.

The FTSE 250 group, whose shopping brands include plus-size focused Simply Be and Jacamo, lifted revenues 4.2% to £415.8m but saw operating profits sag 14.2% to £38.8m and statutory pre-tax profits plummet 54.6% to £19.4m, although this had been flagged. Underlying earnings per share were down 14.5% to 9.9p.

However, chief executive Angela Spindler's transformation delivered tangible results, including online penetration up 5 percentage points to 63% and a strong performance from Simply Be and Jacamo, with product revenue for both up 21%.

Although the business re-organisation towards an online focus means the “ongoing underlying profitability of the business is not yet clear”, according to Investec analyst Kate Calvert. Certain exceptional costs largely relating to the closure of 18 clearance stores put a big dent in profits.

“While we like N Brown's structural growth niche and believe moving to a digitally led, retail model is the right strategy, the modernisation programme disruption means the ongoing underlying profitability of the business is not yet clear,” Calvert said.