N Brown start slowly as US drags, UK shop estate to close

Plus-size clothing retailer N Brown reported slimmer product revenue in the first quarter but remained confident in hitting full year forecasts.

Against a strong start from last year, group revenue rose 0.4% in the 13 weeks to 2 June as both product and financial services came in ahead of muted expectations.

N Brown also announced that all store staff have entered into a consultation agreement over the proposed closure of the group's 20 remaining stores. Closure would crystallise exceptional costs of £18-22m, of which half would be cash.

"As highlighted in our full year results, this was a challenging period for fashion retail," said chief executive Angela Spindler, adding that full year expectations are unchanged.

"In line with our online strategy, and given continued weak high street footfall, we have today commenced a consultation process with colleagues over the future of our small store estate. This action has not been taken lightly and we will do all we can to support the colleagues affected during this process."

Product revenues in the quarter fell by 2.8%, though this was better than the 4% fall expected by City analysts. In the Power Brands, Simply Be rose 9%, with JD Williams down 2% as the company found it tougher to 'migrate' the older Fifty Plus customers, while secondary brand sales tumbled 9.1%, with traditional down 9.8%.

International revenue dropped 8%, or 5.2% in constant currency terms, with US sales falling 15.9% or 7.2% at constant currencies. This largely reflected much reduced offline marketing and a shift in marketing to the second half with new digital-focused agencies "to support exciting new initiatives and drive a stronger trading performance". Ireland sales were flat, or down 3.2% in constant currencies, again driven by a reduction in offline recruitment activity.

Financial services revenues, where customers pay for their clothes on a repayment plan, increased by 9% against weak comparatives.

Shares in N Brown fell almost 2% to 194.4p, down around 45% since last October.

Analysts at Peel Hunt said it was a "solid performance in terms of forecasts being intact, but no sense of sufficient momentum to deliver meaningful profit recovery either".

They said the valuation of the shares, at 8.5 times forecast EPS and a 7% dividend yield, remained "unchallenging" and "may rise on lack of downgrades".

Broker N+1Singer noted that the store estate hit performance and the international performance "was awful".