N Brown looks a less risky 'buy', HSBC says

HSBC, which hefted its target price to 280p from 215p, noted that the results demonstrated the improvement in the underlying performance of the 'power brands' — JD Williams, Simply Be and Jacamo — thanks to more flexible sourcing and new product collections, which helped accelerate its online growth.

Enhanced online exposure, with internet sales representing 69% of total sales and 77% of new customer sales, offers access to structurally higher growth markets despite the challenging consumer outlook, the bank said.

"From a transformation plan perspective the ‘Fit 4 the Future’ IT project is critical to realising group potential," analyst Paul Rossington wrote, noting that progress was in in line with expectations.

N Brown landed its first new international platform in the US in 2016 and this year will land its first new UK platform in 2017, in the shape of High & Mighty.

New finance, merchandising and parts of the new credit system also came on line recently.

"Delaying the roll out of new online sites to Power Brands until 2018, the point at which the majority of the new online customer functionality has landed, reduces execution risk and maxmises potential returns."

With results in line and the earnings guidance for 2018 suggesting a similar outlook, the "big swing factor" is the sterling exchange rate, with the group having hedged 90% of its dollar exposure at £1.27.

However it is not earnings but a reduced risk profile that drove the increase in in the target price.