N Brown sales dip in Q3 but Power Brands stay on track
“Robust online Power Brand growth and stable margin performance in a challenging market.” That was the headline figure in N Brown’s trading update on Thursday and it painted a very clear picture of an 18-week period (to January 5) that had both ups and downs.
But overall the company, which makes larger-sized women’s and menswear, plus fashion for older customers and intimates, said that Q3 sales fell.
They dropped by 1.6%, compared to a 1.5% rise in the first half, which means that the increase for the year-to-date is running at only 0.2%.
The problem appears to be its Secondary and Traditional brands, that have been tracking downwards all year and fell a hefty 5.2% and 22.9% respectively in Q3. That drove the firm’s overall Product category sales down 6%, a drop that was partially countered by a 9.7% rise in Financial Services (the interest it charges customers who pay using credit).
But as mentioned, the firm’s Power Brands (Simply Be, JD Williams and Jacamo) were its most successful as far as product sales were concerned, although sales in this area still rose only 0.1%. Online though, while overall product sales were up 1.3%, the Power Brands rose 6.4%.
CEO Steve Johnson was cautiously upbeat. "The group delivered robust online Power Brand growth and a stable margin performance in what was a challenging and highly promotional peak trading period,” he said. “We continue to manage the anticipated decline of our legacy offline business [that is, the stores that it’s closing] and remain focused on improving our customer proposition to drive profitable online growth. Trading over the Cyber and Christmas periods was relatively consistent and in line with our expectations, with the group benefiting from a more targeted and efficient approach to its promotional activity.
"Based on maintained margin guidance, continued strong Financial Services performance and improved operating efficiency, our full-year expectations remain unchanged.”
Looking deeper into the firm’s Power Brand performance, as mentioned, while the trio’s total revenue only edged up, online their revenues grew strongly.
Simply Be and Jacamo “continued to grow despite the challenging market conditions, with Product revenues up 1.6% and 5.5% respectively, and by 5.9% and 6.8% for online-only.” Simply Be's performance “reflects the strong prior year comparator and a more targeted approach to discounting by the group during the period.”
And while JD Williams declined 3.3%, “having been impacted by the headwind from the migration of Fifty Plus, excluding Fifty Plus it was up 4.2%.” For online sales only, JD Williams was ahead by 6.9% and the company said it’s “currently re-evaluating its proposition for JD Williams and will provide further details at its full-year results later in the year.”
The company also said that it "began to stabilise its International performance,” although with revenue down by 5% “as it began to better re-engage with its target customer base,” it looks like we might have to wait some time for better news in this area.
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