Shares in online clothing and homewares retailer N Brown (BWNG), which earlier this week were trading at 12-month lows, surged as much as 9% to 51.5p in early deals after the firm posted pleasing first half results and said it was ‘well prepared for peak trading’.
Group revenues for the six months to August were flat at £347 million with product sales up 3.3% to £222 million, while credit sales were 5.7% lower at £125 million.
Within product sales, the firm’s five strategic brands - Ambrose Wilson, Home Essentials, Jacamo, JD Williams and Simple Be - grew sales by an impressive 14.9% which more than offset the decline in legacy brands, including £11 million due to the closure of Figleaves.com and High & Mighty.
In the credit division, despite the small dip in revenues the gross margin leapt from 40.8% to 65% thanks to a reduction in provisions for credit losses due to Covid, which shrank from £17 million to £5.2 million.
The firm ended the half with net cash of £41.9 million and net debt of £268 million, down from more than £300 million at the start of the financial year and well below the net customer loan book of around £510 million.
For the full year, product revenues are seen growing between 1% and 4% as the company focuses on profitable growth rather than promotional sales. At the same time the credit division is expected to see sales decline at a slower rate so group revenues will be broadly flat.
Earnings before interest, taxes, depreciation and amortisation are seen in the range of £93 million to £100 million, neatly straddling the consensus forecast of £97 million.
Chief executive Steve Johnson was upbeat about Christmas trading despite concerns over consumer spending: ‘We continue to deliver on our plan and are feeling well prepared for peak trading. EBITDA remains in-line with our expectations, and we are looking forward to exciting our customers with our new ranges as we head towards the Christmas peak. However, we do so with the backdrop of continued uncertainty around consumer confidence.’
