News of a fifth consecutive quarterly improvement in performance, with first quarter product sales growth smashing market expectations, triggers a 7.5% bounce in N Brown’s (BWNG) share price to 306p this morning.
CEO Angela Spindler’s transformation plan for the plus-size fashion retailer is clearly working, although N Brown is facing into some fierce retail sector headwinds.
Click here to read today’s quarterly update from Manchester-headquartered N Brown, the online, specialist fit, fashion retailer behind the JD Williams, Simply Be and Jacamo brands.
FORECAST-BUSTING TURN
For Shares, the headline-hogging metric is the 10.2% growth in product revenue delivered over the 13 weeks to 3 June, which smashes the 5.5% growth rate forecast by consensus.
Marking an acceleration from the 6.9% growth generated in the previous financial year’s final quarter, the growth was driven by a strong ladieswear performance.
Notably, N Brown’s new Spring/Summer campaigns, particularly JD Williams’ ‘Spring into Summer’ and Simply Be's ‘We Are Curves’, were well-received by customers.
SHUTTERING STORES
‘We are pleased to report a good Q1 performance, with continued momentum across all of our brands and categories,’ says Spindler. ‘Ladieswear and Simply Be in particular had a very strong period, with good responses to our Spring/Summer campaigns, leading to further market share gains.’
However, ‘as a result of ongoing weak footfall in some locations, and with a clear focus on driving financial returns across all areas of our business, we will be closing up to five loss-making stores’, reveals the N Brown boss.
In a move highlighting the inexorable shift to the web in retail, N Brown is closing up to five loss-making Simply Be and Jacamo dual-fascia stores with an eye on incoming business rate increases also at play.
‘We continue to improve the performance of the remaining 10 Simply Be and Jacamo dual-fascia stores,’ insists N Brown.
N Brown’s financial services sales have been slower in the last few quarters as the retailer improves the quality of its credit book and as a result of a debt sale last year. UBS, a seller of N Brown by the way, comments:
‘Given the importance of financial services to group earnings and investor sentiment any moves to improve the sustainability of the earnings stream should be welcomed. Whilst the credit offer has been fully approved by the FSA we continue think there are risks that the high APR is unsustainable and the contraction in real disposable income may see default rates increase or credit participation decrease.’
More bullish is N+1 Singer’s retail sector guru Matthew McEachran, a buyer who continues to ‘point investors to the re-rating potential’ of N Brown.
‘Given the online transformation, anticipated Fit 4 the Future benefits, and as we near an inflection point for international growth (in Q2), we have raised our 12-month target price 16% to 350p,’ says the analyst.
