Shares in N Brown rallied this morning as the home shopping group said efforts to turnaround the business and draw a line under the past year’s woes were paying off.
The catalogue and online retailer, which caters for older and larger shoppers through brands such as Simply Be and Jacamo, posted a 15.9 per cent fall in pre-tax profits to £35m in the six months to 29 August, in line with already downgraded expectations.
N Brown blamed the drop in profits mainly on the opening of seven new Simply Be and Jacamo stores and costs relating to its turnaround plan, including the closure of 18 clearance stores.
However total revenue grew by 4.2 per cent to to £415.8m and the group said that the second half had started well, helped by the cooler autumn weather in September.
Under chief executive Angela Spindler, who took over in 2013, N Brown has been shaking off its image as traditional mail-order business and investing in wooing more online – as well as younger – shoppers.
The company has been cutting back on leaflets and catalogues through the post and ramping up its digital marketing to turn itself into a “modern fashion business”.
Online sales now represent 63 per cent of N Brown's sales compared with 58 per cent last year. Mobile devices account for 64 per cent of our online traffic, an increase of 12 percentage points last year.
“We have continued to execute significant changes and have delivered results in line with our expectations,” Spindler said.
“We are adjusting our retail business model and the way we operate, transforming from direct mail-led to digital first. This has been driven by a clear understanding of what customers want, and fuelled by technology,” she added.
Its three “power brands” – JD Williams, Simply Be and Jacamo – performed well, with the number of active customers shopping these brands rising by 8.2 per cent.
N Brown took Simply Be and Jacamo onto the high street for the first time three years ago and now has 14 dual-branded stores including a flagship on Oxford Street.
Like-for-like sales across its stores rose by six per cent while product revenues for the two brands overall rose by 21 per cent.
N Brown shares, which have lost around 17 per cent of their value since the start of the year, have risen by more than seven per cent today to around 338.9p.
Peel Hunt analyst John Stevenson said the update showed a more “confident demeanour” following its string of profit warnings in the last financial year and kept his “hold” rating on the stock.
“After a tumultuous year of downgrades and misfires, there are signs that the transformation strategy is starting to gain traction in trading. The key question is whether management can deliver the same returns from its younger and arguably more affluent customers,” he said.