TIDMBWNG
RNS Number : 5476U
Brown (N.) Group PLC
19 January 2017
19 January 2017
Q3 TRADING STATEMENT
DOUBLE DIGIT GROWTH IN LADIESWEAR DRIVES STRONG PERFORMANCE
STRATEGIC TRANSFORMATION ON TRACK
N Brown, the leading multi-channel, specialist fit fashion
retailer, issues the following trading update covering the 18 week
period to 31 December 2016.
Q3 financial highlights:
-- Group revenue +4.1%
-- Product revenue +5.9%
-- Financial services revenue -0.5%, diluted by non-interest lines
-- On track to meet full year expectations
Q3 strategic highlights:
-- Online revenue up 12%, with penetration now 70%, up 4ppts year-on-year
-- 77% of new customer demand generated online
-- Strong performance of Power Brands:
-- Revenue up 10%
-- Active customer file up 13%
-- Quality of the debtor book significantly improved
-- Christmas trading driven by record Cyber fortnight
Revenue growth FY16/17
yoy
-------------------- -------------------------------------
Q1 (13wks) Q2 (13wks) Q3 (18wks)
-------------------- ----------- ----------- -----------
Product -1.6% +2.7% +5.9%
-------------------- ----------- ----------- -----------
Financial Services +3.4% +0.7% -0.5%
-------------------- ----------- ----------- -----------
Group -0.2% +2.1% +4.1%
-------------------- ----------- ----------- -----------
Angela Spindler, CEO, commented:
"I am pleased to report a good trading period, with standout
performances from Ladieswear and the Simply Be brand. All key
brands and categories grew in the period, including our Traditional
titles which had diluted performance in the first half.
Online sales were up 12%, accounting for 70% of Group revenue.
Mobile devices made up 72% of traffic and conversion on mobile
devices continues to improve.
We are benefitting from improved trading agility as a result of
the transformational changes we have made. This was reinforced by
our performance across Cyber fortnight which resulted in two
record-breaking weeks for the business. In light of our trading
performance, as we approach the year-end, we are comfortable with
current market expectations.
We are operating in what continues to be a challenging period
for the industry and are still in the process of delivering some
key elements of our transformation plan. I am, however, very
pleased with the progress we are making."
Q3 performance
Retail
We continue to focus on driving our three Power Brands - JD
Williams, Simply Be and Jacamo - and this strategy worked well
during the period. Power Brand revenue was up 10% and the active
customer file increased by 13%, outperforming the total active
customer file which was flat.
As previously disclosed, we are in the process of migrating
customers from the Fifty Plus title into the JD Williams brand.
This process is on track and, although it still represents a
headwind, this has materially lessened, with Fifty Plus broadly
flat year-on-year.
The JD Williams brand achieved double-digit revenue growth, with
online performance especially strong. Our new "The Cut" collection,
featuring current season styles at excellent value price points,
significantly exceeded our expectations. If we include the Fifty
Plus title, revenue of JD Williams overall was up high single-digit
year-on-year.
Simply Be revenue grew double-digit year-on-year, driven by our
continued improvements in the product range and a strong online
marketing campaign.
Jacamo grew mid single-digit, against a tough comparative last
year. We continue to champion diversity in male fashion, with our
Real Man Runway model search and recent #FashionForEveryMan
demonstration both attracting great customer and media
attention.
The Support Brands and Traditional segment both recorded low
single-digit revenue growth. Within the Support Brands the
strongest performer was Fashion World. The Traditional titles are
now back into positive year-on-year growth, benefitting from the
actions we took to improve product and presentation over the
season.
At the category level, Ladieswear recorded the strongest growth
by some measure, up double-digit. Menswear and Homewares both
recorded mid-single digit revenue growth year-on-year, and Footwear
was flat. Encouragingly, we saw a further improvement in Group
returns rate year-on-year.
Overall, online penetration increased 4ppts year-on-year to 70%,
with total online sales up 12%. A record 77% of new customer demand
was generated online during the period, up 2ppts year-on-year.
Order frequency and units per basket both recorded good
year-on-year growth, whilst average selling price was slightly
down, as planned, as we invested in price.
During the period mobile devices generated 72% of all traffic,
up 5ppts year-on-year. Within this, smartphones now account for 49%
of all traffic and smartphone conversion increased by 7%
year-on-year. Overall, the significant increase in traffic from
this device type, which naturally has a lower conversion rate,
meant that the overall rate was slightly down, as expected.
We launched our new USA website in September, slightly later
than initially planned, as communicated in our first half results.
This impacted performance through peak, as expected, with revenue
down 3.5% year-on-year (19% on a constant currency basis). The site
is performing well and we remain very confident in the market
opportunity going forward.
Financial Services
During the period Financial Services revenue was marginally down
year-on-year. This masks two moving parts, with interest received
up and non-interest lines such as admin charges down, as we
continue to improve the quality of the debt book. This resulted in
higher overall gross profit from Financial Services, and we have
therefore upgraded our gross margin guidance for the year, as
detailed below.
During the period we launched a trial of differing interest
rates for new customers. Whilst it is too soon to assess the trial
fully, the initial view is encouraging.
Fit 4 the Future
Fit 4 the Future, our systems transformation project, is on
track. The first UK site, which will be High & Mighty, is still
planned for Q1 FY18. In Q3, we will now be launching Fashion World
instead of Simply Be as previously announced. Fashion World is
similar to Simply Be in terms of its online penetration, and it
also has a greater proportion of Financial Services usage. There is
no change to the overall programme costs and benefits, or to the
timing of these.
The launch of the new Fashion World site represents the point in
the project where the majority of the online customer functionality
will have landed, and we will then be able to significantly step
down the programme. Site rollout, including Simply Be, will then be
moved into normal business activity. We continue to expect rollout
to finish by summer 2018.
Full Year 16/17 Guidance
Updates:
-- Product gross margin guidance range narrowed to -100bps to
-150bps (from -50bps to -150bps) due to focussed and planned
promotions
-- Financial Services gross margin guidance improved to +75bps
to +125bps (from +50bps to -50bps) due to continued improvement in
the quality of the credit book
-- Group operating costs (excluding Depreciation &
Amortisation) range narrowed to +3% to +4% (from +2% to +4%)
predominantly due to higher volumes
-- Depreciation & Amortisation GBP28m to GBP29m (from GBP29m to GBP30m)
All other guidance remains unchanged from that provided at the
half year results:
-- Net interest costs GBP8m to GBP9m
-- Tax rate c.20%
-- Net debt GBP280m to GBP300m
-- Exceptional costs of c.GBP12m
-- Capex c.GBP40m
-- FY17 will be a 53-week year, this will result in a PBT benefit of c.GBP2m
-- The above guidance is all given on the basis of a 52-week year
Analyst conference call
CEO Angela Spindler and CFO Craig Lovelace will be hosting a
conference call for investors and analysts at 8.30am. Please
contact MHP (gina.bell@mhpc.com) for dial-in details.
Reporting calendar
We will be announcing our full year results on 27(th) April
2017.
Market expectations
The Board considers that market expectations for FY17 are best
defined by forecasts published by analysts who consistently follow
the Group. The current consensus 52-week Trading PBT as at 16
January 2017, of which the Board is aware, is GBP79.5m (range:
GBP77.1m to GBP81.5m).
About N Brown Group:
An expert in fashion that fits and flatters, N Brown is one of
the UK's leading digital retailers. Its key retail brands are JD
Williams, Simply Be and Jacamo. It offers an extensive range of
products, predominantly clothing, footwear and homewares. N Brown
is all about democratising fashion and is size inclusive, focusing
on the needs of underserved customer groups - size 20+ and age
50+.
N Brown is headquartered in Manchester where it designs, sources
and creates its product offer, and employs over 2,600 people across
the UK.
For further information:
N Brown Group 0161 238 2202 / 1845
Angela Spindler, CEO
Craig Lovelace, CFO
Bethany Hocking, Director
of Investor Relations
MHP Communications 020 3128 8100
John Olsen nbrown@mhpc.com
Simon Hockridge
Gina Bell
This information is provided by RNS
The company news service from the London Stock Exchange
END
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