29th Apr 2015 07:38
LONDON (Alliance News) - N Brown Group PLC Wednesday reported a decline in profit in its recently ended financial year, as it struggles to compete with other high-street and online retailers.
The online, catalogue and stores retailer had issued a profit warning back in March after it further reduced prices in the fiscal fourth quarter to clear stock and compete in the fashion sector, saying it expected pretax profit to fall below the market expectations at that time of GBP88 million.
On Wednesday, it reported a 21% fall in pretax profit for the year ended February 28 to GBP76.3 million from GBP96.8 million the year before. Revenue fell only slightly though, to GBP818.0 million from GBP818.9 million.
It said a weak autumn trading period contributed to the lower-than-expected profit performance, but noted some encouragement in online sales, which grew to 62% of total revenue in the fourth quarter and 59% for the full year.
N Brown, which trades under multiple brands including House of Bath, SimblyBe, jacomo, and figleaves.com, is going through a revamp and is trying to become more retail-led and product focused. However, it's doing this amid fierce competition amongst high-street and online retailers. It moved to an 'all sizes one price' offer and also trialled a 'first price right price' programme.
N Brown said its guidance for the current financial year remains unchanged with gross margin expected to remain flat to 100 basis points lower as it continues its price investments, while operating costs are expected to rise by a mid-single-digit percentage. "Current trading is in line with our expectations," the company said.
Despite the decline in profit, N Brown shares were trading up 4.0% at 334.80 pence early Wednesday.
Both the group's final and total dividend for the year were held flat at 8.56 pence and 14.23p, respectively.
"The scale and pace of change required to modernise the business put a great deal of strain on our performance in a difficult year for the clothing sector. The fall in profits was nevertheless a disappointment. However, we laid important foundations for profit recovery and long-term growth. We have now bedded in many of these changes and this year will see us push on with executing our strategy," Chairman Andrew Higginson said in a statement.
By Karolina Kaminska; [email protected] @KarolinaAllNews
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