14th Jun 2018 09:55
LONDON (Alliance News) - Fashion chain N Brown Group PLC said Thursday it is considering closing all 20 of its physical stores to become a purely online retailer.
N Brown shares were trading 0.1% down at 197.42 pence each.
The clothing retailer said it has entered consultations with staff on the closure of its 20 stores, which it said are loss-making, as it plans to become a "global online retailer". Already 75% of total revenue is generated online, N Brown said.
For the 13-week period to June 2, N Brown stores generated revenue of GBP15 million, representing just 2% of the group's revenue, and made an earnings before interest, taxes, depreciation and amortisation loss of GBP3 million.
The retailer said that, if the decision to close the store is taken, it will incur exceptional costs of around GBP18 million to GBP22 million.
"In line with our online strategy, and given continued weak high street footfall, we have today commenced a consultation process with colleagues over the future of our small store estate. This action has not been taken lightly and we will do all we can to support the colleagues affected during this process," Chief Executive Officer Angela Spindler said.
In the 13-week period N Brown's group revenue increased 0.4%, with product revenue down 2.8% and financial services revenue up 9%. Online sales rose by 3%, however, and Power Brand online revenue by 9%.
If considered by category, the only product revenue registering an increase was Home & Gift, up 0.8%. Menswear and Ladieswear sales were down 3.2% and 4.2%, respectively.
International revenue was down 8.0%, 5.2% at constant currency, with US revenue falling by 16%.
The company, excluding the exceptional costs in the event of the stores' closure, reiterated its previous financial 2019 guidance. It also guided product gross margin to be flat to up 100 basis points, while financial services gross margin will be down 100 to 200 points.
N Brown will announce its half-year results on October 11.
N Brown is just the latest of a series of UK retailers announcing store closures.
Last week, House of Fraser PLC decided to close more than half of its department stores in Britain in a rescue plan for a business which it said is no longer viable in its present form.
On Monday, Poundworld entered into administration putting 5,100 jobs at risk.
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