9th Oct 2014 07:50
LONDON (Alliance News) - Shares in British home shopping retailer N Brown Group PLC dropped 10% Thursday after it reduced its full-year profit guidance, saying that trading in the second half so far has been hit by weaker September sales, following on from a drop in both revenue and profit for the first half of the year.
The company's shares were the worst-performing stock on the FTSE 250 Thursday morning, after issuing its profit warning, down 11% at 311.50 pence.
The owner of brands including JD Williams, Figleaves online lingerie store and the plus-size Simply Be brand, has been investing in revitalising and expanding its businesses. However, it said that a lower first-half profit due to its planned later phasing of products and marketing activities, will not flow through into a better second half as previously expected.
"The benefits of re-phasing will not flow through as expected during the second half as a result of the very difficult market conditions across the clothing sector in recent weeks," said Chairman Andrew Higginson in a statement.
N Brown said it now expects its full-year pretax profit to be in the range of GBP88 million to GBP92 million, before booking GBP5 million in restructuring costs in the second half.
Last year, the group reported a pretax profit of GBP100.1 million.
N Brown on Thursday posted pretax profit of GBP42.7 million for the 26 weeks to August 30, lower than the GBP44.1 million profit it recorded in the first half of last year.
First-half revenue fell to GBP407.3 million from 409.6 million the prior year, hit by a fall in sales at JD Williams, its main business.
N Brown left its interim dividend unchanged at 5.67 pence per share.
"Despite the negative effects of recent market conditions on performance, I am confident that we are taking the right actions and are making good progress," said Chief Executive Angela Spindler in the statement.
Last month, the Manchester-based company said planned phasing adjustments to Simply Be and its JD Williams fashion ranges held back sales in the first-half. It also reduced marketing investment in catalogues by 24% during the period, and shifted spend into new customer recruitment activities, albeit weighted more towards the second half, it said.
"The re-launch of the JD Williams business, whilst difficult to interpret during a period of period of warm, dry early Autumn weather, is showing encouraging signs," the company said Thursday.
N Brown is investing heavily in revitalising its online brands to pull in new customers, pushing some of the brands overseas, and is also expanding a portfolio of UK shops to complement its online offering. This is helping to increase its active customer base, which was up 3.7% in the first-half.
"In re-setting expectations for the full year, the board believes it is taking full account of these pressures on performance and also giving the management team the time and space it needs to push on with the necessary programme of modernisation which is equipping the business to access faster growth in the future," said Higginson.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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