Interim Management Statement

RNS Number : 8672J

Brown (N.) Group PLC

18 June 2014

 



18 June 2014

N Brown Group plc

Interim Management Statement for the 15 Weeks to 14 June 2014

Fashion that fits

N Brown Group, the online, catalogue and stores retailer, today announces a quarterly trading update for the 15 weeks to 14 June 2014. 

Highlights:

·      Total group revenues were up 2.6%, including like-for-like growth of 2.5%.  This is in line with our plan for the quarter.

o  Performance of Simply Be and Jacamo up 6% and 10% respectively.

o  Store like-for-like sales were strong at +20%.

o  The "Famous Five" Home categories were up 10% year on year.

o  Demand in the USA was up 15%.

·      Strategic transitional period

o  Reduced participation of non-core home and electrical ranges.

o  Re-phasing of marketing spend to an in-season model

o  Short-term impact on sales - the last six weeks of the quarter have significantly increased (high single digits).

·      Online penetration is at 58% - fuelled by further service improvements.

·      UK and Turkey-sourced Fast Fashion launched for Simply Be for the first time.

·      TV favourite Lorraine Kelly announced as brand ambassador for JD Williams.

·      Seven further Simply Be/Jacamo dual branded stores opening, creating a total of 240 jobs in Belfast, Birmingham, Cardiff, Edinburgh, Norwich and Exeter and our Oxford Street store,  which opens in September.

Angela Spindler, Chief Executive, commented:

"We are in a period of transition to move us toward our mission to be 'the leading Global retailer famous for making shopping for fashion easy and enjoyable regardless of size'.  We have stepped up the pace of change and we are making progress.  We are modernising the business, broadening our appeal and refocusing on our differentiated proposition - fashion that fits.  Best of all our customers are already noticing these improvements, as we can see from the performance through the quarter.  We have improved the quality of our sales and are on track with our plans for the year as a whole".

TRADING UPDATE

Total group revenues in the period were up 2.6%, including like-for-like growth of 2.5%.  This is in line with our plan for the quarter.  As a result of re-phasing our marketing investment year-on-year our performance strengthened considerably through the quarter.

Growth over the period was supported by the performance of our younger titles, Simply Be and Jacamo which were up 6% and 10% respectively.  Online penetration remains strong at 58%, fuelled by further service improvements, including the recent introduction of Sunday deliveries.  Our stores continue to trade well, up 20% on a like-for-like basis and have now annualised on the introduction of Jacamo to the footprint.

We are in the process of contemporising our proposition to broaden our appeal and accelerate our growth potential. This means changing the way we go to market. In the quarter these changes have impacted in 5 key areas:

Stronger Product Mix

The planned shift from high ticket electrical items and ranges which attract disproportionate levels of bad debt and fraud is already improving the quality of our sales. These changes reduced revenue in the quarter in line with previous guidance of a full year impact of £13m and our gross margin and bad debt ratios have improved as predicted.  Our strategy is to recover these sales over time via our "Famous Five" Home and Gift categories (Bedding, Home Decor, Family Gifts, Outdoor Living and Homewares) and it is pleasing to report that these areas were up 10% in the quarter.  We will start to annualise on the changes from October 2014.

Adjusting the Marketing Programme

During the quarter we have re-phased our marketing spend to enable a shift to "in-season" versus "pre-season" investment as we accelerate our migration to multi-channel processes.  As a result marketing spend during the period has changed year-on-year.   This has impacted the shape of our sales growth in this transitional year with broadly flat sales across March and April and a higher growth rate for May and June.

Whilst we have reduced spending on Direct Mail in the quarter, we have continued our investment in digital recruitment.  As a result, growth in the customer base is healthy - up 3.5% year-on-year.

 Modernising JD Williams

Our plans for the changes to the JD Williams offer are well underway.  We are moving to a more contemporary model, in terms of product and presentation and at the same time adjusting our marketing to broaden our appeal.  We are re-launching mid-life ladies fashion under the JD Williams brand for the Autumn Winter season and are in development on new advertising campaigns, starring our brand ambassador, Lorraine Kelly.  In addition to the adjustment to the seasonal phasing of our marketing spend we have also re-phased an element of our JD Williams marketing to the second half to secure strong support for the re-launch.  Whilst this has impacted first quarter revenue growth, with JD Williams brand sales down 1% in the quarter, the exit rate from the period was positive.  

Customers Responding Positively to Cash Payment Option 

Our other key strategic initiative in the quarter was the successful introduction of the cash payment option. This has performed in line with our expectations and has stabilised with 30% of new customers opting to pay by cash.  Whilst this has not, as yet, materially influenced the overall rate of recruitment, we do expect to see the step-up in recruitment as we adjust our marketing approach during the second half.

Driving International Expansion

A dedicated International team is now in place to drive our Simply Be business in the USA.  In the last month we have launched various on-line marketing initiatives and by the end of June will have launched a credit offer and loyalty scheme to drive customer order values and retention levels.  Demand in the quarter was up 15% with accelerated momentum coming from the new activities.

Overall, we are pleased with our performance in the quarter.  Our strategic initiatives have been implemented well and are performing in line with our expectations, improving the quality of sales and benefiting underlying margin and bad debt ratios as predicted.  We are on track to deliver on our plans for the year as a whole.

Financial Position

There have been no material events, transactions or changes in the financial position of the Group in the quarter, other than as outlined in this statement.

For further information please contact:

N Brown Group plc
Angela Spindler, Chief Executive	On the day:  0207 680 6550
Dean Moore, Finance Director	Thereafter:   0161 238 2202
Website : www.nbrown.co.uk
Newgate Communications
Fergus Wylie / Clotilde Gros / Madeleine Palmstierna Email: [e-mail]	0207 680 6550

 

END

 

 

IMSGGUMWQUPCGMM