Fashion retailer N Brown Group PLC (LON:BWNG) enjoyed a record-breaking Christmas but deteriorating margins mean its full-year profit expectations remain unchanged.
Group revenue in the 18 weeks to 6 January 2018 was up 3.2% year-on-year. Revenue from selling products was up 2.7%, down from growth of 7.5% in the preceding 26-week period, while revenue from financial services was 4.6% higher than the year before.
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The group now expects gross margins to decline by 2.25 to 2.5 percentage points over the full year, compared to previous guidance of a decline of 0.7 to 1.2 percentage points, primarily due to higher promotional activity.
On the plus side, gross margin guidance for financial services is for an improvement of 5 to 5.5 percentage points, up from 1 to 2 percentage points previously, as a result of a further improvement in the customer loan book.
"Simply Be was our standout brand, up 14.5%. We saw strong progress across our key strategic indicators, with online revenue up 9%, Power Brand revenue up 7.3% and the USA up 22%,” declared Angela Spindler, the chief executive officer of N Brown.
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“The fashion market remains competitive and we invested in promotional activity across our brands and product categories, which successfully delivered market share gains.
“Financial Services continues to perform strongly, driven by the ongoing improvement in the quality of our loan book, which adds resiliency to our group in more challenging macro-economic conditions,” she added.
The shares were the second-worst performers in London in early deals, down 7.6% at 257.6p.