The fashion retailer posted group revenue of £457.8mln for the six months to September 1, up 1% on last year’s £453.4mln, as growth in its customer credit business offset a decline in product sales.
N Brown has moved most of its sales online as high street retailer struggle with tough competition and weaker consumer confidence. The company closed 20 stores in August.
Product revenue, excluding the stores that have closed, fell 3.1% to £304.5mln with offline revenue down 22.4% and online revenue up 3.8%.
Core brands continue to grow
The company said its so-called power brands – JD Williams, Simply Be and Jacamo – continued to outperform the rest of the group with revenue up 1.8%, excluding stores, online sales up 8.6%.
The financial services arm, which supplies credit for customers to make purchases, delivered a 12.7% rise in revenue to £146.4mln on the back of growth in the loan book. However, the gross margin fell 50 basis points to 56.0% as it made a provision against each credit customer to meet new IFRS9 rules.
Adjusted pre-tax profit fell 5% to £30.6mln as N Brown invested in improving its IT systems.
“The group's adjusted profit was in line with our expectations as we benefited from growth in our online power brands and Financial Services, along with improved marketing efficiency,” said chief executive Steve Johnson.
“ We were however disappointed with our wider product performance which was impacted by the ongoing decline of our legacy offline business and challenging market conditions.”
N Brown cuts dividend, sees lower offline sales weighing on revenue
The interim dividend reduced by 50% to 2.83p from 5.67p last year. N Brown said that since it has not yet achieved the growth in product or international from its restructuring that it had hoped for, it decided to rebase the dividend to a “more sustainable level”.
Johnson also warned that the group expects offline sales to continue to fall as it focuses on online sales and core brands.
“While this will hold back revenue in the short term, there are opportunities to drive profit particularly through improved efficiency, as the business further shifts online, and we accelerate the use of analytics to increase returns on our promotional spend."
In morning trading, shares fell 23% to 105.5p.