N Brown, the online, catalogue and stores group whose brands include Jacamo, High and Mighty and SimplyBe, has improved its performance since a poor September and early October.
Like other retailers it was hit by the unseasonably warm weather, leading to a weak start to its second half. But since September, when turnover fell 10.8%, its trading performance has improved. October saw a 1.5% rise, with November climbing 3%, helped by the Black Friday discount frenzy. Sales on that day rose 54%, and the company is expecting record online sales over Christmas.
So overall, third quarter sales were down 2.3%, with year to date sales 1.2% lower.
It has relaunched its JD Wiliams brand, opened new stores including in Oxford street in London, as part of its plan to move away from its traditional mail order business model. Chief executive Angela Spindler said:
We are continuing with our strategic plan to simplify and modernise the business. We have a clearly differentiated proposition and the longer range market projections for online growth and changing demographics are in our favour.
N Brown’s shares, which fell sharply after the poor performance in September, are up 23.9p or 7% to 351p, making it the biggest riser in the FTSE 250. In a buy note, analyst Kate Calvert at Investec said:
A volatile quarter for N Brown sees the business ending the period on a more normal footing, with an exit rate of +3% like for likes in November versus a reported number of -2.3% like for like. Management highlighted that the environment remains competitive and promotional, but full year guidance is unchanged. Looking into 2015, we view the investments and changes at N Brown as catalysts to drive the business forwards as it adds retail disciplines and improves infrastructure, enabling it to become a double-digit growth story.
N+1 Singer was more cautious, saying:
We stayed positive on N Brown after its recent profit warning which reflected one of the warmest/driest September/October periods on record. We continue to regard positively N Brown’s more ambitious approach to increase its appeal and reach, but for sentiment to recover we first need to see evidence the new marketing strategy is working (evolution rather than revolution) to both drive new recruitment and reactivate existing customers to drive the top line. If this is the case investors may once again consider the benefits of widening the size of the addressable market and growing EBIT margins in the future. In light of today’s news the shares will likely edge up but the fact remains that the hoped-for growth is proving elusive given trading conditions.
