N Brown, the British plus-size apparel retailer, has issued a worrying second profit warning in just six months, following management’s decision last year to focus on three key brands.
While fourth quarter sales rose by almost 3%, the online and catalogue based retailer has cited a tough Autumn as the reason for a fall in profits and a 15% drop in shares this morning. The Manchester based retailer said it expects pre-tax profit to sit just below the current market consensus of £88m for the year ending March 2015.
Angela Spindler, Chief Executive for N Brown, which is made up of the brands Simple Be, Jacamo, JD Williams and Julipa, said:
“We are very encouraged by the momentum seen during Q4, both in terms of trading and strategic progress. Combined with our continued product improvements, during the period we decided to invest more in price; this proved successful, with product volumes returning to double-digit positive growth for the first time in many years.
We have also accelerated our strategic transformation programme and commenced a major extension of our warehouse to support our future growth. The transformation we are driving is fundamental and necessary for future long-term sustainable growth. Whilst we are disappointed by the slower than anticipated progress from a profit perspective, this is because we are taking the right decisions now - in some areas earlier than anticipated by our previous profit guidance - in order to build a better business for an online world. We enter our new financial year with huge enthusiasm about the exciting journey ahead.”
Lewis Sturdy, dealer at London Capital Group, comments:
“Its slowdown may raise questions about renewed competition from established clothing retailers as they move into more multi-channel offerings,” comments Lewis Sturdy, a dealer at London Capital Group. “N Brown’s shares have now nearly halved since peaking around 600p a year ago. Notably, ASOS, once the online clothing retail darling, has halved in value in the same 1 year covering N Brown’s decline” he concluded.