N Brown Group has warned that a sharp decline in offline sales had hit its revenues and that growth was likely to be stagnant in the short term.
During its first half the JD Williams and Simply Be owner reported a product revenue drop of 3.1 per cent, despite total revenues being up one per cent thanks to growth in its financial division.
It attributed the drop to continually poor sales in its physical retail estate, alongside a poor performance in international markets.
The news sent the group’s share prices plummeting 24 per cent to 105p per share in morning trading.
This comes at a difficult time for the retailer, which saw its chief executive Angela Spindler abruptly depart in September while announcing it was due to close all of its 20 stores and transition to a pureplay online retailer as a result of falling sales and footfall.
“Whereas much progress has been made transforming the business into an online retailer, we have not yet achieved the growth in product or international that we would have hoped for and have decided to rebase the dividend to a more sustainable level from which we will seek to grow,” chairman Matt Davies said.
“We are now in the process of searching for a new chief executive to take the group forward through the next phase of its development.”
GlobalData’s senior retail analyst Sofie Willmott commented: ‘‘While N Brown continues on its path of transformation, turning back into an online pureplay and closing all stores, it just scraped positive growth with group revenue rising £4.4m to £457.8m in H1 FY2018/19.
“However, it was the financial services division that drove incremental sales with product revenue falling £9.6m to £304.5m as secondary and traditional brands continued to be a drag.
“Exceptional costs incurred, including £22m to close all stores, have meant N Brown has reduced its interim dividend to half the level of last year, which unsurprisingly has not gone down well with investors, with share price slumping 25% in early trading.”