// Overall quarterly sales down 1.6%
// Simply Be sales up 1.6% Jacamo up 5.5% but JD Williams sales down 3.3%.
// N Brown’s online growth and financial services arm helped offset weak offline performance
Growth in N Brown’s trio of “power brands” failed to boost the retail group’s overall sales over the key Christmas quarter, with its legacy offline business also contributing to the decline.
For the 18-week period ending January 5, the fashion retail group recorded a 1.6 decline in overall sales as weaker product sales in its bricks-and-mortar estate was offset by growth in online sales and the company’s financial services arm.
N Brown, which operates fashion retailers JD Williams, Simple Be and Jacamo, said product sales dropped six per cent as it continued to scale back marketing spend on its offline business while financial services revenue jumped 9.7 per cent thanks to increased interest charges.
While the company’s three retail chains outperformed the rest of the business with a 0.1 per cent uptick in product sales and a 6.4 per cent increase in online sales, it wasn’t enough to deliver positive growth for N Brown overall.
Simply Be and Jacamo saw product revenue rise 1.6 per cent and 5.5 per cent, respectively, but JD Williams product sales dropped 3.3 per cent.
Meanwhile, secondary brand sales fell 5.2 per cent while traditional brand sales slumped 22.9 per cent.
However, online sales of Simply Be, Jacamo and JD Williams increased by 5.9 per cent, 6.8 per cent and 4.2 per cent respectively.
N Brown added that online sales now accounted for 78.5 per cent of its product revenue, compared to 71 per cent the same period a year ago.
“We continue to manage the anticipated decline of our legacy offline business and remain focused on improving our customer proposition to drive profitable online growth,” chief executive Steve Johnson said.
“Trading over the Cyber and Christmas periods was relatively consistent and in line with our expectations, with the group benefiting from a more targeted and efficient approach to its promotional activity.”
For the 2019 financial year, N Brown continues to expect product gross margin to fall by up to 100 basis points amid an ongoing trend of aggressive promotions in the retail sector.
It also revised its expectations for operating costs to fall between two per cent and four per cent, compared to an earlier estimate of a one per cent to three per cent decline.
However, exceptional costs are now expected to rise above the previous guidance of £67 million due to an impairment on the company’s VAT debtor asset.
“Based on maintained margin guidance, continued strong financial services performance and improved operating efficiency, our full year expectations remain unchanged,” Johnson said.