N Brown warns on full year profit
N Brown has warned that its pre-tax profit will be below its guidance and current market expectations of £88 million.
In a trading statement, the catalogue and stores retailer said its fourth quarter sales covering the 13 weeks to 28 February had grown by 3.6% as trading recovered from a “challenging” autumn season.
However, fourth quarter revenue was impacted by the continued rebalancing of the business towards product sales and away from financial services. Although the transition was planned and in line with strategy, the pace of adjustment was faster than anticipated during the quarter. This resulted in overall full year 14/15 revenue being at below expectations and flat year-on-year.
N Brown said its JD Williams, Simply Be and Jacamo brands were performing strongly, with active customer file growth of 5%.
Angela Spindler, N Brown chief executive, 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."
Following a review of the business and its future profit potential, N Brown has decided to close its small Gray & Osbourn catalogue business which is likely to result in exceptional costs of circa £11 million to £13 million in the full year 14/15. N Brown said the closure would not have any impact on profit expectations.
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