Modernising N Brown (BWNG) is proving tougher than expected. Underlying pre-tax profit at the plus-sized clothing retailer fell 13 per cent to £86.2m last year as the group cut prices, invested in product quality and changed its marketing strategy. Reported pre-tax profits, which included £12.6m of exceptional charges relating to restructuring and a VAT settlement with HMRC, plunged even further.
The warm autumn weather also hit clothing sales, particularly at JD Williams - the biggest division - where like-for-like sales fell 3 per cent. Sales at Simply Be and Jacamo rose 64 per cent to £13m, driven by a ferocious store opening programme, but divisional losses increased slightly to £1.8m, which was at least a better outcome than expected.
However, chairman Andrew Higginson said that the investments had laid "important foundations for profit recovery and long-term growth". For example, changing the pricing architecture at JD Williams caused a short-term headache, but after three months cash margins improved. A move towards cash purchases, away from credit, is appealing to more customers.
Broker Peel Hunt expects a recovery: pre-tax profit of £90.5m and EPS of 25p this year, up from £86.2m and EPS of 21p in full year 2015.
N BROWN (BWNG) | ||||
---|---|---|---|---|
ORD PRICE: | 336p | MARKET VALUE: | £1bn | |
TOUCH: | 336-337p | 12-MONTH HIGH: | 534p | LOW: 282p |
DIVIDEND YIELD: | 4.2% | PE RATIO: | 19 | |
NET ASSET VALUE: | 175p | NET DEBT: | 50% |
Year to 28 Feb | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
---|---|---|---|---|
2011 | 719 | 94.5 | 26.0 | 12.4 |
2012 | 753 | 96.9 | 29.3 | 13 |
2013 | 785 | 96.4 | 28.5 | 13.7 |
2014 | 819 | 96.8 | 27.1 | 14.23 |
2015 | 818 | 76.3 | 17.5 | 14.23 |
% change | - | -21 | -35 | - |
Ex-div: 2 Jul Payment: 31 Jul |