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N Brown braces for poor first half

Investors already know the first six months were not stellar for retailer N Brown.
October 1, 2014

A trading update on the first-half performance from oversize-clothes retailer N Brown (BWNG) disappointed investors last month. The sales decline in the second quarter was worse than expected, at 3.2 per cent, dragging down total first-half sales 0.6 per cent and like-for-like sales by 0.5 per cent.

IC TIP: Buy at 383p

The sales performance was hurt by a 24 per cent cut in marketing spending on catalogues, soft trading in August and poor demand in the home and electrical divisions, where sales dropped 9 per cent. But there are still some reasons to be optimistic ahead of the interim results announcement next week. The number of active customers rose nearly 4 per cent in the first six months, and like-for-like store sales jumped 17 per cent.

Analysts at Investec say full-year forecasts still “appear achievable”, especially as last year’s warm winter will provide soft comparatives in the second half. Customers are also said to be pleased with the new autumn and winter ranges. That said, investors would do well to heed recent warnings from retailers including Next (NXT) and Swedish fashion brand H&M, which have seen sales suffer as a result of this year’s unseasonably warm weather.