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N Brown shares rally despite margin squeeze

Shares reacted positively to the retailer's first-quarter update, but issues with margins remain
June 21, 2017

Shares in N Brown (BWNG) rose more than 8 per cent in early trading yesterday after the fashion retailer reported that sales rose 10.2 per cent in its first quarter, outperforming the broader UK apparel market. This was due to a particularly good period for ladieswear and the Simply Be brand, where product revenue increased 20.5 per cent year on year. The group has continued to cement its presence online, which contributed 71 per cent of revenue, with traffic up 34 per cent.

IC TIP: Sell at 305p

The financial services division was subdued as expected, with revenue down 4.9 per cent, reflecting the impact of debt disposals as management sought to improve the quality of the loan book. But analysts at Shore capital expect the first quarter to be the worst for financial services and continue to expect 2 per cent growth over the year.

Five Simply Be and Jacamo dual-fascia stores, which accounted for the entire £2m operating loss of the group's store estate in its last set of full-year results, will be closed this year due to weak traffic in high-street stores and in anticipation of higher business rates.