Angela Spindler has made a flying start in the three months since becoming chief executive of plus-size home shopping retailer, N Brown (BWNG). Indeed, like-for-like sales have risen 8 per cent - both during the first half, and in the five weeks since. Bad debt, however, is up, margins are weaker and there was little on strategy from the new boss - disappointing some in the City. For that they'll have to wait until early February, but finance boss Dean Moore has a simple explanation for the other issues.
"When you're aggressively recruiting customers you always get a spike in bad debt," says Mr Moore. He believes that N Brown can afford to write-off half its new customers, and their bad debt, given the other half will become loyal and highly profitable. Those customers generated a 7 per cent increase in half-year adjusted pre-tax profit to £45m, driven by Jacamo and Simply Be. Deliberately slowing US growth to improve service meant a 31 per cent increase in sales to £4.5m was a little short, although sales there have broken records since the period-end. Rising internet sales are bringing costs down, too, and less paper-based marketing saved £1.5m. It will be £3m in all this year.
Broker N+1 Singer expects full-year adjusted pre-tax profit of £102.5m, giving adjusted EPS of 29.6p (from £95.1m and 28.1p in 2013).
N BROWN (BWNG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 488p | MARKET VALUE: | £1.38bn | |
| TOUCH: | 487-489p | 12-MONTH HIGH: | 578p | Low: 264p |
| DIVIDEND YIELD: | 2.9% | PE RATIO: | 17 | |
| NET ASSET VALUE: | 161p* | NET DEBT: | 43% | |
| Half-year to 31 Aug | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 379 | 41.8 | 12.4 | 5.45 |
| 2013 | 410 | 44.1 | 12.3 | 5.67 |
| % change | +8 | +6 | -1 | +4 |
Ex-div: 4 Dec Payment: 3 Jan | ||||
