Despite tough consumer conditions, online and catalogue retailer N Brown (BWNG) reported half-year like-for-like sales growth of 3.7 per cent. Momentum has increased markedly since the half year-end, too, with underlying sales surging 9.4 per cent in the past six weeks. Yet the company's share price rating still fails to reflect that growth profile.
True, profitability has been under some pressure and gross margins fell 1.6 percentage points to 53.3 per cent. Around 90 basis points of that slippage reflected discounting as N Brown focused on growing customers numbers. Another 70 basis points of the margin reduction came from the impact of rising bad debts - a consequence of grabbing more customers. Still, new customer sales rose 20 per cent and sales from more profitable younger customers grew 12 per cent to £143m.
Progress is being made overseas, too. The US business grew sales 53 per cent to £3.4m and management expects the international unit's full-year loss to narrow from £4.8m last year to £3.5m, even after factoring in a high returns rate at the German business which dampened sales there.
UBS expects full-year pre-tax profit of £98m and adjusted EPS of 26.9p (from £96.9m and 28.8p in 2012).
N BROWN (BWNG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 290.5p | MARKET VALUE: | £823m | |
| TOUCH: | 290.3-290.8p | 12-MONTH HIGH: | 291p | LOW: 221p |
| DIVIDEND YIELD: | 4.5% | PE RATIO: | 10 | |
| NET ASSET VALUE: | 147p | NET DEBT: | 45% | |
| Half-year to 1 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 364 | 44.8 | 12.3 | 5.29 |
| 2012 | 379 | 41.8 | 12.4 | 5.45 |
| % change | +4 | -7 | +1 | +3 |
Ex-div: 5 Dec Payment: 4 Jan | ||||
