It was not the previous financial year's performance, but the outlook that caused investors to call time-out on fashion retailer N Brown (BWNG), sending its shares down 13 per cent in early trading. With sales for the February 2017 year-end expected to be "subdued" and gross margins forecast to decrease by 50 to 150 basis points, we can hardly blame investors for jumping ship.
However, to its credit, N Brown has delivered on its promise to perform better in the second half of the financial year just ended. Pre-tax profit was up 11 per cent year on year in the second six months, after stripping out exceptional items. Revenue was boosted by the group's three 'power brands', which have responded well to the transition to a more online-focused business model. The financial services division also returned to growth in the second half, with revenue up 2 per cent overall.
Sales at the traditional business segment, which contributes a fifth of the overall total through Ambrose Wilson, House of Bath, Premier Man and Julipa, were down 5.5 per cent. The division includes brands that target an older demographic, and management has identified the need to serve these customers better going forward.
Broker Peel Hunt has reduced its 2017 forecasts and now expects pre-tax profit of £81m and adjusted EPS of 23p, compared with £85m and 24p the prior year.
N BROWN (BWNG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 274.4p | MARKET VALUE: | £778m | |
| TOUCH: | 274.2-274.9p | 12-MONTH HIGH: | 400p | LOW: 265p |
| DIVIDEND YIELD: | 5.2% | PE RATIO: | 14 | |
| NET ASSET VALUE: | 168p | NET DEBT | 61% | |
| Year to 28 Feb | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 753 | 96.9 | 29.3 | 13.00 |
| 2013 | 785 | 96.4 | 28.5 | 13.70 |
| 2014 | 819 | 96.8 | 27.1 | 14.23 |
| 2015 (restated) | 837 | 78.3 | 21.8 | 14.23 |
| 2016 | 866 | 72.2 | 19.5 | 14.23 |
| % change | +3 | -8 | -11 | - |
*Includes intangible assets of £125m, or 44p a share Ex-div: 30 Jun Payment: 29 Jul | ||||
