These results from N Brown (BWNG) might not read well, but they actually beat market expectations. Adjusted pre-tax profit of £80.6m was down close to 9 per cent year on year - the result of a 150 basis point squeeze in product gross margins - and that was actually ahead of consensus expectations of £77m. Even better, the group reported good top-line growth, driven by recent promotions and markdowns in ladieswear, which has resulted in an 80 basis point rise in market share to 4.2 per cent.
The group also revealed a new partnership with supermarket chain Tesco (TSCO). N Brown will sell selected items from its SimplyBe and Jacamo clothing ranges via Tesco Direct, and is also planning a wholesale trial in some of Tesco's eastern European stores.
But poor profit growth at N Brown also includes a £22.9m exceptional cost relating to its financial services division and historic customer redress. That was higher than an initial provision worth £12m, increased after the deadline for complaints was extended by a year to August 2019.
Analysts at Peel Hunt still expect pre-tax profit to fall to £73.5m for the year ending March 2018, giving EPS of 20.8p, compared with £80.6m and 22.2p in FY2017.
| N BROWN (BWNG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 239p | MARKET VALUE: | £677m | |
| TOUCH: | 238-239p | 12-MONTH HIGH: | 273p | LOW: 160p |
| DIVIDEND YIELD: | 6% | PE RATIO: | 15 | |
| NET ASSET VALUE: | 169p* | NET DEBT: | 61% | |
| Year to 4 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2013 | 785 | 96.4 | 28.5 | 13.70 |
| 2014 | 819 | 96.8 | 27.1 | 14.23 |
| 2015 | 837 | 78.3 | 21.8 | 14.23 |
| 2016 | 866 | 72.2 | 19.5 | 14.23 |
| 2017** | 901 | 57.6 | 15.7 | 14.23 |
| % change | +4 | -20 | -19 | - |
Ex-div: 6 Jul Payment: 4 Aug *Includes intangible assets of £142m, or 50p a share **53-week period | ||||
