A sell-off on results day was most likely an exercise in profit-taking following the recent, not to mention remarkable, recovery in N Brown's (BWNG) shares. Even chief executive Angela Spindler admits the stock “has had good momentum”. In her view, it’s because the “conversation has moved on”, as N Brown shifts from a traditional catalogue business to operating “much more like a mobile business”, a concept that extends from how it buys stock to the way it evaluates future growth opportunities.
In the first half, online revenue rose by a solid 14 per cent, with around 76 per cent of all digital traffic coming via mobile devices. This helped product revenue to grow by 7.5 per cent overall, although a 190 basis point contraction in gross margins, itself a previously anticipated result of negative foreign exchange rates, did hinder profit growth. As for the financial services division, revenue only nudged up 1.1 per cent, but a substantial improvement in margins – the result of better quality in the customer loan book – meant gross profit grew 3.9 per cent to £73.5m.
Analysts at Peel Hunt expect pre-tax profit of £77.6m for the year ending February 2018, giving EPS of 22p, compared with £80.6m and 22p in 2017.
| N BROWN (BWNG) | ||||
| ORD PRICE: | 339p | MARKET VALUE: | £960m | |
| TOUCH: | 338-339p | 12-MONTH HIGH: | 361p | LOW: 179p |
| DIVIDEND YIELD: | 4.2% | PE RATIO: | 153 | |
| NET ASSET VALUE: | 153p* | NET DEBT: | 71% | |
| Half-year to 2 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) | |||||
| 2016^ | 429 | 21.1 | 6.0 | 5.67 | |||||
| 2017 | 453 | -27.6 | -7.5 | 5.67 | |||||
| % change | +6 | - | - | - | |||||
| Ex-div: | 12 Dec | ||||||||
| Payment: | 12 Jan | ||||||||
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