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N Brown cuts interim dividend

The fashion retailer has lost its chief executive and cut its dividend but is throwing its energy into building an online future
October 11, 2018

When N Brown (BWNG) released a consensus-beating set of annual results in April, some suggested that the worst might be over for the fashion retailer. We erred on the side of the caution and, judging by the share price drop on release of these half-year figures, we were right to do so.

IC TIP: Hold at 108p

The sudden departure of chief executive Angela Spindler in early September was a further indication that all was not well, and a 50 per cent cut to the half-year dividend hasn’t helped matters, either. It follows a 3.1 per cent contraction in product revenues during the first half, a whopping £65.4m of exceptional costs (including £22m in relation historic customer redress issues) and continued statutory losses. The group says it’s working to prioritise its online businesses, and the sales decline is largely the result of closing 20 stores. In the first half, online revenue grew by 3.8 per cent, with particular growth across the ‘Power Brands’ – Jacamo, Simply Be and JD Williams.

Adjusted pre-tax profit of £30.6m was slightly ahead of Shore Capital’s half-year forecast of £29.1m, but the broker has still nudged down FY2019 pre-tax profit forecasts to £81.2m for the year ending February 2019, giving EPS of 22.3p (from £81.6m and 23p FY2018).

N BROWN (BWNG)   
ORD PRICE:108pMARKET VALUE:£306m
TOUCH:107-108p12-MONTH HIGH:357pLOW: 102p
DIVIDEND YIELD:10.5%PE RATIO:39
NET ASSET VALUE:126p*NET DEBT:118%
Half-year to 1 SepTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
2017453-27.6-7.55.67
2018458-27.1-9.12.83
% change+1---50
Ex-div:13 Dec   
Payment:11 Jan   
*Includes intangible assets of £141m, or 50p a share