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N Brown shares up, cash down

Adjusted figures beat expectations, but exceptional figures led to a statutory loss per share
May 7, 2019

N Brown’s (BWNG) commercial offering differs from many of its competitors in that it targets underserved segments of the retail market, such as plus-size apparel. Where it doesn’t differ is a growing – now, in its case, ‘absolute’ – reliance on online commerce. It accounted for 80 per cent of product sales at its March year-end, by which time a decision to close all 20 of its conventional retail outlets had been enacted.

IC TIP: Sell at 124p

The closures, along with other one-off items, such as a £45m charge for missold PPI to customers, fed into £146m of exceptional charges. Strip these out, however, and adjusted operating profit increased 8 per cent to £97.9m. The gross margin was broadly stable at 52.1 per cent.  

The overwhelming majority of the group’s debt is securitised against receivables as part of the financial services division’s customer loan book. Related credit risk is limited due to a large and diverse customer base, although an increased level of receivables meant that interest payments were up 12.7 per cent. Net debt increased by 35 per cent to £468m, of which core net debt amounts to £77.7m.

Broker Peel Hunt is forecasting adjusted pre-tax profit to rise to £84.1m in 2020, giving EPS of 23.2p (up from £83.6m and 21.2p in 2019).

N BROWN (BWNG)   
ORD PRICE:124pMARKET VALUE:£ 352m
TOUCH:123.6-124.3p12-MONTH HIGH:219pLOW: 82p
DIVIDEND YIELD:5.7%PE RATIO:NA
NET ASSET VALUE:110p*NET DEBT:150%
Year to 02 MarTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201583778.321.814.23
201686672.219.514.23
201790157.615.714.23
201892216.24.414.23
2019914-57.5-20.57.10
% change-1---50
Ex-div:04 Jul   
Payment:02 Aug   
*Includes intangible assets of £145m, or 51p a share