REG - Brown (N.) Group PLC - Trading Statement <Origin Href="QuoteRef">BWNG.L</Origin>

N BrownAnnouncement

20/06/2017 07:05

RNS Number : 4994I
Brown (N.) Group PLC
20 June 2017
20 June 2017
N BROWN GROUP PLC
Q1 TRADING STATEMENT FOR THE 13 WEEKS TO 3 JUNE 2017
CONTINUED MOMENTUM ACROSS THE BUSINESS
N Brown Group Plc, the online, specialist fit, fashion retailer, today announces the following trading update covering the 13 week period to 3 June 2017. 
Q1 highlights: 
 Group revenue +5.6%
 Product revenue +10.2%, driven by strong Ladieswear performance
 Financial Services revenue -4.9%, as expected
 Online revenue +16%, with 71% of revenue now generated online, up 4ppts year-on-year
 Total active customers (12 month rolling basis) up 4%, with Power Brand active customers up 5%
 Up to five loss-making Simply Be and Jacamo dual-fascia store closures announced
 Full year guidance unchanged aside from exceptional costs relating to these store closures
Revenue yoy growth
FY17
FY18
Q1 (13wks)
Q2
(13wks)
Q3 (18wks)
Q4 (8wks)
FY (52wks)
Q1
(13wks)
Product 
-1.6%
+2.7%
+5.9%
+6.9%
+3.4%
+10.2%
Financial Services 
+3.4%
+0.7%
-0.5%
-2.3%
+0.4%
-4.9%
Group
-0.2%
+2.1%
+4.1%
+3.6%
+2.5%
+5.6%
Angela Spindler, CEO, commented:
"We are pleased to report a good Q1 performance, with continued momentum across all of our brands and categories. Ladieswear and Simply Be in particular had a very strong period, with good responses to our Spring/Summer campaigns, leading to further market share gains.
"As a result of ongoing weak footfall in some locations, and with a clear focus on driving financial returns across all areas of our business, we will be closing up to five loss-making stores.
"Although the outlook for consumer confidence remains uncertain, our offering is resonating with customers. At this early stage in the financial year, trading is on track to meet our expectations. We continue to invest in our customer proposition and remain very confident in our future growth prospects."
Q1 performance
Our online metrics continue to be encouraging, with overall traffic up 34% year-on-year. 71% of revenue is now generated online, up 4ppts year-on-year. For new customers, online penetration was 78%, up 2ppts year-on-year. Smartphones accounted for 51% of all sessions, up from 42% last year, with mobile devices as a whole accounting for 74%, up 5ppts. Our conversion rate was slightly down overall due to the continued increase in share of traffic from smartphones, as expected.
During the period average selling price, average units per basket and purchase frequency all increased year-on-year.
Product 
Product revenue by brand
% change yoy
JD Williams brand 
+12.7%
Fifty Plus title
+1.3%
JD Williams (inc. Fifty Plus)
+9.3%
Simply Be
+20.5%
Jacamo
+5.5%
Power Brands (exc. Fifty Plus)
+14.0%
Power Brands (inc. Fifty Plus)
+12.2%
Secondary Brands
+5.4%
Traditional Segment
+10.7%
Product Revenue
+10.2%
Our new Spring/Summer campaigns, particularly JD Williams' "Spring into Summer" and Simply Be's "We Are Curves", were well-received by customers, driving strong performances during the period. The migration of our Fifty Plus title into JD Williams remains on track for completion by the end of this season. 
In Jacamo, we continue to achieve double-digit growth in active customers, which is being partially offset by the reduction in sales of some larger ticket electrical goods, in line with the trend reported during the second half of FY17. 
The 10.7% growth in our Traditional segment reflects the improvements made to product and marketing during the past two seasons, resulting in market share gains. 
Product revenue by category
% change yoy
Ladieswear
+13.5%
Menswear
+6.3%
Footwear & Accessories
+13.4%
Home & Gift
+5.8%
International
International revenue was up 10%, and down 2% in constant currency terms. 
Revenue from Ireland was up 17%, and 9% in constant currency terms, driven by the strong Ladieswear performance. 
Revenue from the USA was up 4%, and down 9% on a constant currency basis. Following the delivery of our new technology platform, a step up in marketing investment is planned in Q2 to drive new customer recruitment going forwards. 
Stores 
We will be closing up to five Simply Be and Jacamo dual-fascia stores. This decision takes into account weak high-street footfall, both current and predicted, together with significant future business rate increases for some stores. Together, these five stores contributed 5.0m revenue but accounted for the entire 2.0m operating loss of our store estate in FY17. 
The process will be completed by the end of August and we anticipate an exceptional cost in relation to these of 10m to 14m, of which approximately 70% will be cash. 
We continue to improve the performance of the remaining 10 Simply Be and Jacamo dual-fascia stores.
During Q1, revenues from our store estate were slightly up year on year, with our Simply Be and Jacamo dual-fascia stores recording mid single-digit growth, and High & Mighty revenue down, as expected. 
Financial Services
Revenue from our Financial Services business was down 4.9% year on year, in line with our expectations. This was impacted by the lower interest revenue booked on payment arrangement debt, due to the sale of some of this debt at the end of FY17, as previously disclosed. Within the revenue performance, interest lines were down low single-digits, as a result of this debt sale, whilst non-interest lines were down high teens percentage as a result of the better quality loan book which reduced admin fees. 
Both the revenue performance and the gross contribution from Financial Services were in line with our plans.
Fit 4 the Future
We continue to make good progress upgrading our core web platform and Financial Services systems. The new High and Mighty site will go live shortly. We remain on track to have all brands replatformed by the end of Summer 2018, as previously disclosed. 
FY18 Guidance
Aside from the exceptional cost guidance, as discussed above, all other FY18 guidance is unchanged. Please note that all P&L guidance is based on comparison to the 52 week FY17 figure. 
 Product gross margin -120bps to -20bps. The decline in gross margin will be first half weighted due to the timing of FX impacts
 Financial Services gross margin flat to +100bps
 Group operating costs up 3.5% to 5.5% (excluding Depreciation & Amortisation)
 Depreciation & Amortisation 29m to 30m. We are expecting a charge of 12m to 13m in the first half
 Net interest 8m to 9m 
 Tax rate c.20% 
 Capex of c.40m 
 Net debt 300m to 320m 
 Exceptional costs of 13m to 17m, with the majority linked to store closures and c.3m as a result of our ongoing tax disputes with HMRC
Reporting calendar
We will be announcing our first half results on 12th October 2017. 
For further information:
N Brown Group 
On the day 07887 536153
Angela Spindler, CEO 
Craig Lovelace, CFO 
Bethany Hocking, Director of Investor Relations and Corporate Communications
Thereafter 0161 238 1845
MHP Communications
John Olsen / Simon Hockridge / Gina Bell 
0203 128 8100
NBrown@mhpc.com 

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