REG - Brown (N.) Group PLC - Trading Update

N BrownAnnouncement

20/01/2022 07:05

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RNS Number : 0179Z  Brown (N.) Group PLC  20 January 2022

 

20 January 2022

 

 

Q3 TRADING UPDATE FOR THE 18 WEEKS TO 1 JANUARY 2022

 

Strong peak performance in Clothing & Footwear with continued growth in
strategic brands

 

Highlights

·  5.5% growth in product revenue from strategic brands

·  Strong performance from Clothing & Footwear through peak trading;
Home & Gift lower year-on-year against tough lockdown comparatives

·  Returned to year-on-year growth in active customers

·  Financial Services revenue trajectory steadily improving

·  Appointment of Digital Chief Operating Officer

 

Continued growth in strategic brands
                             Q3 FY22   Change Q3 FY22 v Q3 FY21(1)  FY22 YTD  Change FY22 YTD v FY21 YTD(1)

 
 Product revenue             £181.2m   (3.5)%                       £403.4m   Flat
    Strategic brands(2)      £149.0m   +5.5%                        £329.5m   +10.6%
    Other brands(3)          £32.2m    (30.5)%                      £73.9m    (30.1)%
 Financial Services revenue  £86.4m    (3.0)%                       £211.0m   (4.6)%
 Group revenue               £267.6m   (3.3)%                       £614.4m   (1.7)%

 
Q3 FY22 is the 18 weeks to 1 January 2022; FY22 YTD is the 44 weeks to 1 January 2022.
1.        FY21 restated for the value added tax element on customer debt written off, previously reported within Revenue rather than being offset against Cost of Sales (refer to Prior Year Adjustment, note 32, in the FY21 Annual Report and Accounts). FY21 is also adjusted to reflect the actual returns performance by quarter, as reflected in the FY21 results.
2.        JD Williams, Simply Be, Ambrose Wilson, Jacamo and Home Essentials.
3.        Other brands are Fashion World, Marisota, Oxendales and Premier Man. High & Mighty and House of Bath were folded into Strategic brands in FY21. Figleaves was closed in March 2021 and is now sold on Simply Be.
 

Q3 product revenue reflects the continued growth in the five strategic brands
of +5.5% on Q3 FY21, offset by the managed decline of our legacy other brands,
which now represent less than 20% of product revenue. Excluding the impact of
the closure of the Figleaves website in March 2021, Q3 FY22 product revenue
was slightly ahead of the prior year and FY22 YTD was up c. 5%.

We entered the peak trading period well prepared, with good product
availability, and successfully managed the ongoing global supply chain
challenges.  Clothing & Footwear continued its resurgence into Q3, with
growth of +18%, including increased demand for dresses, formalwear and
outerwear, demonstrating the appeal of our strengthened product offer.  This
was offset by a reduction in Home & Gift of 19% where we annualised
against periods of high demand driven by lockdown in the prior year and saw a
softer online home market than previously expected.  Additionally, we have
seen a naturally higher returns rate as the product mix has moved back into
Clothing & Footwear, and particularly into higher returning segments such
as dresses.  Returns rates, however, are c. 3ppts lower than pre-pandemic
levels, inclusive of the benefit from the stronger product offer.

Total active customers have returned to year-on-year growth, reflecting both
improved customer retention rates and new customer acquisition.  Total active
customers ended the period at 2.91m (Q3 FY21: 2.87m), with Simply Be and
Jacamo at record levels.

The trajectory of Financial Services revenue steadily improved during the
period with a 3.0% year-on-year reduction in Q3 reflecting the smaller debtor
book at the start of the financial year.  Customer behaviour is gradually
returning to pre-Covid levels and we continue to see the benefits of offering
our customers a well-managed, flexible credit product.

 
Robust balance sheet positions us well for the future

At 1 January 2022 the Group had unsecured net cash of £33.5m.  The RCF of
£100.0m and overdraft of £12.5m are both fully undrawn.  The securitisation
facility was voluntarily underdrawn by £49.9m and can be redrawn if
required.   Using cash balances to offset the securitisation facility is
delivering greater balance sheet efficiency and interest savings, whilst the
facility remains available for drawing.

 

Digital Chief Operating Officer joins Executive management team

The Executive management team has been refreshed over the last two years as
the business continues its transformation, and in November we appointed Nuno
Miller to lead our technology teams.  Nuno is overseeing the ongoing digital
transformation across the Group including the development of new front-end
websites.  Nuno joined from the multinational fashion group, Sonae Fashion,
where he was the Chief Digital and Information Officer.

 
FY22 outlook and guidance

The Q3 strategic brands growth was in the context of a softer online home
market, resulting in FY22 YTD group revenue of -1.7%, slightly behind our
previous expectations for the full year of broadly flat.

For full year FY22 we expect to report Adjusted EBITDA(4) between £93m and
£96m, which is at the lower end of our previously guided range, reflecting
the online market conditions and a slightly higher level of project spend now
being expensed rather than capitalised.

Net interest costs continue to improve and are now expected to be c.£14m.
Depreciation and amortisation is expected to be favourable to that previously
guided at c.£39m.

We expect capex of c.£22m, lower than previous guidance, net of the project
spend now being expensed rather than capitalised.

At the end of FY22 we expect the Group to have a strong unsecured net cash
position with net debt anticipated to improve on previous guidance and be in
the range of £260m to £265m.

The Board remains confident in achieving the Group's medium-term objective of
delivering sustainable profitable growth.

4. Adjusted EBITDA is defined as operating profit, excluding exceptional
items, with depreciation and amortisation added back

 

Steve Johnson, Chief Executive, said:

"The business has performed resiliently over the peak period and our
colleagues have worked tirelessly to deliver for customers in challenging
circumstances.

Against the backdrop of Covid uncertainty, a volatile consumer environment and
well-documented supply chain issues, the continued growth of our strategic
brands has been particularly pleasing, as has a return to growth in active
customers. We are now seeing more people than ever shopping with Simply Be and
Jacamo. JD Williams is also resonating well with customers, particularly on
the back of our successful partnerships with Amanda Holden and Davina McCall.

We have continued to execute on our plan and, looking ahead, will continue our
strategic investment to transform the business, supported by a robust balance
sheet and a strengthened executive team."

 

Conference call

A conference call will be held at 8:30am today for analysts and investors.
To register for access, please contact MHP Communications on +44 (0) 20 3128
8193 or email Nbrown@mhpc.com (mailto:Nbrown@mhpc.com)

 

For further information:

 

 N Brown Group
 David Fletcher, Head of Investor Relations  +44 (0)7876 111242

 MHP Communications
 Simon Hockridge / Charles Hirst             +44 (0) 20 3128 8789

                                             NBrown@mhpc.com (mailto:NBrown@mhpc.com)

 

 Shore Capital - Nomad and Broker

 Dru Danford / Stephane Auton / Daniel Bush / John More   +44 (0) 20 7408 4090

 

 

About N Brown Group:

N Brown is a top 10 UK clothing & footwear digital retailer. Our retail
brands are JD Williams, Simply Be, Jacamo, Ambrose Wilson and Home Essentials
and our financial services proposition allows customers to spread the cost of
shopping with us. We are headquartered in Manchester where we design, source
and create our product offer and we employ over 1,800 people across the UK.

 

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