Despite seeing digital sales rise, fashion retailer N Brown Group’s profits for the year to the end of February have fallen by 29% as it wrestles with digital transformation.
The group, which owns Simply Be, Jacamo – both Top100 retailers in RXUK Top500 research – Ambrose Wilson and JD Williams, saw revenue fall 6.1% to £858.2 million. However, digital sales are picking up. In the year to 29 February 2020, 85% of its product revenue was generated through digital channels, up 6% on the previous year.
Across its brands, 98% of Simply Be revenues were digital, 97% of Jacamo’s, 81% at JD Williams and 60% at Ambrose Wilson.
“In a year of restructuring for the Group, Simply Be, JD Williams, Jacamo and Ambrose Wilson all grew digital revenue and following further progress in the first quarter of this financial year, 91% of our product revenue three now comes from digital channels,” says chief executive Steve Johnson.
He adds: “Over the last two financial years the Group has undertaken a significant restructuring programme which has created the right platform for sustainable growth. Digital penetration has significantly increased, international markets have been exited and the store estate has been closed. As we enter the new financial year, N Brown is now a top 10 UK clothing & footwear digital retailer, supporting underserved mature and size inclusive markets. Digital capabilities have been enhanced, the executive and senior leadership team has been refreshed, with a clearer strategic focus and the cost base is now more appropriate for a digital retailer, with further cost saving opportunities identified.”
However, Johnson sounded a note of caution around the year ahead. “The retail environment remains heavily promotional and the regulatory challenges in financial services have required us to adapt and evolve our offer, but our commitment to driving operating efficiencies is creating the right platform for the future.”
In fact, as a result of the impact of the lockdown the group has scrapped its dividend for the 2021 financial year, after seeing a dramatic drop in sales in March. Group revenue fell 22% in the first quarter of the new financial year, with sales down nearly 30%. However, this has been cut to a drop of 21% month-on-month for the last three weeks of this current quarter.
Looking further ahead, however, the group believes that trading will continue to improve as the lockdown measures ease. The company also has high hopes that it will also start to reap the rewards of its digital transformation strategy, tapping into the switch to online among many consumers.
“We will invest to support our strategic priorities, improving our digital capabilities and ultimately improving the customer experience,” says Johnson. “Through FY20, we substantially changed how we delivered technology projects, moving away from largescale, waterfall delivery to a more agile methodology focused on driving frequent, incremental value gains. Working under this methodology has already delivered a new Home Essentials trading website, Android and iOS apps for JD Williams, Simply Be, Jacamo, Ambrose Wilson and Home Essentials and Artificial Intelligence enabled search.”
He continues: “For the next two financial years we will focus on progressing N Brown with a ‘digital first’ mentality. Our investment will be focused on new front-end websites, providing significant benefit to the customer experience, and improving site speed to drive performance of organic search. In addition, we will invest in a new Financial Services platform to support new credit products.”