N Brown keeps pace but takes margin hit from discounting

N Brown has reported improved sales, boosted by ‘development projects’ such as Figleaves.com and High & Mighty. The retailer, which owns catalogue and web brands such as Simply Be and Jacomo, posted turnover up 5.1% in the 18 weeks to July 2. Like-for-likes advanced 1.6% over the period, which N Brown said was “slightly ahead” of that reported at the time of its preliminary results in May.

But the home shopping group says it has sacrificed some margin through discounting – needed in the current climate to prompt spending. “As we anticipated, and in line with the sector, we are having to be more aggressive with targeted promotional discounts to help drive revenue and this has led to a 0.2% decline in the rate of gross margin,” said N Brown chairman Lord Alliance.

He said Figleaves and High & Mighty are both delivering improved financial results, and international sales for Simply Be in Germany and the USA have risen in line with expectations. “We have secured two retail sites in North West England to trial the multi-channel home shopping retail concept, utilising the latest technology, which we expect to open by early October 2011,” said Lord Alliance.

The group’s core strategy is to target niche customers and products, increasingly through online marketing activities. Online sales now account for 47% of the total, up from 41% last year. “The provision of credit facilities to our customers is undoubtedly a benefit in these tough economic conditions, and default rates are in line with our expectations,” said Lord Alliance. “This combination, together with our development program, the flexibility of our business model, and the continuing strong financial position of the group gives the board confidence in the future outlook for the group.”