N Brown moves faster from mail order to multichannel business

N Brown Group today said it had upped the speed at which it was changing from a mail order to a multichannel model in order to ensure the business was ‘fit for the future’. But the cost of investment in a ‘year of transition’ meant that profits and sales were lower in the first half of its financial year. Full-year profits were likely to be reduced both as a result of the changes, and as shoppers held back from buying new clothes in a warmer autumn, N Brown warned.

This year the company has focused on building customer loyalty through approaches including improvements to the online customer experience, from reducing page download speeds to improving search and navigation and introducing personalisation. Seven-day delivery is now operating, with an 8pm last order time for next-day delivery set to move to 9pm next spring. The company is also to offer collection and returns from 5,500 parcel shops by Christmas. By the end of the first half, 58% sales took place online, and 3% through its new and expanding stores channel. The business also trades through mail and telephone ordering.

N Brown said the changes had been received well, with Institute of Customer Service research putting it in third place in the UK market behind Amazon and John Lewis.

It has also moved marketing spend further towards Christmas in order to recruit customers more efficiently, and invested in infrastructure, including upgrading IT systems and warehouse expansion, the latter underpinning multichannel delivery processes.

But reorganization and restructuring costs put at £5m are expected in the second-half of the year, denting profits that are now forecast at between £88m and £92m. On the upside, the company said the relaunch of its JD Williams business, featuring new brand ambassador Lorraine Kelly, meant that while sales were 3% down in the first half, customer numbers were up by 26% so far in the second half.

N Brown Group said its chain of Simply Be/Jacamo branded stores, which it launched out of the website and mail order businesses of the same name, had enjoyed a first-half 17% boost to revenue, although the stores lost £0.5m in the same period. By Christmas, the chain will have expanded to 14 stores.

Chief executive Angela Spindler said: “We have stepped up the pace of change in the business designed to unlock the potential value we see in a proposition built around fashion that fits. In modernizing the way we operate and the way we go to market we are focused on attracting more customers by raising brand awareness and broadening our appeal; building customer loyalty through further product and service improvements and creating a modern scalable infrastructure so that the business is fit for the future.”

The home shopping group today reported group revenue of £407.3m in the six months to August 30, down by 0.6% compared to the same time last year. Pre-tax profits of £45.2m were 6.6% down on last time, and the company warned its profits would not be as high as previously expected.