The company – which owns specialist brands Simply Be, Jacamo and High and Mighty – has had a year closer to ASOS (LON:ASOS) and Boohoo (LON:BOOH) than its high street clothing rivals. And while N Brown’s rise has to be put in context of the last few years, where it fell from a £6 peak in early 2014 to a sub-£1.70 low in mid-2016, it’s still grown 63% since 2017 began. That leaves N Brown Group at a current trading price, and 19-ish month high, of £3.57.
Back in January N Brown kicked things off with a bang, posting a 4.1% rise in Q3 group revenue thanks to a 12% surge in online sales – which now account for 70% of the firm’s total revenue – around the Christmas period .
The company’s annual figures in April were less promising. While total sales rose 4% to £900.7 million, pre-tax profit plunged 20% to £57.6 million as the firm set aside £25.2 million to cover PPI compensation claims. Even with that one-off cost stripped out, pre-tax profits still fell 7.4% to £82.8 million.
However, investors weren’t interested in this drop, as N Brown wisely sweetened the update with news of a tie-up with Tesco (LON:TSCO). The company will now sell its plus-sized ranges on the supermarket’s website, a move that further enhances N Brown’s online presence (the division’s sales rose 10% year-on-year).
June’s first quarter statement continued this shift online. CEO Angela Spindler said that N Brown intended to close ‘up to’ 5 Simply Be and Jacamo dual-branded high street stores, at a cost of between £10 million to £14 million. As for product sales, they were up 10.2% in Q1, a remarkable turnaround from the 1.6% decline seen the year previous; revenues for providing credit to customers dropped 5%, leaving the company with a 6% rise in total sales.
While investors were mighty impressed with that June update, almost a month later those gains were undone by the news that it would have to set aside another £40 million after it found issues with a credit insurance product sold to customers between 2006 and 2014. Yet investors quickly got over this shock, with N Brown witnessing a near interrupted rise from mid-July onwards.
In terms of next week’s interim report, investors will want to see N Brown maintain the same kind of online growth as it has seen for the last few quarters. They’ll also be interested to see what state the company’s pre-tax profit is in once the various financial services hits are stripped out.
N Brown Group PLC (LON:BWNG) has a consensus rating of ‘Hold’ with an average target price of £2.72.
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