Shares of Manchester-based fashion retailer N Brown Group fell 8% on Thursday after it announced a trading update for the 18 weeks to January 5, 2019, amid its transformation into a digital retailer in “challenging market conditions.”
N Brown’s brands include JD Williams, Simply Be and Jacamo.
Group revenue fell 1.6% and product revenue fell 6% in the third quarter.
“Our transformation into a digital retailer continues, with total online Power Brand revenues increasing by 6.4% during the period,” said N Brown.
“The group’s digital sales now account for 78.5% of product revenue compared to 71.0% for the same period last year.
“Encouragingly, despite the highly promotional retail environment experienced during the period, the group is maintaining its product gross margin guidance at between 0 and -100bps for the full year.
“As anticipated total Q3 product sales (exc. stores) declined by 6.0% as the group continued to scale back its expenditure on offline marketing and recruitment, consistent with its stated strategy of focusing on online growth and improving its marketing efficiency.
“This mainly impacted revenues in its traditional and secondary segments, which were down 22.9% and 5.2% respectively.
“While power brand revenues were flat, within this Simply Be and Jacamo continued to grow despite the challenging market conditions, with product revenues up 1.6% and 5.5% respectively, and by 5.9% and 6.8% for online only.
“Simply Be’s performance reflects the strong prior year comparator and a more targeted approach to discounting by the group during the period.
“Although JD Williams declined 3.3%, having been impacted by the headwind from the migration of Fifty Plus, excluding Fifty Plus it was up 4.2%.
“For online sales only, JD Williams was ahead by 6.9%.
“The group is currently re-evaluating its proposition for JD Williams and will provide further details at its full year results later in the year.”
N Brown Group CEO Steve Johnson said: “The group delivered robust online Power Brand growth and a stable margin performance in what was a challenging and highly promotional peak trading period.
“We continue to manage the anticipated decline of our legacy offline business and remain focused on improving our customer proposition to drive profitable online growth.
“Trading over the Cyber and Christmas periods was relatively consistent and in line with our expectations, with the group benefiting from a more targeted and efficient approach to its promotional activity.
“Based on maintained margin guidance, continued strong financial services performance and improved operating efficiency, our full year expectations remain unchanged.”