N Brown shares up amid stronger Q2 trading

Shares of Manchester-based fashion retailer N Brown Group rose about 7% on Wednesday after it said in a trading update for the six months to August 29 that first-half revenue fell 17.6% — but all its womenswear and menswear brands performed better in the second quarter.

N Brown’s brands also include JD Williams, Jacamo, Simply Be, Ambrose Wilson and Home Essentials. 

About 92% of the group’s product revenue is now digital.

The group said it reduced its net debt by 17.3% during the half to £411.1 million. 

“Product revenue trajectory has continued to improve through the second quarter from the sudden and significant decline experienced in the first quarter as Covid-19 lockdown restrictions were introduced,” said N Brown.

“Apparel sales have continued to recover from mid-March levels and demand for Home & Gift, supported by the launch of our new Home Essentials brand on 1st April, continued to be well above the prior year.  

“All Womenswear and Menswear brands performed better in the second quarter, in particular JD Williams and Jacamo.

“As expected, lower product revenue, regulatory changes and a smaller debtor book resulted in lower financial services revenue …

“Financial services cash collection rates have continued to perform and remain in line with the prior year.  

“As a result of our on-going focus on cash generation, tight cost control, reduction in capital expenditure and suspension of the dividend, together with a smaller debtor book, the group has started its objective of reducing its level of indebtedness. 

“The group has reduced net debt by 17.3% in the half, to £411.1m. 

“As previously guided, we expect our year-end net debt to be in the range of £380m to £400m.

“As at 29th August 2020, drawings under the group’s borrowing facilities stood at £455.9m down from £544.6m at 29th February 2020.  

“Net cash generation in the period was £45.3m and as at 29th August 2020 cash balances stood at £44.8m and the overdraft facility was undrawn.”

N Brown Group CEO Steve Johnson said: “It is encouraging to see a continued improving trend in trading following the sharp decline witnessed upon the initial impact of Covid-19, with trading in-line with expectations. 

“Home & Gift sales in the first half of our financial year have been particularly strong and our fashion brands continue to recover, particularly JD Williams and Jacamo. 

“We have accelerated our digital transformation and 92% of our product revenue is now digital.

“Our financial services cash collection rates have remained stable and we continue to offer support and flexibility to those credit customers who require it. 

“We will continue to implement our refreshed strategy, and particularly mindful of an uncertain UK retail environment, we will continue to focus on cost control, deleveraging and cash generation.”

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