N Brown Group plc (LON:BWNG) have seen their shares crash over 24% following the issuance of a profit warning.
Shares in N Brown trade at 107p (-24.59%). 16/1/20 11:10BST.
The firm issued a profit warning on Thursday morning which also saw a mixed performance within its retail operations and struggles in its financial services unit.
Within the 18 week period, Brown saw total revenue fall by 5% to January 4. Notably, womenswear saw positive growth of 1.1% year on year, as digital revenue also grew 6.7% following growth in its Simply Be brand.
The Simply Be Brand was one of the standout performers for Brown, as revenue climbed 12% from a year ago and online revenue surged 13%.
In the Womenswear sector, Brown holds brands such as JD Williams and Ambrose Williams.
In this department, both brands such year on year revenue growth of 0.4% and 7.9% respectively, however both brands saw overall revenue declines.
Notably, in the JD Williams brand segment total revenue slumped by 4% and Ambrose Wilson fell further by 9.6%.
Jacamo, one of the menswear brands that the firm holds saw a rise in digital revenue of 3.2%, which pushed overall revenue up by 2.5%.
Brown report mixed trading period
Steve Johnson, CEO, commented:
“This has been an encouraging period of peak trading for the business in a highly promotional market, as we delivered digital revenue growth across both Womenswear and Menswear with particularly strong digital growth from Simply Be and Ambrose Wilson as customers responded well to our ranges. Financial Services revenue was down, reflective of our strategic approach to the retail business and continued tightening of our lending criteria.”
“We are making good progress with our ongoing strategic review and look forward to providing further details at our full year results in April. Our work so far has highlighted the need to have a tighter brand portfolio, a sharper focus on product and a cost base appropriate for delivering sustainable digital growth. At the same time, we will continue to proactively address the accelerating and cumulative external factors which are anticipated to reduce the size of our Financial Services business over the next two years. These will significantly influence the way we will operate our Financial Services business and we are taking proactive measures to ensure that the change is managed appropriately. This is in line with our strategy of becoming a digitally focused, retail-led business.”
“Our expectations remain that the retail market will continue to be challenging and promotional, but we are focused on our clear strategy of delivering profitable digital growth.”
Change of fortunes for Brown
In October, the firm saw its shares bounces following the releasing of its half year results.
The Group, saw its profits surge on the back of a hike in online sales, which now comprise 84% of product revenue.
Despite a 5.4% contraction in Group revenue, the Company swung from a £23.8 million loss to a £14.7 million profit, in a year-on-year comparison of the six month period ended 31 August. Similarly, adjusted EBITDA rose 4.0% to £54.1 million and adjusted profit before tax grew 3.9% to £38.1 million.
The Womenswear market
When looking at the womenswear market, the stand out performer across 2019 was Boohoo (LON: BOO).
The firm lifted its annual guidance this week following strong revenue growth.
Also in the update, the firm said that it had appointed former JD Sports (LON:JD) chief financial officer as its new deputy chair.
Across the four month period, which ended on December 31, the firm said that its revenue had jumped 44% to £473.7 million from the £328.2 a year ago.
Boohoo said that it expects revenue growth for its financial year, which ends on February 29 to be between 40% and 42% ahead of their previous guided range of 33% to 38%.
The firm added that t expects adjusted earnings before interest, taxes, depreciation and amortisation margin to be 10% to 10.2%, beating its previous guidance of around 10%.
Koovs struggle
Another rival who work in the womenswear department is Koovs (LON:KOOV).
Koovs have seen a poor period of trading, and notably in December were placed into administration.
The India focused online fashion retailer said that it continued to negotiate with major shareholder Future Lifestyle Fashions Ltd (NSE:FLFL) for completing its £6.5 million investment.
“The board expects that the business and assets of Koovs will be purchased from the administrator by a company connected to the company’s largest secured creditor, Waheed Alli, ensuring the continuation of the operating business,” the company said.
“If a replacement nominated adviser is not appointed within one month, the admission of the company’s securities will be cancelled on AIM. The company has no current intention of appointing a replacement nominated adviser,” Koovs added.
The future of Koovs is still being dealt with relevant brokers and legal authorities, however it does not look so bright.
Shareholders of Brown will be worried about the update and the crash in share price.
However, Brown can take away some positives such as the performance of Jacamo within the update.
