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N Brown unveils Tesco tie-up as profits fall

N Brown Group’s adjusted profit before tax fell 8.7% to £80.6m in the year to 4 March as it invested in improving its offer to drive future growth.

It was also hit by exceptional costs of £25.2m related to its miscalculation of compensation owed to customers following complaints about its financial services, as reported in April.

The results were adjusted to reflect the different reporting periods – there were 53 weeks in its 2017 financial year, compared to 52 in 2016.

Group revenue was up 2.5% to £887.7m, with product revenue up 3.4% and financial services revenue up 0.4%. Online revenue was up 10% year on year, with 71% of all traffic coming from mobile devices.

Its store estate made a £2m operating loss, and the group said it does not plan to open any new stores in the future.

Product gross margin was 54.7%, down 150 basis points on last year, due to the promotional stance it took in the first half and the continued headwind from the weakness of sterling. 

Womenswear revenue was up 4.2% year on year, its best performance since 2008. N Brown said it made “significant market share gains”. Power brands JD Williams, Simply Be and Jacamo all enjoyed growth in sales.

Since the start of the financial year, N Brown has added more than 100 third-party brands to its offer, including Chi Chi, Wrangler, Ben Sherman, Jack Wolfskin, Dune, Hunter, Spanx, Religion, Not Your Daughters Jeans, Timberland, Ann Summers and Gossard.

The business today announced a new partnership with Tesco, through which it will sell a capsule collection of Simply Be and Jacamo lines on Tesco Direct and in some stores in Eastern Europe.

The in-store collections will be available on a trial basis at four Tesco stores in Hungary and Slovakia, followed by further stores in Poland and the Czech Republic. It comes after a capsule Jacamo collection launched on Asos in March.

N Brown Group chief executive Angela Spindler said: ”Tesco Direct is one of the UK’s largest ecommerce sites, and this partnership will be an excellent way of further increasing awareness of our unique offer in an under-served market.”

On full-year trading, she added: “I am pleased with the progress made this year, as we continue to build on our position as an agile, online fashion retailer. Our improved trading agility is evident in the figures we are announcing today. Our performance accelerated in the second half as we demonstrated our enhanced ability to flex our product offering in season.

“The macro-economic backdrop remains challenging for retail. Against this backdrop we remain vigilant over our core costs and efficiencies. We are also continuing to invest in improving our capabilities and customer experience to enable future profitable growth.

“The past few years have seen a huge amount of change in the business. We remain on track to complete the final stages of our systems programme by summer 2018. We are focused on driving the business forward, both in the UK and internationally, and I am very confident in our prospects. Although it is early in our new financial year, performance so far has been encouraging and in line with our expectations.”

The business also announced that is has appointed Richard Clark as international director. Clark was most recently marketing and international director at Boohoo, but left in January after just over two and a half years.

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