Profits at multichannel retailer N Brown were hit by the closure of 18 shops and nearly 400 voluntary redundancies in its first half, as the business restructures into a digital-first operation.
Total revenue increased 4.2% to £415.8m at N Brown for the six months to August 29. However, its statutory pre-tax profit dropped 54.6% year on year to £19.4m.
Spindler said exceptional costs, including store closures and redundancies, had “diluted” profits.
In late August the business closed 18 clearance stores across the UK after a store review concluded that disposing of unwanted stock through outlet stores was “inefficient and outdated”. Excess inventory is now sold through online channels.
N Brown said the closure of the stores, and the associated loss of colleagues’ roles, was “not a decision it took lightly”, but was in line with its digital-first strategy and will save £3m a year, which will be reinvested in the business.
It has 15 full-price stores operating under its three fascias, Simply Be, JD Williams and Jacamo, of which 14 sell two of the brands.
Another cost for the business was the restructuring of the JD Williams team, first reported by Drapers in July this year.
Almost 13% of the JD Williams’ staff – 380 employees – left the business in August. Most took voluntary redundancy. Since then, 100 employees have been appointed across merchandising, digital marketing, IT and PR.
Spindler said: “It was very difficult, however, the new hires have given us new capabilities and new skills across these areas. It’s a positive change.”
The multichannel retailer also changed the phasing for its marketing spend this year. The cost of three adverts for the three fascias, totalling £3m, were paid for in August, instead of falling into the second half.
Product revenue for the period was up 6.1% and the turnaround for JD Williams is “on track” with new customers up 21%. N Brown said online performance of the brand was “particularly encouraging”: penetration exceeded 50% for the first time, up 8 percentage points on the year before.
Product revenue was up 21% for both Jacamo and Simply Be, reflecting “strong performance”.
“It talks to our improvement in product and digital capabilities”, said Spindler.
N Brown expects the business to be back in growth by the end of its financial year.
Spindler said: “In line with market expectations we are expecting strong profit growth in the second half. We are pleased with our performance and we are well on our way to becoming a digital-first retailer.”