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H1FY14 sales drop marginally at apparel marketer N Brown
Oct '14
In what N Brown Group, a UK marketer of apparels called ‘A Year of Transition’, revenues slipped marginally, while profits dropped 3.2% year on year in its interim results announced for the 26 weeks period or fiscal first half ending August 30, 2014.

During the first half of 2014, total group sales declined 0.6%, from a year earlier to £407.3 million, which N Brown attributed to lower sales in JD Williams. Like-for-like sales, excluding newly opened stores, were also 0.5% lower.

Profit before taxation also fell 3.2% to £42.7 million from £44.1 million in the comparable period of fiscal 2013.

However, overall gross margin improved by 40 basis points, which the marketer said was due to an improved bad debt and financial income yield performance which has resulted from the success of its tightened credit policies.

Despite good overall cost control, particularly in payroll and in marketing as N Brown graduated from more of its spending from paper-based to digital activities, operating profit reduced by 6.6% to £45.2 million, after absorbing £1.7 million loss in the US and £0.5 million loss from the Simply Be stores.

Distribution costs rose as a result of the strong growth in the volume of smaller parcels dispatched. N Brown said it has identified around £2.0 million of cost savings within sales and administration costs, linked to the organisational and marketing changes.

Due to higher levels of average borrowings, net finance costs mounted to £3.6 million in the first half of 2014 against £3.4 million in the first half of 2013.

N Brown informed that the effective rate of tax was slightly lower at 21.7% in the period under review from 22.0% in the same period of 2013.

In the process, adjusted earnings per share fell by 7.9% to 11.56 pence also down from 12.55 pence in first half of 2013. The interim dividend stayed the same as last year at 5.67 pence.

Net assets at N Brown grew by 8.6% year on year in the first half of 2014 to £495.3 million. Net cash generated from operating activities also rose steeply from £26.1 million to £67.3 million, mainly due to an improved working capital performance.

Capital expenditure in the period rose higher to £30.8 million from £8.5 million, as a result of the investment in its business transformation programme. After funding dividends and finance costs, net debt increased by £7.3 million from first half of 2013 to £205.2 million in first half of 2014. (AR)

Fibre2fashion News Desk - India

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