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(Sharecast News) - Clothing retailer N Brown warned on profits on Thursday, pinning the blame on a "highly promotional markets" and lower revenue from its credit lending service.
The company, which also pointed to a lower-than-expected benefit from the IFRS9 non-cash provision estimate, said FY20 adjusted pre-tax profit will come in between £70m to £72m, below consensus expectations of between £78m and £84.1m.
In addition, it said the reduced scope for bad debt provision improvements, combined with industry-wide regulatory changes, will result in FY21 adjusted pre-tax profit being at a similar level to FY20.
In an update for the 18 weeks to 4 January, N Brown - which is behind brands such as Jacamo, Simply Be and JD Williams - said product revenue fell 4% as it continues the managed decline of legacy brands. Meanwhile, revenue form the financial services segment was down 4.6% due to lower product revenue and the impact of previously-announced measures undertaken on changes to its lending practices.
JD Williams and Ambrose Williams saw revenue declines of 4% and 9.6%, respectively, but Simply Be saw a 12.1% increase.
Chief executive officer Steve Johnson said: "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."
At 0830 GMT, the shares were down 19% at 114.35p.
29 Jan 2020 16:05
