Last checked at 15 Jan 2009 07:00
Interim Management Statement and Trading Update
N Brown Group plc, the internet and catalogue home shopping retailer, today announces a trading update for the 19 weeks ended 10th January 2009.
Group revenue both in total and on a like-for-like basis has increased in the period by 8.8%. We have seen strong demand from our established customers across all our principal product groups. The sales from new customers were level with last year, in line with the revised marketing investment in recruitment as previously announced at the time of our half year results. Online sales now account for 35% of the total, having increased by 34% compared with the same period last year.
The rate of gross margin achieved on revenue in the 19 weeks ended 10th January 2009 has fallen by 1.5%, wholly due to an increase in the charge for bad debts. 0.7% of this is due to the planned higher proportion of sales from younger customers, as they produce a higher credit risk but lower operating costs. The remainder of the bad debt increase is due to a significant decline in the rates on offer from third party debt collectors for residual debtors. This is more a reflection of the high level of arrears from both secured and unsecured lending in the debt recovery marketplace than any material change in the quality of the debts we are transferring. This situation is likely to endure until we are through the economic downturn, so we will be increasing the scale of our internal debt collection activity. However this incremental cost is largely balanced by the reduced rate of interest paid on our bank borrowings.
The financial position of the group remains stable and has not significantly changed since the interim results. Our current banking facilities of £320m are secured until March 2012 and we anticipate an interest cover level of approximately seven times for the current financial year.
We are proceeding with our international expansion plans to launch Simply Be in Germany in February 2009 as scheduled, and simultaneously opening up our English language websites to a number of European markets. The total investment to launch will be £1m. We fully recognise the difficult economic environment in which we will be trading in 2009 and have adopted a cautious stance on customer recruitment, credit management and stringent control of overheads and cashflow. The remainder of the financial year will be determined by the customers' response to our Spring catalogues but at present the board is confident we can deliver a full year performance in line with our expectations.
ENDS
For further information please contact:
N Brown Group plc
Alan White, Chief Executive Tel: 0161 238 2202
Dean Moore, Finance Director Tel: 0161 238 2208
Website: www.nbrown.co.uk
Gavin Anderson & Company
Fergus Wylie/Clotilde Gros Tel: 020 7554 1400