Brown Group Regulatory News (BWNG)

30th September 2020

 TRADING UPDATE FOR THE 6 MONTHS TO 29th AUGUST 2020

Highlights

· Improved product revenue trajectory through Q2 with 92% of product revenue now digital

· Financial services cash collection rates in line with the prior year

· Continued operating cost reduction reflecting agility of business model

· Reduction in debt underway and continuing

· Group continues to trade in line with its expectations

Improved product revenue trajectory

Q1 FY'21 is the 13 weeks to 30th May 2020, Q2 FY'21 is the 13 weeks to 29th August 2020

Product revenue trajectory has continued to improve through the second quarter from the sudden and significant decline experienced in the first quarter as Covid-19 lockdown restrictions were introduced. Apparel sales have continued to recover from mid-March levels and demand for Home & Gift, supported by the launch of our new Home Essentials brand on 1st April, continued to be well above the prior year. All Womenswear and Menswear brands performed better in the second quarter, in particular JD Williams and Jacamo.

As expected, lower product revenue, regulatory changes and a smaller debtor book resulted in lower Financial Services revenue. A very small number of customers required forbearance as a result of FCA Covid-19 guidance and as at 29th August 2020 less than 1% of debtor balances remained on a Covid-19 related payment holiday, down from a peak of 3% in May 2020.

Continued focus on operating costs

The Group took swift and decisive action to maximise operating efficiency and strengthen liquidity following the onset of the pandemic. The Group has continued to exercise this discipline with operating costs materially lower in the second quarter compared to the prior year. This is further demonstration of the Group's agile and flexible operating cost base. Material volume and cost efficiency savings were achieved across all areas of the cost base, with the most material savings in marketing costs. As previously guided, in this financial year the Group is confident of offsetting at least 75% of the Group gross profit decline through operational cost savings.

Reduction in debt underway

Financial Services cash collection rates have continued to perform and remain in line with the prior year. As a result of our on-going focus on cash generation, tight cost control, reduction in capital expenditure and suspension of the dividend, together with a smaller debtor book, the Group has started its objective of reducing its level of indebtedness. The Group has reduced net debt by 17.3% in the half, to £411.1m. As previously guided, we expect our year-end net debt to be in the range of £380m to £400m.

As at 29th August 2020, drawings under the Group's borrowing facilities stood at £455.9m down from £544.6m at 29th February 2020. Net cash generation in the period was £45.3m and as at 29th August 2020 cash balances stood at £44.8m and the overdraft facility was undrawn.

1 Under the terms of the £50m CLBILS three-year term loan facility the Group was required to drawdown a minimum of £2m against the facility in order to maintain access to it

2 Excludes debt securitised against receivables (customer loan book) of £378.9m and lease liabilities of £6.0m

3 Total liabilities from financing activities less cash, excluding lease liabilities

Steve Johnson, Chief Executive, said:

"It is encouraging to see a continued improving trend in trading following the sharp decline witnessed upon the initial impact of Covid-19, with trading in-line with expectations. Home & Gift sales in the first half of our financial year have been particularly strong and our fashion brands continue to recover, particularly JD Williams and Jacamo. We have accelerated our digital transformation and 92% of our product revenue is now digital.

Our financial services cash collection rates have remained stable and we continue to offer support and flexibility to those credit customers who require it. We will continue to implement our refreshed strategy, and particularly mindful of an uncertain UK retail environment, we will continue to focus on cost control, deleveraging and cash generation."

Half year results for the 6 months ended 29th August 2020

N Brown will release its results for the 6 months ended 29th August 2020 on 5th November 2020.

For further information:

About N Brown Group:

N Brown is a top 10 UK clothing & footwear digital retailer. We are size inclusive, focusing on the needs of underserved customer groups - size 20+ and age 50+. We offer an extensive range of products, predominantly clothing, footwear and homewares, and our financial services proposition allows customers to spread the cost of shopping with us. We have five distinct brands: Simply Be, JD Williams, Ambrose Wilson, Jacamo and Home Essentials. We are headquartered in Manchester where we design, source and create our product offer and we employ over 2,200 people across the UK.