The owner of fashion chains JD Williams and Simply Be said more cautious consumer spending and shrinking budgets have led to a tough retail environment – as it revealed its profits have almost halved.
N Brown Group, which describes itself as an inclusive retailer, gave a bleak outlook on the retail environment, which it said has brought down its revenues in the first half of the financial year.
The Manchester-based group said “the cost-of-living crisis is impacting all elements of people’s lives, including their decisions in relation to spending on non-essential items”.
Revenues across the group were down by 4.6% in the six months to August 27, totalling £331.5 million compared to £347.4 million reported a year ago.
Its product revenue declined further, by more than 9%, into September and the chain said the rate is expected to continue into the second half of the financial year.
But the company’s profits have seen the biggest hit, with adjusted pre-tax earnings sinking by 47% to £27.9 million versus £52.5 million last year.
N Brown said it had abnormally low write-off levels last year and released a Covid credit provision, leaving the group with more cash than normal.
Rising cost inflation, significant increases in energy prices and interest rate hikes have all put pressure on household budgets and created an “extremely challenging” retail and economic environment, N Brown said.
But it told investors it has taken a number of steps to cushion the impact, including price rises, reducing promotion levels and increasing shipping charges to shoppers ordering online, as well as tightly managing overall costs.
Furthermore, the average value of items across its fashion brands went up by 14% in the first half of the year, which reflects “resilient” customer spending, the group said.
Steve Johnson, N Brown’s chief executive, said: “In a difficult period of weakening consumer confidence, we have balanced our objectives between disciplined trading – with a focus on upholding margin – and delivering on our long-term strategy to transform the business.
“We anticipate continued softness in trading over the second half as macroeconomic pressures continue to weigh on consumers, despite government support.
“We will, therefore, maintain our focus on tightly managing both our costs and margins.
“At the same time, given our ongoing confidence in our strategy and the strength of our balance sheet, we will continue to invest in our digital transformation to deliver sustainable profitable growth.”
Published: by Radio NewsHub Source : Radio News Hub