N Brown expects to hike prices 5% with rising costs

By This Is Money
Updated: 05:00 EDT, 12 October 2010

Home shopping firm N Brown expects to hike prices on new ranges by up to 5% as it battles rising costs from suppliers in the Far East.

Expansion: N Brown recently bought Figleaves and also launched in US

The online and catalogue group said rising cotton prices and higher wages in emerging markets such as China had resulted in cost inflation of between 4% to 5%, meaning the group will be one of a host of retailers set to lift prices in the coming months.

N Brown's half-year results also showed the impact of subdued trading during the general election period, with like-for-like sales up 0.6% in the six months to August 28.

Sales have recovered well since the election and emergency budget, up around 1.9% between July and August, rising to 2.1% in the first six weeks of the second half.

Interim figures showed a 5.5% rise in underlying pre-tax profits to £44.1m and N Brown said stronger demand for its younger fashion ranges was helping offset a tough market for the hard-hit over-65s.

Sales to the 65 and over market slumped by 11% as those customers - whose income is largely based on savings - continue to suffer from record low interest rates.

But sales of its younger brands targeted at under 45s raced 7% higher, with Simply Be and menswear range Jacamo among those selling well.

Manchester-based N Brown, a specialist in clothes for the fuller figure, said it would keep prices on hold for so-called run-through lines - items included in existing ranges.

However, it is likely to raise price tags on new designs, from the spring/summer 2011 collection onwards.

High street names including Next have recently warned over moves to pass on higher input costs.

Alan White, N Brown chief executive, said while braced for more challenging consumer conditions in the year ahead, the group's customer base should prove more resilient.

With an average age of 57, its shoppers are expected to be largely protected from the public sector job cuts, according to Mr White.

He said state pension increases should also help counteract poor rates on savings for older shoppers.

N Brown recently bought lingerie brand Figleaves and High and Mighty as part of expansion plans, while it has also launched in the US.

It sent out 250,000 Simply Be catalogues across the US in August and is planning a further 750,000 this autumn, with hopes to tap into a 34bn US dollar market for outsize clothing in America.

N Brown has also been increasing its online offering and said sales rose 17% in the half-year, now accounting for 43% of total revenues.

Overall half-year sales were impacted by its ongoing clampdown on credit to reduce customer bad debts, which it said left sales around 2% lower.

Bad debts reduced by around £3.5m on a year earlier and the firm said efforts to tighten credit criteria had got these losses under control.