N Brown to raise £100m after 25% profit drop
By Sean Farrell
Date: Thursday 05 Nov 2020
(Sharecast News) - N Brown is raising £10m to reduce debt and invest in its digital sales platform after reporting a 25% drop in first-half profit.
The home shopping fashion group will raise the money through a share placing underwritten by its founder and biggest shareholder David Alliance. The transaction could make Alliance, who owns 45% of N Brown, its majority owner.
The open offer will be priced at 57p a share, equal to the five-day closing average, at 11 shares for every 18 existing shares. Net proceeds for the owner of fashion brands Jacamo and JD Williams will be about £94m.
The company's shares have fallen by two-thirds in 2020. The company also said it would move its listing from the main market to AIM. N Brown shares fell 10.9% to 52.6p at 11:25 GMT.
The group will use about £77m of the money raised to pay off unsecured debt from its total of £411m net borrowings. It will invest the rest of the cash in a better customer credit platform, upgrading its website to make shopping easier and promoting its brands. The company has shifted away from catalogues to online sales to respond to changing consumer habits.
As part of its debt-reduction plans the company will pay off government loans under the Covid-19 support programme. This will allow it to pay dividends, which are barred for users of the government's scheme.
Steve Johnson, N Brown's chief executive, said: "Having restructured the business and transitioned to more than 90% of revenues from digital, we now see a clear opportunity to capitalise on various industry drivers, not least the increasing trend towards online retail, and further improve our customer proposition.
"The proposed capital raise will give us the firepower to invest further in our digital capabilities and accelerate our growth strategy, whilst significantly strengthening the group's balance sheet to provide us with ongoing flexibility and a strong platform from which to deliver returns for all of our shareholders."
Pretax profit for the six months to the end of August fell to £14.1m from £18.8m as revenue fell 17.6% to £356.7m. Product revenue fell 29% in the first quarter and 12% in the second quarter as business started to revive. N Brown said trading was in line with its expectations.
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