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Lorraine Kelly fronts a TV advert for JD Williams
Lorraine Kelly fronts a TV advert for JD Williams whose owner, N Brown, has revised its annual pre-tax profits to between £88m and £92m. Photograph: PR
Lorraine Kelly fronts a TV advert for JD Williams whose owner, N Brown, has revised its annual pre-tax profits to between £88m and £92m. Photograph: PR

N Brown shares slump after profits warning

This article is more than 9 years old
Online fashion business, which includes JD Williams, blames ‘unseasonably mild autumn’ for poorer than expected figures

Shares in N Brown dived 13% after the online fashion business warned profits would be hit by the Indian summer despite a marketing push fronted by the TV presenter Lorraine Kelly.

The company, which owns Figleaves, Simply Be and JD Williams, was the biggest faller in the FTSE 350 after it admitted that “unseasonably mild autumn temperatures in September and so far in October” would result in annual pre-tax profits of between £88m and £92m, about £15m less than analysts had expected.

Sales at other fashion retailers – including Next, Debenhams and Marks & Spencer – are also thought to have been affected by September’s warm and dry weather, which have prompted a spate of discounting across the high street. Next warned last month that if the mild weather continued throughout October the retailer would have to lower profit forecasts.

Analysts at M&S’s joint broker Citi also trimmed full-year profits forecast for the retailer by 1.5% to £650m as they predicted underlying sales of clothing and homewares were likely to have fallen by 4% over the summer.

Industry analysts said they were surprised by the warning as just three weeks ago N Brown’s chief executive, Angela Spindler, had said the company was on track, to meet its profits hopes.

“While we believe management’s strategy is right for the businesses long term, arguably management has been too ambitious in its change programme. Anticipated customer response and execution has been poor,” said Kate Calvert, an analyst at Investec.

Jonathan Pritchard, at Oriel Securities, said N Brown’s poor trading could also be down to management trying to do to much too quickly.

“If the poor September sales number was simply to do with the weather, then surely there is pent-up demand, now that the brands are, according to the company, resonating so well with customers?” he said

The disappointing start to the second half of N Brown’s financial year comes despite the launch of a TV advert for JD Williams featuring Kelly as well as changes to the timing of marketing spending and other tweaks – including cutbacks in the amount of less profitable electrical goods being sold and a tightening of credit policy.

Pre-tax profits fell by 3.2% to £42.7m in the six months to 30 August while sales dipped by 0.6%. The figures, released on Wednesday, included a £1.7m loss in the US, where N Brown operates the Figleaves brand, and £0.5m of losses from the set-up of Simply Be stores.

Spindler said: “Despite the negative effects of recent market conditions on performance, I am confident that we are taking the right actions and are making good progress.”

She said the number of active customers increased by 3.7% in the six months to 30 August compared with the same period last year, with 26% more shoppers at JD Williams. Sales were also strong in company’s high-street stores with underlying sales up by 17% during the period. There will be 14 Simply Be/Jacamo stores trading by Christmas.

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