N Brown, a digital fashion retailer, has recently reported weak sales for the third quarter, leading them to anticipate that the downward trend will continue into the fourth quarter. The company has been facing difficulties amidst a “soft and highly promotional market” and is also grappling with ongoing macroeconomic pressures in the UK. While sales for the third quarter were in line with management expectations, they still reflected a decline. Product revenue saw a significant decrease of 9.2% to £166.4 million, bringing the year-to-date decline to 7% amounting to £377.6 million.

Within the company’s strategic brands, which include well-known names such as JD Williams, Simply Be, and Jacamo, there was a 5.5% decrease to £120.9 million in the third quarter (a 3.7% decrease to £271.5 million year-to-date). The heritage brands within N Brown also experienced a decline of 17.6% in the quarter, reaching £106.1 million (a 14.4% decrease to £106.1 million year-to-date). Additionally, financial service revenues dipped by 4.2% in the third quarter and by 3.7% year-to-date. Consequently, total group revenues fell by 7.6% to £249.2 million for the quarter and by 5.9% to £580.7 million year-to-date.

Looking forward, N Brown expects the fourth quarter to be softer than the third quarter, which is typically their quietest period of the year. However, the company highlighted that they possess a strong balance sheet, significant liquidity, and positive unsecured net cash. During this period, customers have been more deliberate in their spending habits, focusing either on the value or premium end of N Brown’s product ranges. The company also acknowledged that cold weather has impacted the demand for outerwear, causing a shift in timing later in the season. N Brown stated that their product mix, returns rates, and credit arrears rates have returned to pre-pandemic levels. However, they anticipate a soft market for UK discretionary consumer goods in 2023, particularly in the first half of the year. Consequently, N Brown expects to begin the fiscal year 2024 with fewer active customers compared to the previous year due to the challenging trading environment. Despite these challenges, CEO Steve Johnson expressed confidence in the resilience of the business and the strategic investments being made for the long term.

Useful links:
N Brown official website
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