N Brown sales growth gathers momentum

Internet and catalogue home shopping group N Brown has said that current-year results are expected to be in line with expectations, with like-for-like (LFL) sales coming in ahead of analyst estimates in the third quarter.

Internet and catalogue home shopping group N Brown has said that current-year results are expected to be in line with expectations, with like-for-like (LFL) sales coming in ahead of analyst estimates in the third quarter.

Total group revenue rose by 8.5% in the 19 weeks to January 12th, while LFL revenue was up by 7.9%. LFL sales growth was just 3.7% in the first half.

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The firm said the momentum has been helped by higher levels of new customer recruitment, with an investment of £2m above the original budget.

N Brown said it has invested heavily in capital and revenue expenditure during the year to drive sales growth and strategic initiatives outside the core UK home shopping business. The group noted "promising signs" of growth within concept stores in the US.

"It has been pleasing to see our investments in improved online systems, more customer recruitment and revamped product ranges and pricing continuing to drive a strong sales momentum, despite the lacklustre retail environment," said Chief Executive Alan White.

Despite the positive comments, N Brown's shares were down 2.14% at 363.46p in early trading on Wednesday.

Jefferies takes an upbeat viewJefferies said on Wednesday that current trading is ahead of its expectations; it was forecasting a 5.3% gain in LFL sales for the period.

"The headline steer that FY13 results are expected broadly in line understates the strength of this update, in our view," according to equity analyst Joe Spooner from Jefferies.

"Sales momentum has sustained despite transitioning to tougher comps, gross margins are trending as expected, customer dynamics remain positive and that trading performance has enabled an increase in customer recruitment spend plus ongoing development investment to be absorbed without material FY profit before tax implications," he said.



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