N Brown hit by economics and rain

N Brown, the internet and catalogue home shopping firm, said sales were up but price conscious shoppers opting for value ranges had hit margins.

In the four months to the end of June the firm said total group revenue increased by 2.5%.

Like-for-like revenue growth was 1.9% after excluding sales from stores opened in the last year.

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The company said an overall improvement in sales disguised a significant variation in performance by product category.

Ladieswear revenues had been lower than expected, primarily due to the bad weather conditions, which Brown said depressed the sales of summer clothing.

It contrasted this rainy day performance with sunny weeks when it saw very strong sales and margins.

Menswear, footwear, lingerie and home and leisure product categories all showed growth but shoppers opted for value lines or those which had promotional discounts, the company said.

The firm's Chairman, Lord Alliance of Manchester, will later tell its AGM that this mix of sales resulted in a 1% lower rate of gross margin than the firm anticipated in the period.

"However we still expect the gross margin to improve from current levels as we progress through the year as our planned lower stock levels will result in reduced volumes of discounted sales of excess stocks than we saw in the second half of last year," he will tell shareholders.

"The second half will also benefit from lower input prices which should help to stimulate demand."

However, he will also warn that "neither the prevailing economic backdrop nor the weather conditions are helpful to our business".