6 June 2024

 

FULL YEAR RESULTS FOR THE 52 WEEKS ENDED 2 MARCH 2024

 

Continued strategic progress delivering for our customers

Adjusted EBITDA above market expectations and return to profit

Strong balance sheet and liquidity

 

£m	52 weeks to 2 Mar 2024 (FY24)	52 weeks to 25 Feb 20231	Change 52 weeks v 52 weeks	53 weeks to 4 Mar 2023 (FY23)1
Group revenue	600.9	666.0	(9.8)%	677.5
Product revenue	381.2	426.6	(10.6)%	433.4
Financial Services revenue	219.7	239.4	(8.2)%	244.1
Adjusted EBITDA2	47.6	54.4	(12.5)%	57.3
Adjusted EBITDA margin	7.9%	8.2%	(0.3)ppts	8.5%
Adjusted profit before tax2	13.3	4.9	171.4%	7.5
Statutory profit / (loss) before tax	5.3	N/A	N/A	(71.1)
Cash and cash equivalents	65.2	N/A	N/A	35.5
Adjusted net debt2	(236.3)	N/A	N/A	(297.4)
Gross customer receivables	517.0	N/A	N/A	555.2

Steve Johnson, Chief Executive, said:

"We have delivered against our strategic and financial objectives this year. We have kept to our transformation plans, despite the macro-economic backdrop, whilst building resilience through our strong balance sheet, and achieving adjusted EBITDA above market expectations.

"Our customers are now seeing tangible benefits from our transformation, with an enhanced experience being delivered by our new websites and our recently launched Product Information Management system ensuring customers have more detailed product descriptions to inform their purchases.

"Looking ahead, our strong liquidity position allows for continued investment in our strategy, positioning the business for sustainable growth whilst always improving the customer experience.

"I'd like to thank all our colleagues for their continued hard work in progressing our transformation and for the results achieved this year. We are confident in our strategy and in building a stronger N Brown for all stakeholders."

Highlights

Delivering strong strategic and operational progress

·    Improved customer experience through the launch of Jacamo's new mobile-first website and launch of Product Information Management ('PIM') system, fundamental to our marketing strategy, initially on Simply Be

·    Successful launch of new product lines across our strategic brands:

o  JD Williams launched its Anthology premium line, increasing prominence of own brand offering

o  Simply Be enriched its third-party offering with the launch of lifestyle sports brand TALA and started offering select lines in Sainsbury's stores

o  Jacamo enhanced its own brand offer, expanding across key categories including smart casual, denim, and footwear

·    Financial Services ('FS') transformation continues to progress well, with the new platform build underway and end to end testing commencing this year

·    Net Promoter Score ('NPS') 6pts ahead of last year, including benefits from better delivery performance as well as customer experience improvements

·    Approval by the Science Based Targets initiative ('SBTi') of commitment to reduce Scope 1, 2 and 3 greenhouse gas emissions by 46% by FY31 against a FY22 base year, aligned with Paris Climate Agreement

·    Received Drapers Award for Diversity and Inclusion for 2023 and named as one of The Sunday Times Best Places to Work 2024

Financial

Adjusted EBITDA above market expectations³, supporting a return to statutory profit

·    Despite macro-economic challenges, management actions drove adjusted EBITDA margin up c. 4ppts from H1 to H2, with full year margin of 7.9% broadly in line with FY23

·    Group revenue decreased 9.8%, reflecting the continued challenging market conditions and a focus on driving profitable sales

·    Full year adjusted group gross profit margin increased 1.5ppts to 47.7%:

o  Product margin up 1.2ppts, benefiting from a cleaner year-end stock position, the focus on profitable sales and lower freight rates

o  FS margin rate up 1.8ppts driven by lower write offs and more active debt management strategy

·    Full year adjusted operating costs reduced by £15m, with volume-related savings and management actions more than offsetting c.£12m of inflationary pressures

·    Statutory profit before tax of £5.3m, reflecting improvement of £76.4m, driven by lower adjusting items

·    Adjusted profit before tax of £13.3m, an improvement of £8.4m, including a reduction in depreciation and amortisation of £15.0m following the impairment of non-financial assets in FY23

Robust balance sheet and available liquidity, with no unsecured borrowings

·    Net cash generation of approximately £30m in the year, after further investment of £23m in the transformation of the business

·    Strong balance sheet with significant cash and cash equivalents, and total accessible liquidity of over £148m. RCF and overdraft remain undrawn with limits of £75m and £12.5m respectively

·    £65.2m cash and cash equivalents; securitisation borrowings of £301.5m under the facility extended to December 2026 in the year are well covered by £517.0m gross customer receivables

·    Adjusted net debt of £236.3m reflects the securitisation borrowings and net cash

Current trading and outlook - gradual improvement in trading expected through FY25

·    The rate of FY24's product revenue decline has moderated at the start of FY25, with Q1 declining by 6%

·    This improvement is expected to continue as the year progresses, and for full year FY25 the Group anticipates product revenue will return to a moderate level of growth, alongside a modest improvement in the rate of decline in Financial Services revenue and a Group gross margin rate consistent with FY24

·    Clear priorities to set the business up for 2024 peak trading, with the third of the three strategic brands, JD Williams, launching its new mobile-first website ahead of peak

·    To support sustainable growth, planning to scale FY25 marketing investment by around £10m, funded by cost efficiencies

·    FY25 year end adjusted net debt is expected to be similar to FY24's closing position. Strategic investment will continue to be self-funded through carefully managed cash flows

·    The Board has continued confidence that the investment in the Group's strategic transformation plan, its differentiated brands and a new credit proposition in development, leave it well positioned to deliver future sustainable growth

 

Webcast for analysts and investors:

A webcast presentation of these results will take place at 9.00am on 6 June 2024 followed by a Q&A conference call for analysts and investors.  Please contact Hawthorn on +44 (0)7719 078 196 or email nbrown@hawthornadvisors.com for details. 

 

Financial calendar

The Group's next scheduled update is its FY25 Interim results in October 2024.

 

For further information:

N Brown Group
David Fletcher, Head of Investor Relations	+44 (0)7876 111 242
Hawthorn
Henry Lerwill	+44 (0)7894 608 607
Simon Woods	+44 (0)7719 078 196 nbrown@hawthornadvisors.com
Shore Capital - Nomad and Broker
Stephane Auton / Daniel Bush / Rachel Goldstein Fiona Conroy (Corporate Broking)	+44 (0) 20 7408 4090

 

About N Brown Group:

N Brown is a top 10 UK clothing and footwear digital retail platform, with a home proposition, headquartered in Manchester and employs around 1,700 people nationwide.  Through our strategic retail brands including JD Williams, Simply Be and Jacamo, we exist to make our customers look and feel amazing, and take great pride in passionately championing inclusion and serving the under-served. Our customer-first shopping experience, supported by our innovative financial services proposition, is designed to deliver choice, affordability, and value to our customers, and allows us to be truly inclusive and accessible.

 

¹ FY23 was the 53 week period ended 4 March 2023.  A detailed comparison of the 53 week results to 4 March 2023 and 52 week results to 25 February 2023, for comparability with this year's 52 week period, is set out on page 15. The Highlights narrative refers to the 52 weeks to 25 February 2023 as the comparative period, except for Statutory profit / (loss) before tax and balance sheet / cash flow metrics, for which 52 week comparatives are not available.

² A full reconciliation of statutory to adjusted measures is included in the FY24 Financial Performance section.

³ The market consensus for FY24 Adjusted EBITDA is £44.7m as at 5 June 2024.

 

PERFORMANCE REVIEW

There is much to be proud of in relation to the progress N Brown has made this year in challenging macro-economic conditions. The transformation of our business gained pace, as we became more agile and able to deliver changes faster. We made significant strides against our strategic pillars, which had a meaningful impact on our business. And we delivered a profit performance ahead of expectations, whilst returning to a profitable pre-tax position.

There is no denying that we continue to operate in challenging times but we remain confident in our strategic direction. We believe that, with our differentiated brands, improving consumer sentiment and a new credit proposition in development, we are well positioned for the future. We are also well-capitalised to continue to invest in our self-funded transformation.

Strategic Execution

Although the macro-economic challenges seen during the year were broadly anticipated in our FY24 guidance, it has been a year of notable market softness, demonstrated by the online pureplay market declining by 10%¹. Despite the backdrop, we have executed against our plans, delivering levels of financial performance and strategic transformation which means that FY24 represents an important step forward in building a stronger N Brown for all stakeholders.

We entered the year with a set of streamlined transformational priorities as laid out in our full year results in June 2023, concentrating on select programmes to drive mid-term business change. We are laying the foundations to support our ambition to return to sustainable, profitable growth, and have delivered the work we planned against our five transformational areas. This included the successful rollout of a mobile-first website for Jacamo. It was delivered in a third of the time of our first rollout for the Simply Be site, with the faster delivery benefitting from our commitment to agile ways of working. Jacamo's site performance has been promising, with conversion during Black Friday week reaching the highest level in three years.

We made significant strides in enhancing our customer experience with the successful launch of a Product Information Management ('PIM') system on our first strategic brand, Simply Be, towards the end of FY24. This system is fundamental to our marketing strategy and enriches product descriptions on display pages, offering detailed information on sizing, fit, and fabric. By ensuring greater consistency and accuracy in pre-purchase communications across all channels, we're empowering our customers to make more informed purchases. This is anticipated to lower return rates, thereby elevating the overall customer experience.

We have further developed our data culture, by leveraging analytical opportunities throughout the year. This has included increasing the number of categories which use PriceTagger, our in-house tool which optimises product promotion by leveraging price elasticity.

Our new Financial Services ('FS') platform has progressed as planned through FY24, with all discovery phases now concluded. All brand development work has also been completed, including marketing guidelines, and the build of a new system has begun. The platform is anticipated to give the Group further product flexibility to provide customers with more choices in how they manage their payments.

Our new agile ways of working are structured around putting our customers first and provide the business with the agility required to flex to their needs. Over 50% of our head office colleagues have officially adopted our new ways of working, which promotes cross-functional cooperation and communication, and has allowed us to deconstruct conventional business silos, enabling acceleration in the pace of execution for our brand strategies.

1         For the 52 weeks ended 2 March 2024, the online pureplay market according to IMRG declined by 10%.

 

Our agile ways of working have ensured we have made more mature choices in our technology roadmap and continued to invest iteratively in all areas of our technology estate. In our continuous feedback loop, we take confidence that our operating model has allowed the deployment of user changes that release value now, but set the correct foundations for future releases, whilst also enabling a higher velocity of change.

Our efforts to establish clearer, more distinct brand identities continue, highlighting our progress through engaging and creative campaigns which resonate with our customers. We continue to develop more unique fashion propositions for all of our brands, with own brand launches including Anthology, and multiple third-party releases across our portfolio throughout FY24. Our own brand fashion propositions have been elevated with strategic partners, with a strong first year collaborating with Sainsbury's. Working closely with our logistics partners, we also continued to optimise our final mile service, which has contributed to a 6pts increase in Net Promoter Score ('NPS') in the year.

Further information on the significant progress we are making with our strategic transformation is included from page 7.

Financial Review

A strong focus on managing our cost base and driving profitable sales has helped to drive a number of important achievements within financial performance. Firstly, Adjusted EBITDA of £47.6m and Adjusted profit before tax of £13.3m are each ahead of market expectations. Secondly, the business returned to a statutory profit before tax, reporting £5.3m, following a statutory loss before tax of £(71.1)m in FY23 which included the final settlement of the Allianz litigation and non-cash impairment of non-financial assets. Thirdly, cash generation has been strong at nearly £30m and has been achieved after delivering against our plans to continue to self-fund the transformation of the business, with c.£23m of further capital expenditure, including the strategic areas discussed above.

As a result of ongoing cautious consumer behaviour and our focus on driving profitable sales, product revenue declined by 10.6% against the prior year, excluding last year's additional 53^rd week, leading to Group revenue declining by 9.8%. The implementation of a number of initiatives, set out in our Interim results in October 2023, improved both Adjusted gross profit margin and Adjusted operating costs in H2, leading to growth in Adjusted EBITDA margin of 4ppts in H2 relative to H1.

Against last year, Adjusted EBITDA reduced by £6.8m excluding the 53rd week, driven by lower revenue. A year-on-year increase in Adjusted gross profit margin of 1.5ppts broadly offset an increase in Adjusted operating costs as a percentage of Group revenue. The cost ratio was impacted by lower operational leverage, despite a strong focus on costs having driven a reduction in Adjusted operating costs of nearly £15m.

The strong cash generation has helped to further strengthen our balance sheet, with total accessible liquidity closing the year at £148.5m and with unsecured net cash of £65.2m. During the year, the Revolving Credit Facility ('RCF') and overdraft were refinanced to December 2026, and remain undrawn, with facility limits of £75m and £12.5m respectively. The Group also extended its securitisation facility commitment to December 2026, maintaining the facility limit of £400m and lender commitment of £340m.

Year end adjusted net debt of £236.3m is now under half of the peak level reported at FY20 year-end (£497.2m). A key achievement over the last few years through the transformation journey is the improvement in this position - with the only borrowings within adjusted net debt being £301.5m drawings against the securitisation facility, and which are well covered by the £517.0m gross customer receivables. The unsecured net cash position partially offsets the securitisation drawings, benefitting the adjusted net debt position. This provides a position of strength from which to scale marketing spend in FY25.

 

Leadership Update

As previously announced, Ron McMillan retired as Chair and stepped down from the Board, as of 30 April 2024. The Board would like to thank Ron for his dedication to N Brown and for the critical role he has played in the transformation of our company. The search for a permanent Chair has commenced and a further announcement will be made in due course.

In addition to Ron McMillan's retirement as Chair, we announced that Vicky Mitchell had announced her intention not to stand for re-election and will step down from the Board of N Brown to focus on other professional commitments following the Company's Annual General Meeting in July 2024. The Board has commenced a process to identify and appoint an additional Independent Non-Executive Director and will provide an update on this process in due course. The Board would like to express their gratitude to Vicky Mitchell for her service to N Brown.

A number of previously announced Board changes were also confirmed during the financial year. In June 2023, Dominic Appleton succeeded Rachel Izzard as Chief Financial Officer and joined the Board, having previously joined the Group as Chief Financial Officer Designate in March 2023. In April 2023, Meg Lustman was appointed as an Independent Non-Executive Director. In July 2023, following the conclusion of the Annual General Meeting, Gill Barr and Richard Moross stepped down from the Board. Gill served as Senior Independent Director. Gill was also Chair of the Remuneration Committee, in which she has been succeeded by Meg Lustman.

With regards to our Executive Leadership team, we were pleased to announce two changes, in line with our ongoing strategic transformation.

We have welcomed Clare Empson as Director of Supply Chain. Clare has an extensive range of experience across the retail sector over the past 25 years and in leading global retail operations. Clare was most recently Director of Operations at Ted Baker, where she also held senior roles within its Retail and Transformation areas during her time there.

Natalie Rogers has joined as our Chief People Officer. Natalie brings with her more than 25 years of extensive cross-sector experience - including digital, tech and financial services - in a breadth of HR disciplines covering organisational culture, employee relations, leadership development, reward and organisational design.

FY25 Outlook

The strategic progress against our transformational priorities during FY24 leaves us well placed to continue investment in FY25, in support of our vision, mission and purpose. Having delivered new mobile-first websites for two of our three strategic brands, Simply Be and Jacamo, we plan to launch a new site for JD Williams ahead of FY25 peak trading. In doing so, we will complete our priority of new websites being in place for all of our strategic brands. Investment will also continue into a new technology platform for FS to enhance the ways customers can pay, having begun the build of the new system in FY24. Alongside this, and particularly given the digital nature of our business, we will further upweight our focus on use cases for AI technologies.

We are assuming that macro-economic conditions felt by consumers will still be a feature of our performance during FY25 but believe that conditions will continue to improve. Product revenue during the start of FY25 has moderated against FY24's rate of decline, with year-on-year product revenue for the 13 weeks ended 1 June 2024 (Q1 FY25) declining by 6%. We currently anticipate FY25 product revenue returning to a moderate level of growth, with a weighting towards H2.

Management actions will help drive product revenue growth through scaling the investment in marketing & production by around £10m, funded by cost efficiencies, in order to improve new customer recruitment and stimulate the existing base to trade more frequently.

The FS customer loan book opened the year lower than the prior year and the benefit from product revenue growth will take longer to feed through to FS revenue performance. However, we do expect FS revenue to decline at a slightly improved rate to that seen in FY24.

We anticipate Adjusted gross profit margin to be consistent with FY24. This reflects an expected further improvement in product gross margin, including benefits from higher clothing mix, commencing the year with a cleaner stock position and better underlying factory gate pricing, offsetting a slightly lower FS gross margin. We are well hedged against our US Dollar purchases for FY25.

We expect a low single-digit £m increase in total across depreciation and amortisation, and net finance costs. This is reflective of capex levels and the expiry of the existing interest rate hedge on the securitisation facility at the end of 2024 calendar year.

The business will increase investment in FY25, aligned to the transformational priorities, which will continue to be self-funded through carefully managed cash flows. At the end of FY25, we expect Adjusted net debt to be similar to FY24's closing position, and for strong levels of liquidity to be maintained. We remain confident in our strategic direction and our digital transformation as we focus on driving sustainable profitable growth.

An update against our five strategic pillars is provided below:

1.    Build a Differentiated Brand Portfolio

Strategic objective: Build two multi brand and category platforms, one for women (JD Williams) and one for men (Jacamo), as well as one inclusive fashion brand for young women (Simply Be).

What we have achieved in FY24

Our strategic brands (JD Williams, Simply Be, and Jacamo) have each embarked on unique initiatives in the year to enhance customer engagement and brand visibility:

JD Williams partnered with ITV and Global to sponsor the TV show, My Mum Your Dad, which had over 33 million views throughout the series. The partnership increased the recognition of JD Williams, leading to a 36% increase in the awareness of the brand.

Simply Be launched the 'Serious about Shape' campaign, promoting inclusivity and body positivity in fashion, aiming to resonate with a diverse customer base. This message was further reaffirmed through the launch of a new podcast hosted by the influential Fleur East.

Jacamo collaborated with LADbible, a community within which our target audience spends their time. Our 'No Average Jack' campaign received recognition at the Campaign Media Awards in March 2024, winning in the Fashion and Beauty category. The first year of the partnership achieved over 95 million views and a significant increase in customer conversion rate from customers directed to the website from the campaign.

What we will focus on in FY25

We will invest more of our marketing budget into raising brand awareness and consideration, to increase acquisition through earned channels. We will support performance via media efficiency programmes to ensure our spending is at the optimum level and appropriately targeted. Customer acquisition costs in performance media have risen significantly during FY24 and so to mitigate over-exposure to these channels, we plan to build on current initiatives and learnings, investing more in awareness to foster brand recognition.

JD Williams has partnered with Sky and Channel 5, in a new campaign fronted by Gok Wan, Judi Love and Helen Skelton. This exciting journey promises to bring our brand closer to our customers, sparking conversations and fostering relationships. JD Williams will continue to focus engagement with midlife women, leveraging a new digital platform powered by the launch of our new mobile-first website.

Simply Be is here for trend-led women aged 25-45 who prioritise great fit, but we have recognised that it's helpful to be more specific about who within that broader target we're particularly designing for. Simply Be will be re-positioned to target a slightly older customer, in a less congested area of the market. We will refine its proposition in the first half of the year, before investing in brand awareness in the second half.

Jacamo will be entering the second year of our successful partnership with LADbible, where we will be focusing on bigger moments in customers' lives, which we anticipate will be more impactful with them. Our 'No Average Jack' campaign which launched last year continues, moving beyond areas he is interested in and leaning into 'style missions'; identifying moments coming up where he wants to look and feel confident.

Within the heritage portfolio, the focus will be on stabilising the customer base through a series of initiatives agreed upon and launched via our agile operating model.

2.    Elevate the Fashion and Fintech Proposition

Strategic objective: Elevate the fashion assortment, integrate the credit offer into the journey and create a credit brand.

What we have achieved in FY24

JD Williams: Reflecting further progress within our own brand proposition, we launched Anthology, a JD Williams own premium line. The line is designed with an elevated approach to dressing which offers versatile, quality fabrics. This move is part of JD Williams' ongoing efforts to increase the prominence of its own brand offering and enhance the product choice further with third-party offerings.

Simply Be: Simply Be continues to enrich its third-party offering, elevating our fashion assortment, with great success in the launch of TALA. Simply Be also continued to champion accessibility and enhance its customer-first approach through partnerships. Within partnerships, the launch of Simply Be on Sainsbury's online clothing platform and selected stores has performed strongly in its first year, as well as providing enhanced exposure to different customer segments.

Jacamo: Jacamo has enhanced its own brand offer, expanding the offer across key categories like smart casual, denim, and footwear, while investing more in sizes XL and below. The team has also worked closely with key third-party brands such as Polo Ralph Lauren and BOSS, increasing the depth of buy, improving availability and ensuring the platform continues to provide its customers with access to the brands they love in an inclusive range of sizes.

New FS Platform: As outlined on page 4, our new Financial Services platform has made good progress during FY24.

Whilst we develop the new platform ahead of go live, we implemented a fresh credit limit strategy to maintain responsible lending to our customers, while also mitigating the effects of write-offs and arrears on our business. Simultaneously, our innovative new payment arrangement, which extends reduced payment periods for those facing financial difficulties, has improved customer retention effectively.

What we will focus on in FY25

Strategic brands: We are committed to enhancing our brand offerings across all our strategic brands. Specifically, we recognise the potential to expand the presence of premium products within JD Williams. Additionally, we aim to diversify Jacamo by incorporating more men's fashion items whilst rationalising the tech offering. Furthermore, we intend to increase the proportion of own-designed products within Simply Be. Following Simply Be's strong partnership performance with Sainsbury's, we believe there is a strategic opportunity which partnerships can have in our fashion proposition, particularly in raising the awareness in broader customer segments of Simply Be. Our intent is to grow partnerships as a distribution channel through existing and potential new partners.

New FS Platform: We look forward to releasing the new FS proposition to our colleagues once the minimum viable product ('MVP') has been built. Upon successful testing with colleagues, the external MVP rollout will commence in FY26, providing a modern, market-standard credit proposition. Before delivery of the new FS platform, we will ensure the current offer is as competitive and visible as possible.

3.    Transform the Customer Experience

Strategic objective: Transform the customer experience, pre and post purchase, and drive conversion at checkout through a personalised experience.

What we have achieved in FY24

As outlined on page 4, we have continued to roll out the new mobile-first websites to our strategic brands with the new Jacamo website going live in FY24. The new websites remain the cornerstone in transforming our customer experience and we have seen a doubling of our Google Lighthouse scores (an open-source measure of site performance and user experience).

Our new Product Information Management ('PIM') system, as described on page 4 was launched on our first strategic brand in Simply Be. Having a single place to collect, manage, and enrich product data, will not only provide a better experience for our customers on-site but will also create a more efficient process for colleagues.

What we will focus on in FY25

Significant progress has been made in rolling out new mobile-first websites. The implementation of a new content management system at the start of FY25 will enable the launch of the new mobile-first website for JD Williams. Following this, heritage brands will begin to be sequentially transitioned to the new platform. We will continue to iterate on the website capabilities, with feature releases planned throughout the year to continue to enhance the customer journey.

Following the successful launch of the PIM system on Simply Be, we plan to operationalise the technology onto the remaining strategic brands in FY25. We believe that the PIM system will also improve search engine optimisation (SEO), thereby improving marketing efficiency.

We plan to improve the mobile app offering for our strategic brands. This will provide a home for future enhancement to our loyalty programme offering for both Retail and Financial Services. This will then support activities that follow, having greater insight into notification performance, and using data from customers to improve personalisation, which will also improve engagement with the app, and the overall customer experience.

4.    Win with our Target Customer

Strategic objective: Grow our customer base through our existing core customer, high value lapsed customers and a new, younger generation.

What we have achieved in FY24

To engage our target customers in an ever-challenging consumer landscape, we continue to foster close collaboration with strategic partners. Together with Meta, we have implemented automated product promotion campaigns (ASC+). The system uses machine learning to combine prospecting and existing customer audiences and ensure that the campaign is targeted to customers who have a high probability of purchase, further streamlining our customer acquisition strategy.

We have diversified the way we engage our customers. We have enhanced our Customer Relationship Management ('CRM') proposition, by launching SMS as a new channel. We have also strengthened our loyalty programmes, engaging more of our target customers, and optimising our contactable base. These enhancements, dovetailed with data-driven messaging, have led to an increase in customers enrolling in our loyalty programmes, with a 20% increase in the number of customers who opted into our loyalty programme compared to FY23.

We have continued to make data-driven decisions, conducting tests to determine the best way to continuously identify opportunities for customer experience enhancements. This includes offering more ways to pay, with the launch of Apple Pay.

What we will focus on in FY25

We plan to increase new customer acquisition and ensure we maximise the value of our existing base, whilst always being focused on our most active customers. We will be able to reach more customers in a relevant, timely way thanks to improvements in data usage and new channels to reach our customers.

Our apps remain the highest converting channel, reinforcing how integral the app channels are to transforming the customer experience. Credit customers are some of our longest-serving customers; their loyalty and continued engagement contribute significantly to the longevity of our customer base. Hence, we will prioritise targeting both credit and app customers, as they show higher levels of engagement with our brands than other customers.

The approach we will take when communicating with opted-in loyalty members will be more engaging and personalised to specific customer groups. We will reduce usage of discount and promotional activity, instead focusing more on brand-specific content which will fuel more desire for our offer.

5.    Establish Data as an Asset to Win

Strategic objective: Establish data as an asset to drive top line and margin improvements.

What we have achieved in FY24

We've harnessed data-driven insights from our Customer Lifetime Value models to shape our predictive models for customer behaviour. This ensures a more personalised marketing approach and a consistent customer experience. These insights have been used to deliver targeted onsite messaging to customers who could benefit from our credit proposition.

We've broadened the use of PriceTagger, our in-house tool that optimises product promotion using price elasticity, which has seen adoption across 34% more of our products. PriceTagger enables machine learning-driven pricing by gauging how demand and supply of products respond to price changes. We're continually refining our predictive models to account for seasonal trends in customer behaviour and their impact on the rate of sale, thereby enhancing our pricing agility in the market space.

What we will focus on in FY25

Data-driven decision-making will continue to drive our strategy forward and there will be an increased focus on marketing analysis to ensure optimal channel mix by brand, whilst ensuring efficiencies in spend. We will continue to deliver data, analytics and reporting, to help improve profitability, such as planned enhancements to our Customer Lifetime Value models.

We will begin transitioning to a cloud-native Analytics Platform to consolidate data, accelerate analytics, facilitate self-service use cases, and mitigate compliance risks. This will require an upgrade to Google Analytics 4 for continued data tracking on our sites. We will also transition from third-party cookies to first-party data collection for compliance with UK privacy law changes in 2024.

Key Enablers

What we have achieved in FY24

In FY24, the new Consumer Duty set higher and clearer standards for consumer protection in financial services, emphasising customer-centric practices. At N Brown, we adopted the new Consumer Duty regulations on time and to a high standard, highlighting our commitment to prioritising our customers. We consistently assess our offerings, policies, and processes to uphold this customer-focused strategy.

The company fosters an inclusive culture through the EMBRACE Strategy and colleague-led communities. Our commitment to colleague development and welfare is reflected in our eNPS scores, which exceeded the UK retail benchmark by 16 points in FY24. This is again a testament to our agile ways of working, which have fostered our collaborative environment.

What we will focus on in FY25

We will act to scale the marketing spend in FY25 and fund this through cost efficiencies. This choice is needed to help change the momentum in our active customer file.

We will roll out agile ways of working to the remainder of employees at head office, leaving only our logistics operation to finalise. The rollout of this transformation has complemented the right-sizing of our cost base.

We will develop our transition plan in line with the Climate-Related Financial Disclosures ('CRFD') requirements and cultivate a culture that revolves around sustainability throughout our organisation.

 

 

Key Performance Indications ('KPIs')¹

As a digital retailer committed to accelerating our strategy and navigating a post-pandemic environment, we continue to report various digital customer metrics, which provide operational measures of how our strategy is progressing.

	52 weeks to 2 Mar 2024	52 weeks to 25 Feb 2023	Change
Total website sessions2	183m	220m	(16.8)%
Conversion2	3.7%	3.7%	-
Total Orders	7.3m	8.7m	(16.1)%
AOV	£83.6	£79.2	5.6%
Items per order	2.8	2.8	-
AIV	£30.2	£28.3	6.7%
Total active customers	2.2m	2.6m	(15.4)%
FS arrears	10.6%	9.1%	1.5ppts
NPS	63	57	6

^{1 KPIs are defined on page 25. KPIs shown above on a 52 week basis for FY23 other than Financial Services Arrears, which reflects a 2 March 2024 balance sheet date.}

^{2 Sessions and conversion for 52 weeks to 25 Feb 2023 restated for consistency with definitions within 52 weeks to 2 Mar 2024 reporting. Note that approach to reporting associated with "Google Consent Mode" going forward is anticipated to lead to a restatement of sessions and conversion for 52 weeks to 2 Mar 2024 within FY25 reporting.}

 

Consistent with the broader market, we have continued to see the impact of macro-economic challenges and consumer behaviour, which has been accentuated for online pureplay businesses.

This is reflected in the broad trends in customers, sessions and ordering continuing from FY23. The lower active customers trend includes our heritage portfolio of brands where our focus is on stabilisation and value protection rather than growth.

The reduction in orders has been partially offset by an increase in Average Item Value ('AIV'). We have seen a continuation of more intentional behaviour from customers, which has included buying into more premium ranges, and we have also implemented measured price increases supported by data tools to offset an element of the inflationary impacts on our product costs.

The Financial Services arrears rate includes a higher level of insolvent accounts, reflecting debt sale timings year-on-year. Excluding insolvent accounts, the arrears rate was 9.0% (FY23: 8.7%) with the increase due to a higher mix of payment arrangements held at year end, as a year end debt sale did not occur at the end of FY24 unlike in prior years. The business continues to support and retain customers through times of financial hardship.

Our Net Promoter Score ('NPS') further improved in H2. Full year performance has been driven by a number of operational improvements including better delivery performance, an extension in order cut off time for next day deliveries to 11pm, and website improvements.

We are pleased with the strategic execution in the year and have a clear set of priorities looking forward. Combining the strategic progress, scaling of marketing spend described in the FY25 Outlook section and an anticipated gradual improvement in macro-economic conditions, provides us with confidence in unlocking progress across the KPIs.

Environment, Social and Governance

We have continued to embed our Environmental, Social and Governance strategy into the business. Our sustainability plan, SUSTAIN, fully aligns our ethical policies with our commercial activities and our commitment to Our People and Our Planet.

Our near-term science-based targets to reduce greenhouse gas ('GHG') emissions have been approved by the Science Based Targets initiative ('SBTi'). The Group has committed to reduce Scope 1, 2 and 3 emissions by 46% by FY31 against an FY22 base year, with the SBTi ensuring that targets are aligned with the latest climate science under the Paris Climate Agreement. These targets are part of the Group's ambition to achieve net zero emissions by 2040 under the British Retail Consortium's ('BRC') Climate Action Roadmap.

A key commitment for the business is responsibly sourcing own brand product. We have reached 47% of own brand designed Clothing and Home textile ranges with sustainable attributes (from 0% in 2019) as we target growing this to 100% by FY30 in line with our Textiles 2030 commitment. We have also reached 70% of cotton use being responsibly sourced (Better cotton, organic or recycled) as we focus on transitioning to 100% responsibly sourced cotton by FY26.

During the year we have driven engagement with our colleague-led charity partners - the Retail Trust and FareShare Greater Manchester. Through a variety of fundraising activities we reached the fundraising milestone of £50,000 just over one year into the partnership.

FY24 FINANCIAL PERFORMANCE

 

Financial KPIs

Our non-financial KPIs are contained in the Chief Executive Officer's statement. We also use a number of financial KPIs to manage the business. These are shown below and will continue to be reported going forwards.

 

	52 weeks to 2 March 2024	52 weeks to 25 Feb 20231	Change	53 weeks to 4 March 20231
Product revenue	£381.2m	£426.6m	(10.6)%	£433.4m
Adjusted EBITDA2	£47.6m	£54.4m	(12.5)%	£57.3m
Adjusted EBITDA margin2	7.9%	8.2%	(0.3)ppts	8.5%
Adjusted operating costs to Group revenue2	39.8%	38.1%	1.7ppts	37.7%
Cash and cash equivalents3	£65.2m	N/A	N/A	£35.5m
Total Accessible Liquidity2,3	£148.5m	N/A	N/A	£143.9m
Statutory profit before tax	£5.3m	N/A	N/A	£(71.1)m
Adjusted EPS2	1.65p	N/A	N/A	1.81p

1 FY23 was the 53 week period ended 4 March 2023.  A detailed comparison of the 53 week results to 4 March 2023 and 52 week results to 25 February 2023, for comparability with this year's 52 week period, is set out on page 15.

2 A full glossary of Alternative Performance Measures and their definitions is included on page 26.

3 FY23 Total Accessible Liquidity of £143.9m and cash and cash equivalents of £35.5m are as at the balance sheet date, 4 March 2023. Subsequent to the balance sheet date, the Group refinanced its borrowings and extended their maturities to December 2026. As at 6 May 2023 and following the refinancing and extended maturity dates, Total Accessible Liquidity was £112.0m.

 

Reconciliation of Statutory financial results to adjusted results

The Annual Report and Accounts includes Alternative Performance Measures ('APMs'), which are not defined or specified under the requirements of IFRS. These APMs are consistent with how we measure performance internally and are also used in assessing performance under our incentive plans. Therefore, the Directors believe that these APMs provide stakeholders with additional, useful information on the Group's performance.

The adjusted figures are presented before the impact of adjusting items. These are items of income and expenditure which are one-off in nature, and material to the current financial year, or represent true ups to items presented as adjusting in prior periods. These are detailed in note 6.

A full glossary of Alternative Performance Measures and their definitions is included on page 26.

 

 

 

 

 

 

Reconciliation of Income Statement Measures

 

	52 weeks to 2 Mar 2024				53 weeks to 4 March 2023			52 weeks to 25 Feb 2023
£m	Statutory	Adjusting items	Adjusted		Statutory	Adjusting items	Adjusted	53rd week impact	52 weeks Adjusted
Group Revenue	600.9		600.9		677.5		677.5	(11.5)	666.0
Cost of sales	(315.2)	0.8	(314.4)		(364.7)		(364.7)	6.7	(358.0)
Gross Profit	285.7	0.8	286.5		312.8		312.8	(4.8)	308.0
Gross profit margin	47.5%		47.7%		46.2%		46.2%		46.2%
Operating costs	(242.3)	3.4	(238.9)		(290.0)	34.5	(255.5)	1.9	(253.6)
Adjusted operating costs to Group revenue ratio			39.8%				37.7%		38.1%
Adjusted EBITDA			47.6				57.3	(2.9)	54.4
Adjusted EBITDA margin			7.9%				8.5%		8.2%
Depreciation & amortisation	(20.7)		(20.7)		(35.7)		(35.7)	-	(35.7)
Impairment of non-financial assets	(3.3)	3.3	-		(53.0)	53.0	-	-	-
Operating profit / (loss)	19.4	7.5	26.9		(65.9)	87.5	21.6	(2.9)	18.7
Net finance costs	(13.6)		(13.6)		(14.1)		(14.1)	0.3	(13.8)
Profit / (loss) before taxation and fair value adjustments to financial instruments	5.8	7.5	13.3		(80.0)	87.5	7.5	(2.6)	4.9
Fair value adjustments to financial instruments	(0.5)		(0.5)		8.9		8.9	-	8.9
Profit / (loss) before taxation	5.3	7.5	12.8		(71.1)	87.5	16.4	(2.6)	13.8
Taxation (charge) / credit	(4.5)	(1.1)	(5.6)		19.7	(20.6)	(0.9)	-	(0.9)
Profit / (loss) for the year	0.8	6.4	7.2		(51.4)	66.9	15.5	(2.6)	12.9
Earnings / (loss) per share	0.17p		1.65p		(11.19)p		1.81p		N/A

 

Reconciliation of Cash and cash equivalents and bank overdrafts to Unsecured Net Cash and Adjusted Net Debt

 

£m	2 March 2024	4 March 2023
Cash and cash equivalents	65.2	35.5
Unsecured debt and bank overdrafts	-	-
Unsecured Net Cash	65.2	35.5
Secured debt facility linked to eligible receivables	(301.5)	(332.9)
Adjusted Net Debt	(236.3)	(297.4)

 

 

 

 

 

Reconciliation of Net movement in Cash and cash equivalents and bank overdrafts to Net Cash  generation / (outflow)

 

£m	52 weeks to 2 March 2024	53 weeks to 4 March 2023
Net increase / (decrease) in cash and cash equivalents and bank overdraft	29.7	(7.6)
Voluntary flexible drawdown of securitisation loan	-	(60.1)
Net cash generation / (outflow)	29.7	(67.7)

 

Overview

It is encouraging that this year's return to a positive statutory profit before tax, the delivery of Adjusted EBITDA above market expectations, and strong levels of cash generation, have been achieved despite the challenging macro-economic conditions.

The discussion of revenue, Adjusted gross margin, Adjusted operating costs and Adjusted EBITDA which follows is against last year's 52 week comparative, for comparability with FY24's 52 week period.

We planned for the continued market softness which has characterised FY24, albeit conditions have weighed on customer behaviour for longer than we expected at the outset of the year. These conditions drove product revenue down 10.6%. Financial Services revenue reduced 8.2% as a result of the lower opening debtor book and the impact from lower product revenue in the year, with the Financial Services debtor book remaining well controlled.

Adjusted EBITDA margin strengthened significantly in H2, up 4ppts against H1, returning full year EBITDA margin broadly to the level achieved in FY23. This reflects a strong focus on areas which are in the business' direct control, consistent with our plans and guidance set out in October at Interim results. The H2 Adjusted gross profit margin improved by c.2ppts over H2 of FY23, leading to full year 1.5ppts up on prior year. The H2 Adjusted operating costs to Group revenue ratio improved by c.4ppts against H1, with some easing of inflationary impacts as H2 annualised against significant increases in the prior year, helping to contain the full year ratio to under 40% despite further operational deleverage in the year.

Adjusting items reduced to £7.5m, from £87.5m last year. The prior year charge largely related to a non-cash impairment of non-financial assets and settlement of the Allianz litigation. Combined with lower depreciation and amortisation following last year's impairment, statutory profit before tax improved to a positive level of £5.3m.

A proactive moderation of intake and clearance of older stock items has driven inventory £20m lower than prior year and supported strong cash generation of nearly £30m after £23m of self-funded capital investment into the transformation of the business. The balance sheet remains strong with £148.5m of total accessible liquidity, with £65.2m of unsecured net cash, and the RCF and overdraft remaining undrawn with limits of £75m and £12.5m respectively.

 

 

 

 

 

Revenue

 

£m	52 weeks to 2 Mar 2024	52 weeks to 25 Feb 20231	Change 52 weeks to 52 weeks	53 weeks to 4 Mar 20231
Revenue
Strategic brands2	282.5	306.8	(7.9)%	311.8
Heritage brands3	98.7	119.8	(17.6)%	121.6
Total product revenue	381.2	426.6	(10.6)%	433.4
Financial services revenue	219.7	239.4	(8.2)%	244.1
Group revenue	600.9	666.0	(9.8)%	677.5

^{1 FY23 was a 53 week period, ending 4 March 2023. Revenue has also been presented on a 52 week basis, excluding the 53rd week for comparability with FY24's 52 week period. A detailed comparison of the 53 week results to 4 March 2023 and 52 week results to 25 February 2023, for comparability with this year's 52 week period, is set out on page 15.}

^{2 JD Williams, Simply Be, Jacamo.}

^{3 Ambrose Wilson, Home Essentials, Fashion World, Marisota, Oxendales and Premier Man.}

 

Group revenue declined 9.8% to £600.9m reflecting a 10.6% decline in product revenue and a 8.2% decline in FS revenue.

The product revenue decline seen in FY24 is broadly a continuation of that seen in H2 of FY23 when there was a softening in performance reflective of more challenging market conditions and the impact of cost-of-living pressures evident in customers' buying behaviour. FY24's performance is in the context of a decline in the online pureplay market of 10%¹, a 12% reduction in marketing spend, as well as unseasonable weather conditions experienced at certain times during the year, particularly for selling Summer ranges through Spring and July to August. As explained within the non-financial KPI section, customer behaviour has continued to be cautious in the year, reflected in customer numbers, sessions and orders, but partially offset by strength in average item values.

Against this market backdrop, our strategic brands saw a decline of 7.9%. Our heritage brands, which are managed for contribution as opposed to growth, saw product revenue down 17.6%.

The product revenue trend improved through Quarters 1 to 3 (Q1: -11.9%, Q2: -10.4%, Q3: -9.7%). In Q4, which is the quietest period of the year, product revenue reduced by 11.2%, reflecting a softening in the market after Christmas and a focus on profitable trading.

The reduced level of product sales from this year and prior years resulted in a smaller year end customer receivables loan book of £517.0m (FY23: £555.2m), down 6.9%. This in turn drove lower FS revenue, down 8.2%. The reduction in FS revenue is greater than the reduction in book size due to a higher mix of non-interest bearing payment arrangements.

Our responsible and flexible credit offering remains an integral part of our customer proposition, particularly in the current macro-economic environment.

^{1 For the 52 weeks ended 2 March 2024, the online pureplay market according to IMRG declined by 10%.}

 

Adjusted Gross profit¹

£m	52 weeks to 2 Mar 2024	52 weeks to 25 Feb 20232	Change 52 weeks to 52 weeks	53 weeks to 4 Mar 20232
Product gross profit	173.8	189.6	(8.3)%	192.5
Product gross margin %	45.6%	44.4%	1.2ppts	44.4%
Financial services gross profit	112.7	118.4	(4.8)%	120.3
Financial services gross margin %	51.3%	49.5%	1.8ppts	49.3%
Adjusted Group gross profit1	286.5	308.0	(7.0)%	312.8
Adjusted Group gross profit margin1	47.7%	46.2%	1.5ppts	46.2%

¹ A reconciliation of statutory measures to adjusted measures is included on page 15. A full glossary of Alternative Performance Measures and their definitions is included on page 26.

² FY23 was a 53 week period, ended 4 March 2023. Adjusted gross profit has also been presented on a 52 week basis, excluding the 53rd week for comparability with FY24's 52 week period. A detailed comparison of the 53 week results to 4 March 2023 and 52 week results to 25 February 2023, for comparability with this year's 52 week period, is set out on page 15.

 

Adjusted gross profit margin increased 1.5ppts year-on-year to 47.7%, driven by improvements across both product and FS gross margin.

Product gross margin improved 1.2ppts to 45.6%, reflecting better stock purchasing and realisation of margins. c.0.5ppts of the improvement came from trading benefits, including annualising against additional provisioning when year end stock was higher than normal for the forward level of sales, which reduced prior year margin rate by c.1ppt, partially offset by adverse year-on-year impact of c.0.5ppts from product mixes. c.1ppts of the improvement came from normalisation of freight rates, partially offset by c.0.5ppts adverse impact from lower VAT bad debt relief due to lower write-offs¹.

FS gross margin increased 1.8ppts to 51.3%, reflecting improvement in write-offs and a more active debt management strategy adopted. This has had a more prominent benefit in H2, yielding a higher gross margin compared to H1, as the benefit is realised. The FX contracts used to hedge US dollar spend are described in note 7 to the financial statements and we remain well hedged throughout FY25, with the anticipated level of US dollar spend fully hedged.

¹ Included in product gross margin as they are only recoverable due to being a combined retail and financial services business, and they would not be recoverable as a standalone credit business.

 

 

 

 

 

 

 

Adjusted operating costs¹

£m	52 weeks to 2 Mar 2024	52 weeks to 25 Feb 20232	Change 52 weeks to 52 weeks	53 weeks to 4 Mar 20232
Warehouse & fulfilment costs	(58.1)	(62.2)	6.6%	(63.2)
Marketing & production costs3	(59.3)	(67.6)	12.3%	(68.2)
Admin & payroll costs3	(121.5)	(123.8)	1.9%	(124.1)
Adjusted operating costs1	(238.9)	(253.6)	5.8%	(255.5)
Adjusted operating costs to  Group Revenue ratio1	39.8%	38.1%	1.7ppts	37.7%

¹A reconciliation of statutory measures to adjusted measures is included on page 15. A full glossary of Alternative Performance Measures and their definitions is included on page 26.

² FY23 was a 53 week period, ended 4 March 2023. Adjusted operating costs have also been presented on a 52 week basis, excluding the 53rd week for comparability with FY24's 52 week period. A detailed comparison of the 53 week results to 4 March 2023 and 52 week results to 25 February 2023, for comparability with this year's 52 week period, is set out on page 15.

³ FY23 FS statement costs re-presented from Marketing & production into Admin & payroll costs, consistent with updated classification used in FY24.

 

Total operating costs excluding adjusting items reduced £14.7m to £238.9m through a real focus and discipline in areas which the business can directly control. This included a headwind of c.£12m cost inflation being more than offset by volume savings and management initiatives. As previously highlighted, the inflationary pressure had increased the cost base in H2 23, for both supplier costs and internal pay awards, and this has flowed through and annualised into FY24.

Adjusted operating costs as a percentage of Group revenue increased 1.7ppts to 39.8% reflecting the negative operational gearing on fixed costs. As guided to at Interim results in October 2023, further management actions have been taken in H2 and which have moderated the H2 increase relative to that seen in H1, with the H2 Adjusted operating costs ratio improving by c.4ppts against H1.

Warehouse and fulfilment costs were £4.1m or 6.6% lower than the prior year, benefiting from the flexible cost base, with c.£11m of savings from lower core volumes. This was partially offset by inflationary headwinds of c.£4m, and cost increases totaling c.£3m including the impact of lower volumes on efficiency levels, and a slightly higher returns rate.

Marketing and production costs were £8.3m or 12.3% lower than prior year driven by the continued benefit from lower performance marketing costs, reflecting lower website sessions, and the decision to pull back spend given the softer conditions, particularly in H2 (down 17%) as management has focused on profitable sales in a subdued market. This more than offset cost inflation of c.£2m. As explained within the FY25 Outlook section, management has plans to scale marketing and production spend in FY25 with a focus on returning to sustainable profitable growth.

Admin and payroll costs reduced by £2.3m or 1.9%, as management initiatives have more than offset inflationary increases, totaling c. £6m, including utilities, technology contracts and pay awards.

Statutory operating costs including adjusting items decreased by 16.4% against last year's 53 week comparative due to the movements discussed above and lower adjusting items (see below section).

 

 

Depreciation and amortisation

Depreciation and amortisation of £20.7m was down £15.0m versus £35.7m in the prior year. This was driven by the non-cash impairment of £53.0m against non-financial assets booked in FY23, with the reduction consistent with guidance provided at the time of FY23 full year results.

Finance costs

Net finance costs of £13.6m were in line with the £13.8m in the prior year on a 52 week basis, despite the increase in external interest rates. The Group has limited its exposure to interest rate movements through interest rate hedging which it continues to have in place, as described in note 7, and an increased level of interest has been earned this year on cash balances, with the RCF and overdraft remaining undrawn.

Adjusting items

During the year, the Group continued the multi-year transformation of the business and the ongoing review of the operating model. Specifically, a restructuring programme of the Group's operational and head office headcount to reflect the lower sales orders, was initiated in Q2 FY24 and continued throughout the financial year.  Total redundancy costs of £1.7m were incurred in the period within the strategic change total below.

During the year, the Board also approved the rationalisation of the Group's warehousing facilities following a review of the overall warehouse portfolio capacity, utilisation and associated operational cost base. This resulted in a charge of approximately £2.4m including staff exits, onerous contracts and terminal stock rationalisation included within the strategic change total below. £3.3m of property impairment was also booked. Further details can be found in note 6.

The prior year adjusting items include an accounting impairment of £53.0m which was recorded against intangible and plant and equipment assets and a charge of £26.1m representing the additional amount required to cover the settlement and legal costs to completion following the Group reaching full and final settlement in respect of the legal dispute with Allianz Insurance plc.  Under the negotiated settlement, which was made without admission of liability, the Group paid the sum of £49.5m.

 

£m	52 weeks to 2 March 2024	53 weeks to 4 March 2023
Strategic change	4.2	2.4
Impairment of non-financial assets	3.3	53.0
Settlement of Allianz litigation	(0.1)	26.1
Other	0.1	6.0
Items charged to profit before tax	7.5	87.5

 

Profit and earnings per share

Driven by lower product and FS revenues, on a comparable 52 week basis Adjusted EBITDA decreased by £6.8m to £47.6m. The lower revenues were largely mitigated at an Adjusted EBITDA margin level, which showed a relatively small decline of 0.3ppts, to 7.9%.

Statutory operating profit / (loss) improved by £85.3m over prior year to a profit of £19.4m (FY23 £(65.9)m) reflecting the lower level of adjusting items charged to operating profit and reduction in depreciation and amortisation, partially offset by the reduction in Adjusted EBITDA.

Statutory profit before tax was £5.3m, up £76.4m year-on-year (FY23 statutory loss before tax: £(71.1)m), reflecting the improvement in statutory operating profit, partially offset by a loss of £0.5m on fair value adjustments to financial instruments. This annualised against a gain of £8.9m in the prior year which reflected foreign exchange and interest rate hedging mark to market gains.

The taxation charge for the year is based on the underlying estimated effective tax rate for the full year of 87%, impacted by the low level of pre-tax profit in the year and the value of tax adjustments made to derive taxable profits. Further tax analysis is contained in note 8.

Statutory earnings per share improved to 0.17p (FY23: loss of 11.19p). Adjusted earnings per share reduced to 1.65p (FY23: 1.81p).

Financial services customer receivables and impairment charge on customer receivables

Gross customer receivables at year end reduced by 6.9% to £517.0m (FY23: £555.2m), driven by the reduced level of product sales despite an increase in credit penetration.

Arrears rates excluding insolvent accounts increased to 9.0% (FY23: 8.7%), driven by a larger balance of accounts on payment arrangements held at the year end (£53.2m v £48.6m in FY23) as, unlike prior year, a year end debt sale did not occur at the end of FY24. The business continues to support and retain customers through times of financial hardship.

Macro-economic conditions have evolved in the year from inflationary pressures at the start of the year moving towards political uncertainty at the end of the year, with continued pressure on customers from higher prices and higher interest rates, which is being carefully monitored as we continue to support our customers during this time.

Supporting customers on payment arrangements for longer, a strategy adopted at the end of FY23, has resulted in a marked year-on-year reduction of customer balances written-off, improved collections and return to trade.

The expected credit loss ('ECL') provision ratio increased to 14.2% (FY23: 13.4%). The 0.8ppts increase reflects a c.1.1ppts year-on-year impact due to holding more insolvent accounts (included within normal) at year end as a result of debt sale timings year-on-year. Excluding this, the ECL provision ratio would have reduced by 0.3ppts.

 

 

 

£m	2 March 2024	4 March 2023	Change
Gross customer receivables	517.0	555.2	(6.9)%
ECL provision	(73.3)	(74.6)	(1.8)%
Normal account provisions1	(55.7)	(55.6)	(0.8)ppts
Payment arrangement provisions	(15.4)	(16.5)	0.0ppts
Inflationary impacts1	-	(2.5)	0.4ppts
Unemployment rate uncertainty	(2.2)	-	(0.4)ppts
ECL provision ratio	14.2%	13.4%	0.8ppts
Net customer receivables	443.7	480.6	(7.7)%

¹4 March 2023 categorisation re-presented.

 

The profit and loss net impairment charge on customer receivables for FY24 was £106.2m, £16.1m lower than the prior year driven by reduced write-offs from a smaller customer receivables loan book, improved credit decisioning and a more active debt management strategy adopted. 

£m
53 weeks to 4 Mar 2023 net impairment charge on customer receivables	122.3
Lower write-offs due to smaller book size	(7.6)
Lower write-offs due to improving credit risk	(17.4)
Change in annual impairment charge	(7.2)
Lower recoveries and timing of sales	14.1
Week 53 in prior year	(2.3)
Other impacts, including nominal interest	4.3
52 weeks to 2 March 2024 net impairment charge on customer receivables	106.2

 

Funding and total accessible liquidity ('TAL')

The Group has the following arrangements in place:

·    A £400m securitisation facility (FY23: £400m) with commitment extended during the year until December 2026, drawings on which are linked to prevailing levels of eligible receivables but with flexibility around the level which the Group chooses to draw. The Group has previously chosen to proactively reduce the lender commitment from £400m to £340m to reflect the accessible funding level and reduce ongoing fees;

·    A RCF of £75m, and an overdraft facility of £12.5m, both fully undrawn at 2 March 2024. As previously disclosed, these facilities were refinanced following the FY23 year end and are both committed to December 2026.

Throughout the year all covenants have been complied with.

At 2 March 2024, the Group had TAL of £148.5m, comprising cash of £65.2m including restricted cash of £4.2m, the fully undrawn RCF of £75.0m and overdraft of £12.5m. At the end of FY23 TAL was £143.9m and following the refinancing of the RCF facility, at 6 May 2023, TAL was £112.0m.

Net Cash Generation / (Outflow)

£m	52 weeks to 2 March 2024	53 weeks to 4 March 2023
Adjusted EBITDA	47.6	57.3
Inventory working capital movement	21.1	(6.7)
Other working capital, operating cash flows and provision movement	(9.8)	(14.7)
Cash flow adjusted for working capital	58.9	35.9
Adjusting items	(3.0)	(55.4)
Capital investing activities	(23.2)	(25.6)
Non-operating tax & treasury	4.0	0.2
Interest paid	(13.8)	(15.0)
Non-operational cash outflows	(36.0)	(95.8)
Gross customer loan book repayment	38.2	21.9
Decrease in securitisation debt in line with customer loan book	(31.4)	(29.7)
Net cash inflow / (outflow) from the customer loan book	6.8	(7.8)
Net cash generation / (outflow)	29.7	(67.7)

 

The business generated cash of £29.7m in the year, a significant improvement from the £67.7m cash utilised in the prior year. The inflow was driven by positive EBITDA generation and work undertaken to right-size the stock balance. The year closed with £65.2m of unsecured net cash.

Year end net inventory levels were down 21%, at £73.9m (FY23: £94.1m), driving a net improvement in working capital. As outlined at Interim results in October 2023, we have been executing against our previously flagged plans to carefully manage inventory intake and reduce older stock holdings, with units at the end of the year 1.8m below FY23. This has allowed FY25 to be entered with a cleaner stock position.

Adjusting items of £3.0m largely reflect cash outflows from previously announced restructuring activity. These annualise against adjusting items totaling £55.4m, including the full and final settlement paid to Allianz.

Capital expenditure of £23.2m (FY23: £25.6m) has continued to be self-funded as we invest in delivering the ongoing digital transformation of the business. Capital investment was higher in H2 than H1, as guided to in the Interim results in October 2023. The lower full year spend than FY23 reflects timing of certain expected investment now falling into FY25.

The net cash inflow from the customer loan book of £6.8m reflects the reduction in the customer loan book in the year. This annualises against an outflow of £7.8m in FY23, which incorporated a £14.3m adverse impact from a partial deferral of the debt sale.

Adjusted net debt

Unsecured net cash / (debt), which is defined as the amount drawn on the Group's unsecured borrowing facilities less cash balances, closed the year in a positive position with unsecured net cash of £65.2m (FY23: unsecured net cash £35.5m) with the RCF and overdraft facilities remaining undrawn.

Adjusted net debt reduced by £61.1m in the year, to £236.3m (FY23: £297.4m). This is the net amount of £65.2m of unsecured net cash and £301.5m of debt drawn against the securitisation funding facility, which is well covered by the gross customer receivables book of £517.0m.

The reduction in net debt over the prior year reflects the net cash generation described above and the lower securitised borrowings.

Dividend and capital allocation

As previously announced in the Group's FY23 results and in light of the macro-economic environment, our clear set of investment plans and the number of competing demands on our cash resources, the Board decided not to re-introduce a dividend in FY23 or FY24. The Board continues to keep its dividend policy under review and will evaluate the re-introduction of a dividend when transformational priorities and business performance allows.

Pension scheme

The Group's defined benefit pension scheme had a surplus of £17.1m at the end of the year, slightly below the prior year's position (FY23: £20.0m surplus) reflecting asset returns over the period and an allowance for high levels of short term inflation.

Financial risk management and processes

Controls over financial reporting is an area of continuous improvement and remains a key priority for the Group. Due to the legacy systems and processes across the Group, we continue to target improvements in documentation, clarity on key controls, and overall process level controls to reduce reliance on detective management controls. This feeds into the Audit and Risk Committee focus on improving controls. Examples of improvements deployed during the year include refinements to our inventory stock count processes and further development of our IFRS 9 model and policy documentation, including quarterly stress testing of macro-economic updates. In preparation for potential UK SOx attestation requirements, we also completed a review of all key Retail and Financial Services processes and controls. We have an ambition to cover all material areas in the next financial year.

 

KPI DEFINITIONS

Measure	Definition
Total website sessions	Total number of sessions across N Brown apps, mobile and desktop websites in the 12 month period
Total active customers	Customers who placed an accepted order in the 12 month period to reporting date
Total orders	Total accepted orders placed in the 12 month period.  Includes online and offline orders.
AOV	Average order value based on accepted demand1
AIV	Average item value based on accepted demand1
Items per order	Average number of items per accepted order
Orders per customer	Average number of orders placed per ordering customer
Conversion	% of app/web sessions that result in an accepted order
NPS	Customers asked to rate likelihood to "recommend the brand to a friend or colleague" on a 0-10 scale (10 most likely). NPS is (% of 9-10) minus (% of 0-6). NPS is recorded on JD Williams, Simply Be, Jacamo and Ambrose Wilson
FS Arrears	Arrears are stated including both customer debts with two or more missed payments, or customer debts on a payment hold

 

¹Accepted demand is defined as the value of Orders from customers (including VAT) that we accept, i.e. after our credit assessment processes.

 

 

 

APM GLOSSARY

The Preliminary Results statement includes alternative performance measures ('APMs'), which are not defined or specified under the requirements of IFRS. These APMs are consistent with how the Group measures performance internally and are also used in assessing performance under the Group's incentive plans. Therefore, the Directors believe that these APMs provide stakeholders with additional, useful information on the Group's performance.

 

 

Alternative Performance Measure	Definition
Adjusted gross profit	Gross profit excluding adjusting items.
Adjusted gross profit margin	Adjusted gross profit as a percentage of Group Revenue.
Adjusted EBITDA	Operating profit, excluding adjusting items, with depreciation and amortisation added back.
Adjusted EBITDA margin	Adjusted EBITDA as a percentage of Group Revenue.
Adjusted profit before tax	Profit before tax, excluding adjusting items and fair value movement on financial instruments.
Adjusted profit before tax margin	Profit before tax, excluding adjusting items and fair value movement on financial instruments expressed as a percentage of Group Revenue.
Net Cash generation	Net cash generated from the Group's underlying operating activities.
Adjusted Operating costs	Operating costs less depreciation, amortisation and adjusting items.
Adjusted Operating costs to Group revenue ratio	Operating costs less depreciation, amortisation and adjusting items as a percentage of Group Revenue.
Adjusted Net debt	Total liabilities from financing activities less cash, excluding lease liabilities.
Net debt	Total liabilities from financing activities less cash.
Unsecured net cash / (debt)	Amount drawn on the Group's unsecured debt facilities less cash balances. This measure is used to calculate the Group's leverage ratio, a key debt covenant measure.
Total Accessible Liquidity	Total cash and cash equivalents, less restricted amounts, and available headroom on secured and unsecured debt facilities.
Adjusted Earnings per share	Adjusted Basic earnings per share based on earnings before adjusting items and fair value adjustments, which are those items that do not form part of the recurring operational activities of the Group. These are calculated in note 9.

 

The reconciliation of the statutory measures to adjusted measures is included in the Financial Performance section on page 15.

 

 

 

 

 

 

 

 

 

 

Consolidated income statement

for the 52 weeks ended 2 March 2024

 

 

			52 weeks ended 2 March 2024			53 weeks ended 4 March 2023
		Note	Before adjusted items £m	Adjusted items (note 6) £m	Total £m	Before adjusted items £m	Adjusted items (note 6) £m	Total £m
Revenue			400.6	-	400.6	455.7	-	455.7
Credit account interest			200.3	-	200.3	221.8	-	221.8
Group revenue		5	600.9	-	600.9	677.5	-	677.5
Cost of sales		5	(208.2)	(0.8)	(209.0)	(242.4)	-	(242.4)
Impairment losses on customer receivables			(106.2)	-	(106.2)	(122.3)	-	(122.3)
Gross profit		5	286.5	(0.8)	285.7	312.8	-	312.8
Impairment of non-financial assets		10	-	(3.3)	(3.3)	-	(53.0)	(53.0)
Operating profit/(loss)			26.9	(7.5)	19.4	21.6	(87.5)	(65.9)
Finance income1			2.6	-	2.6	1.5	-	1.5
Finance costs1,			(16.2)	-	(16.2)	(15.6)	-	(15.6)
Profit/(loss) before taxation and fair value adjustments to financial instruments			13.3	(7.5)	5.8	7.5	(87.5)	(80.0)
Fair value adjustments to financial instruments		7	(0.5)	-	(0.5)	8.9	-	8.9
Profit/(loss) before taxation			12.8	(7.5)	5.3	16.4	(87.5)	(71.1)
Taxation		8	(5.6)	1.1	(4.5)	(0.9)	20.6	19.7
Profit/(loss) for the period			7.2	(6.4)	0.8	15.5	(66.9)	(51.4)
Earnings/(loss) per share from continuing operations
Basic		9			0.17			(11.19)
Diluted		9			0.17			N/A
1FY23 has been re-presented to separately disclose finance income and finance costs

 

Consolidated statement of comprehensive income

for the 52 weeks ended 2 March 2024

 

		52 weeks  ended 2 March 2024	53 weeks ended 4 March 2023
	Note	£m	£m
Profit/(loss) for the period		0.8	(51.4)
Items that will not be reclassified subsequently to profit or loss
Actuarial losses on defined benefit pension schemes		(4.6)	(19.4)
Tax relating to items not reclassified	8	1.6	6.7
Net other comprehensive loss that will not be reclassified to profit and loss		(3.0)	(12.7)
Items that may be reclassified subsequently to profit or loss
Exchange differences on translation of foreign operations		(0.6)	0.8
Fair value movements of cash flow hedges		(1.0)	30.5
Amounts reclassified from other comprehensive income to profit and loss		(10.1)	(6.6)
Tax relating to these items		2.8	(6.0)
Net other comprehensive (loss)/income that may be reclassified subsequently to profit and loss		(8.9)	18.7
Other comprehensive (loss)/income for the period		(11.9)	6.0
Total comprehensive loss for the period attributable to equity holders of the parent		(11.1)	(45.4)

 

 

Consolidated balance sheet

As at 2 March 2024

	Note	As at 2 March 2024 £m	As at 4 March 2023 £m (Restated)2
Non-current assets
Property, plant and equipment	11	47.0	50.9
Intangible assets	10	60.9	58.3
Right-of-use assets		6.3	0.5
Retirement benefit surplus		17.1	20.0
Derivative financial instruments	7	0.1	7.6
Deferred tax assets2	8	15.9	16.0
		147.3	153.3
Current assets
Inventories		73.9	94.1
Trade and other receivables	12	468.6	504.7
Derivative financial instruments	7	8.8	19.1
Current tax asset	8	0.2	0.1
Cash and cash equivalents	14	65.2	35.5
		616.7	653.5
Total assets		764.0	806.8
Current liabilities
Trade and other payables	13	(65.0)	(72.5)
Lease liability		(1.1)	(0.3)
Provisions	18	(4.9)	(10.1)
Derivative financial instruments	7	(0.7)	(0.1)
Current tax liability		-	-
		(71.7)	(83.0)
Net current assets1		545.0	570.5
Non-current liabilities
Bank loans	15	(301.5)	(332.9)
Trade and other payables	13	(0.2)	-
Lease liability		(4.8)	(0.2)
Provisions	18	(6.6)	-
Derivative financial instruments	7	(0.1)	-
		(313.2)	(333.1)
Total liabilities		(384.9)	(416.1)
Net assets		379.1	390.7
Equity attributable to equity holders of the parent
Share capital	17	51.2	50.9
Share premium account		85.7	85.7
Own shares		(0.1)	(0.2)
Cash flow hedge reserve		5.4	15.7
Foreign currency translation reserve		1.2	1.8
Retained earnings		235.7	236.8
Total equity		379.1	390.7
1 FY23 net current assets has been re-totalled in comparison to the figure reported in the FY23 Annual Report 2 FY23 deferred tax assets and deferred tax liabilities have been restated to present on a net basis (see note 19)

 

 

Consolidated cash flow statement

For the 52 weeks ended 2 March 2024

 

		Note	For the 52  weeks ended 2 March 2024 £m	For the 53  weeks ended 4 March 2023 £m
Net cash inflow from operating activities			92.2	6.3
Investing activities
Purchases of property, plant and equipment			(2.9)	(5.8)
Purchases of intangible assets			(19.8)	(19.8)
Initial direct costs of right-of-use additions			(0.5)	-
Net cash used in investing activities			(23.2)	(25.6)
Financing activities
Interest paid1, 2			(15.4)	(15.5)
(Repayments)/proceeds from bank loans			(31.4)	30.4
Principal elements of lease payments			(0.7)	(1.0)
Foreign exchange forward contracts			7.7	(1.2)
Proceeds on issue of share capital			0.3	-
Purchase of shares by ESOT			(0.3)	-
Net cash (outflow)/inflow from financing activities			(39.8)	12.7
Net foreign exchange difference			0.5	(1.0)
Net increase / (decrease) in cash and cash equivalents and bank overdraft			29.7	(7.6)
Cash and cash equivalents and bank overdraft at beginning of period			35.5	43.1
Cash and cash equivalents and bank overdraft at end of period		14	65.2	35.5

¹ Included within Interest paid is £14.0m (FY23: £13.0m) relating to interest incurred on the Group's securitisation facility, drawings on which are linked to prevailing levels of eligible receivables

² FY23 has been re-presented to separately disclose interest received and interest paid  

Reconciliation of profit/(loss) to net cash flow from operating activities

 

	For the 52  weeks ended 2 March 2024 £m	For the 53  weeks ended 4 March 2023 £m
Profit/(loss) for the period	0.8	(51.4)
Adjustments for:
Taxation charge/(credit)	4.5	(19.7)
Fair value adjustments to financial instruments	0.5	(8.9)
Net foreign exchange gain	(0.5)	1.0
Finance income	(2.6)	(1.5)
Finance costs	16.2	15.6
Depreciation of right-of-use assets	0.8	0.8
Depreciation of property, plant and equipment	2.6	4.3
Loss on disposal of intangible assets	0.1	0.8
Impairment of non-financial assets	3.3	53.0
Amortisation of intangible assets	17.3	30.6
Share option charge	1.5	1.5
Operating cash flows before movements in working capital	44.5	26.1
Decrease/(increase) in inventories	21.2	(6.7)
Decrease in trade and other receivables	35.6	28.3
Decrease in trade and other payables	(8.3)	(22.3)
Increase/(decrease) in provisions	1.5	(20.9)
Pension obligation adjustment	(0.8)	(1.0)
Cash generated by operations	93.7	3.5
Taxation (paid)/received	(3.1)	2.3
Interest received1	1.6	0.5
Net cash inflow from operating activities	92.2	6.3
1 FY23 has been re-presented to separately disclose interest received and interest paid
Changes in liabilities from financing activities	52 weeks to 2 March 2024	53 weeks to 4 March 2023
	£m	£m
Loans and borrowings
Opening balance at 4 March 2023 (26 February 2022)	333.4	303.8
Changes from financing cash flows
Net (repayment)/proceeds from loans and borrowings1	(31.1)	27.9
Lease principal payments in the period	(0.7)	(0.8)
Lease disposals in the period	6.1	-
(Decrease)/increase in loans and borrowings due to changes in interest rates	(0.3)	2.5
(Decrease)/increase in loans and borrowings	(26.0)	29.6
Closing balance at 2 March 2024 (4 March 2023)	307.4	333.4

 

¹ Repayments relating to the Group's Securitisation facility are re-presented net of cash receipts in respect of the customer book collections. The Directors consider that the net representation more accurately reflects the way the securitisation cash flows are managed.