N Brown, the fashion retailer saw its share price drop over 13% in mid-morning trading. Despite enjoying a record-breaking Christmas, the company reported deteriorating margins.
The group now expects gross margins to decline by 225 basis points to 250 basis points over the full year, compared to previous guidance of a decline of 70 basis points – 120 basis points, primarily due to higher promotional activity.
There were some positives in the company’s latest trading statement. Financial services gross margin guidance now is for an improvement of 5% to 5.5%, up from 1% to 2% previously, as a result of a further improvement in the customer loan book.
Group revenue in the 18 weeks to 6 January 2018 was up 3.2% year-on-year. Revenue from the US was up 22% while online revenue was up 9%
Product revenue was up 2.7%, down from growth of 7.5% in the preceding 26-week period, while revenue from financial services was 4.6% higher than the year before.