N Brown sales sees sales plunge, warns on profit
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In light of current market conditions and the rapidly changing developments regarding Covid-19, N Brown plc in an update said that at this stage, there is no way of predicting the impact the virus will have on the company’s sales, nor how long the pandemic will last and what effect it will have on customer behaviour. The company added that while trading for the first two weeks of the new financial year was in line with expectations, during the last week, N Brown saw a very significant and sudden reduction in customer demand with daily product sales down in excess of 40 percent compared to expectations. The company anticipates a material reduction in demand through FY21. The company further said that it expects adjusted profit before tax to be lower than the previously guided range of 70 million pounds to 72 million pounds.
As a result, N Brown has announced a number of immediate measures to reduce costs and preserve liquidity, including a significant reduction in marketing expenditure with immediate effect and for the foreseeable future if market conditions do not improve; stopping and deferring all non-essential capital expenditure; working collaboratively with HMRC to secure the deferral of all tax and national insurance payments; stopping stock purchases immediately, thereby aligning stock levels for SS20 with reduced customer demand and freezing all recruitment and reviewing organisational structures.
In addition, N Brown said, the group is exploring all options in relation to the Government and Bank of England support packages for business. The group has financing facilities in place totalling 652.5 million pounds. As at March 20, 2020, the company was drawn on the securitisation facility, to the maximum extent possible, being 414.7 million pounds and fully drawn down on the RCF of 125 million pounds and it had also drawn down 9 million pounds on the overdraft and held cash balances of 46.3 million pounds.
As a result of the initial impact of Covid-19 the company’s board will not be recommending a final dividend for the financial year ended February 29, 2020 and will suspend dividend payments for the foreseeable future.