N Brown raises dividend as profits grow 5.5%

10th May 2011 09:58

Full-year profits at internet and catalogue home shopping company N Brown came in ahead of expectations, helped by the first-time contribution from lingerie retailer Figleaves, prompting the group to hike its dividend by 15%.Pre-tax profit (before fair value adjustments to financial instruments) for the 12 months to 26 February grew 5.5% to £98.2m, from £93.1m previously. The figure came in £0.5m ahead of Peel Hunt's forecasts.The total dividend for the year grew from 10.79p to 12.41p per share, while basic earnings per share (EPS) jumped from 22.83p to 26.04p.Meanwhile, revenues increased by 4.2% to £718.8m, from £690m previously, helped by strong growth in Menswear.The company said that the fastest growing part of its overall portfolio were the "younger brands" - targeted at customers aged between 30 and 45 - which saw sales grow 11% to £240m, helped by Figleaves, which was acquired in June 2010 for £10.3m.However, sales growth was restricted by tight credit control, "but this has been a major contributor to the improved net bad debt charge to sales ratio which has fallen from 9% to 7.4%," said chairman Lord David Alliance. As a consequence, the group managed to increase its gross margin by 1.3 percentage points year-on-year to 53.8%.Sales during the first ten weeks of the current year (to 7 May) are up 4.8% on last year, 1.5% higher on a like-for-like basis. The group said it has maintained the rate of gross margin during the period, despite a 9% rise in cost prices and a higher rate of VAT."We reiterate our 'buy' stance and raise our target price to 340p [from 300p], reflecting the continued long term EPS growth N Brown continues to deliver," said Peel Hunt analyst John Stevenson.---BC