UBS downgrades N Brown on competition concerns

12th Mar 2014 10:49

UBS has downgraded its rating for N Brown, the online and catalogue home shopping group, from 'neutral' to 'sell', raising concerns with competition from some well-known High Street names.The bank said that N Brown has to "continually improve the fashionability of its clothing offer to appeal to a wider UK and increasingly global audience" in order to deliver the next leg of growth."The aim is to push clothes designed specifically for plus-sized customers into the larger end of mainstream clothing markets. The brand consolidation and UK stores should allow for more effective marketing and consequent increase in brand awareness. "However, the size 16-18 women's clothing market is the stomping ground of some of the industry heavyweights, such as M&S, Next and Debenhams, and this move away from their differentiated, core niche increases the risk." Recent sales growth at N Brown has been strong but UBS said this has been largely offset by underlying investment in customer acquisition and distribution costs which will impact on margins.The stock was down 2.1% at 567.5p by 10:46.The target price for the stock has been lowered from 565p to 535p.BC