UPDATE: N Brown's Sales Growth Slows After UK Election

6th Jul 2010 13:01

(Adds CEO comment, analyst comment, detail) By Hannah Benjamin Of DOW JONES NEWSWIRES LONDON (Dow Jones)--Home shopping retailer N. Brown Group PLC (BWNG.LN) Tuesday said sales growth slowed following the U.K. general election, as its customers weighed up the likely impact on their finances of the coalition government's new policies. N. Brown--which sells clothes for big and tall people through catalogues and online--said trading had been "subdued", with overall group revenue rising 1.1% in the 18 weeks to July 3 and comparable sales ticking up just 0.1% in the same period. This is a marked slowing of the 3.1% growth in comparable sales in the eight weeks to April 24. "Our customers are older and they tend to read the papers and watch the news and absorb the information on things like the budget and what it means to them," Chief Executive Alan White told Dow Jones Newswires. But he said he thinks the slowing sales trend is just a "blip" and expects sales to return to a level similar to that seen before the election. "We think we can get it back to the 3% and 4% (growth) level for the rest of the year and new customer recruitment should help achieve that," he said. White said customer recruitment activity is producing good results, especially from online search engines like Google (GOOG), and the company will pump an extra GBP2 million in to recruitment spend in its second half to bolster its customer database. "It should also allow us to recover some of the sales we've lost over the last few weeks," White said. N. Brown's brands include Simply Be, Jacamo and High & Mighty. The average age of one of its customers is 57. During the first quarter the firm said it increased its share in women's clothing and footwear even though sales for the market as a whole for customers aged over 65 and for size 16-plus clothing fell. The company took action last year to reduce bad debt levels, through setting tougher criteria to its credit accounts, which it said has reduced revenue by about 2%. However the steps have contributed to better than-expected gross margins, down 20 basis points on the same points last year, but above forecasts of a 30 basis points decline made at the time of the company's preliminary results in April. Investec Securities analysts David Jeary and Katharine Wynne expect to trim their pretax profit estimates by about 1% or 2%, as they await more guidance on the impact of bad debt management on sales and gross margin. They're currently forecasting the company to make a fiscal 2011, ended Feb. 28, pretax profit of GBP98.5 million on sales of GBP739 million. Shore Capital analyst Kate Calvert kept a "buy" rating on N. Brown, citing its strong market position and opportunities for growth, particularly overseas in new regions like the U.S. -By Hannah Benjamin, Dow Jones Newswires; 44-20-7842-9298; [email protected] (END) Dow Jones Newswires July 06, 2010 08:01 ET (12:01 GMT)