UK’s N Brown’s profit margin rise to 49.2% in H1 FY25

Manchester-based online retailer, N Brown Group witnessed profitable sales in a market which remained soft and was characterised by unseasonal weather in the first half (H1) of the fiscal 2025 (FY25) ended August 31, 2024. Its adjusted group gross profit margin rose up by 1.6 percentage points (ppts) to 49.2 per cent.

The group’s H1 results show a 6.7 per cent decline in revenue, with product and financial services (FS) revenues down 7.9 per cent and 4.6 per cent, respectively, yet improving. Adjusted Earnings Before Interest, Taxes, Depreciation, and Amortisation (EBITDA) grew 7.4 per cent to £18.8 million (~$24.56 million) and adjusted profit before tax increased to £3.6 million (~$4.7 million), while statutory profit reached £0.2 million from a £2.8 million loss, the company said in its half yearly earnings report.

N Brown Group’s H1 FY25 saw a 6.7 per cent revenue drop but a 1.6-point rise in gross profit margin to 49.2 per cent, with adjusted EBITDA up 7.4 per cent.
Despite a soft market, cost efficiencies and strategic investments, including a new JD Williams website, supported profitability.
Early Q3 trading shows improvement, with FY25 EBITDA expected to meet targets.

The e-commerce platform generated around £1 million (~$1.31 million) in net cash after investing £14.4 million in strategic transformation. The company maintains a strong balance sheet, with £66 million in cash and total liquidity of £150.2 million, while adjusted net debt stands at £211.6 million. Encouraging Q3 trading shows a product revenue decline of just 2 per cent, with further improvements expected in H2 due to strategic initiatives and increased marketing. FY25 adjusted EBITDA is projected to meet management expectations. The company remains focused on margin improvement and cost efficiencies, with strategic investments funded through managed cash flows, positioning it well for sustainable future growth.

The company launched a new mobile-first website for JD Williams, completing the transition of its three strategic brands to the new platform to make further strategic progress. The product information management (PIM) system, essential for the marketing strategy, is now implemented across all brands. The FS transformation is progressing, with testing of the new platform’s minimum viable product underway.

Steve Johnson, interim executive chair and chief executive, said: “We have built on our return to profit in FY24 by delivering YoY progression in the first half of FY25. Our focus on maximising profitable sales and managing the cost base in a soft trading environment, has ensured we remain on track to achieve management’s full year adjusted EBITDA expectations, and we are encouraged by trading at the start of Q3.”

FY25 adjusted EBITDA is expected to be in line with management expectations. Trading during the first five weeks of Q3 has been encouraging, with product revenue trajectory improving to -2 per cent against prior year. Expected continued improvement in product revenue trajectory in H2 supported by delivery of the company’s strategic initiatives and increased investment in marketing. Continued management focus on margin rate and operating cost efficiencies. Strategic investment will continue to be self-funded through carefully managed cash flows, the report added.

Fibre2Fashion News Desk (SG)