Investment: N Brown lifts retail gloom

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The Independent Online
MANCHESTER-BASED mail order merchants N Brown yesterday defied the encircling gloom in the retail sector with some reassuring figures. In spite of poor summer weather, sales in the six months to 29 August grew by 3 per cent and profits rose by 5.7 per cent to pounds 19m.

What's more, sales in the first seven weeks of the second half are 5 per cent ahead of last year. Electrical goods and hardware are up only 3 per cent, but clothing and footwear are ahead by 10 per cent.

The figures reassured jittery investors, lifting the shares 15 per cent to 243p yesterday. Nevertheless, the company is still only worth half its value of six months ago.

It helps that half the goods it sells are sourced abroad in low-cost countries made even cheaper by currency changes, allowing the company to hold its catalogue prices, while margins actually widened. Stock levels have also been cut, reducing the need for discounting unsold lines.

Unlike most of its mail order rivals, N Brown employs no agents and delivers increasingly by courier. Selling its property financial services division for pounds 4m and a pounds 6.8bn VAT refund have boosted the balance sheet, allowing N Brown to pursue its long-term aim of buying Freemans from Sears if the price is right.

Analysts who cut their forecasts for the full year by up to 10 per cent earlier this summer are now holding firm at around