Specialist fashion retailer N Brown tanked on Thursday as it slashed its interim dividend and warned that a drop in offline revenue will hold back overall revenue growth.
In an update for the 26 weeks to 1 September, the company posted a 1% rise in group revenue to £457.8m and a 5% decline in adjusted pre-tax profit to £30.6m.

Still, the company, which cut its dividend by 50% to 2.83p a share, said its three “power brands” – JD Williams, Simply Be and Jacamo – continued to outperform the rest of the group, with revenue up 1.8% excluding stores. Power brands now account for 58% of product revenue.

Offline revenue at N Brown fell 22.4% in the half-year as the company continued to shift its focus to its growing online business.

Meanwhile, N Brown's financial services business, which gives customers credit for purchases, saw revenue rise 12.7% to £146.4m, as it benefited from interest from its growing customer loan book. Gross margin was down 50 basis points to 56.0% due to its requirement under IFRS9 to make a provision against every credit customer, including those that are trading normally.

Chief executive Steve Johnson said: “The group's adjusted profit was in line with our expectations as we benefited from growth in our online power brands and financial services, along with improved marketing efficiency. We were however disappointed with our wider product performance which was impacted by the ongoing decline of our legacy offline business and challenging market conditions.

“Going forward we expect offline sales to continue to fall as we focus on online power brand growth. While this will hold back revenue in the short term, there are opportunities to drive profit particularly through improved efficiency, as the business further shifts online, and we accelerate the use of analytics to increase returns on our promotional spend.”

Still, the company said that the positive outlook for financial services and scope for further efficiencies mean its full-year expectations are unchanged.

At 1125 BST, the shares were down 22% to 108.70p.