N BROWN GROUP PLC INTERIM RESULTS 16 OCTOBER 2012 1 N Brown Group - PowerPoint PPT Presentation

N BROWN GROUP PLC INTERIM RESULTS 16 OCTOBER 2012 1 N Brown Group

N Brown Group plc ALAN WHITE CHIEF EXECUTIVE 2 N Brown Group

RESULTS SUMMARY 2012 2011 % £m £m Revenue 379.3 363.7 +4.3 EBITDA 54.9 54.9 - Operating Profit 45.7 47.0 -2.8 Trading Profit 42.0 44.0 -4.5 Adjusted EPS (p) 12.48 12.10 +3.1 Dividend (p) 5.45 5.29 +3.0 3 N Brown Group

KEY FEATURES – INTERIM RESULTS • Revenue – improving trend • Gross margin – mix impact • Online – increasing penetration • Recent acquisitions – encouraging trends • Stores and International – progress report • Update on strategy plans • Current trading - positive 4 N Brown Group

SUMMARISED P/L Revenue Operating Profit £m TY LY % TY LY % Established 368.2 355.5 +3.6 49.4 49.9 -1.0 International/Stores 11.1 8.2 +35.4 (3.7) (2.9) -27.6 379.3 363.7 +4.3 45.7 47.0 -2.8 LFL Revenue +3.7% 5 N Brown Group

KEY BRAND PORTFOLIO AGE Ladieswear Menswear Stand Alone Upmarket Brands N Brown Group 6

HOME SHOPPING CUSTOMERS Brands Target Age £m % of % Total Change <50 143 38 +12 >50 236 62 - 379 100 +4 2011 • New Customer Sales +20% -2% • Active established customer accounts +1% -5% • Sales per established customer account +1% +6% 7 7 N Brown Group

CUSTOMER RECRUITMENT Press Advertising Online Brand Advertising Mini Catalogues TY 44% 10% 16% 30% LY 39% 11% 13% 37% Focus On Focus On Mid/Old Young/Mid 61% of first order value online 8 N Brown Group

HOME SHOPPING PRODUCTS Turnover % of Total % Change £m Ladieswear 188 49 -2 Footwear 42 11 +4 Menswear 48 13 +12 Home & Leisure 101 27 +13 379 100 +4 Menswear 50% 46” - 64” Waist Ladieswear 50% Sizes 20-38 Corsetry 75% D-L Cup Footwear 92% E-EEEEEE fitting 83% 38 ”+ Back 41% size 7+ ASP +2% 9 N Brown Group

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PRODUCT DEVELOPMENT N Brown Group 11

PRODUCT GROSS MARGIN RATE bps 200 100 0 -100 -200 -300 -400 SS10 AW10 SS11 AW11 SS12 AW12 SS12 AW12 Product mix -ve -ve Amazing value lines -- ve -ve Marketing discounts - ++ve Stock clearance - ++ve Online trading -ve -ve Net impact -90bps +100-150 bps 12 N Brown Group

INTERNET PENETRATION 250 60 53% 48% 43% 50 200 £196m 38% % of Home Shopping Sales 40 +12% Online Sales (£m) 33% £175m 150 +17% £150m 30 25% £128m +17% 21% +21% 100 £106m 20 15% +45% £73m 10% +40% 50 6% £52m 10 +57% £33m £21m +55% £13m +70% 0 0 Aug-03 Aug-04 Aug-05 Aug-06 Aug-07 Aug-08 Aug-09 Aug-10 Aug-11 Aug-12 13 13 N Brown Group

INTERNET SALES BY CUSTOMER GROUP % Penetration % Growth TY LY <50 70 65 +19 >50 42 40 +7 53 48 +12 • Growth rates +7% > total 14 14 N Brown Group

ONLINE SALES DRIVERS • Customer mix • Recruitment - 61% first orders online • Email - automatic – 2.3m - service - £2m • Site developments - SEO - Product promotions - Size guides • Social media - e.g. 75k Facebook fans (x4) - High engagement scores • Faster page loads 15 15 15 N Brown Group

ONLINE ONLY PRODUCT SALES Moda in Pelle AX Paris Gemma Collins 40k Lines Sales +57% >90% DD Glamorise Telephones Computer Games 16 N Brown Group

MOBILES & TABLETS 20.0% 15.0% 10.0% % of session % of online demand 5.0% 0.0% May … Aug … Sep … Nov … Dec … Feb- … Mar- … May … Aug … Sep … Apr-11 Jun-11 Jul-11 Oct-11 Jan-12 Apr-12 Jun-12 Jul-12 • Mobile optimised checkout • Mobile optimised browse • Convergence – bounce/ conversion rates 17 N Brown Group

MOBILES & TABLETS PRODUCT WINDOW SEO Copy Refine results Sort by options Same product sequencing on desktop and mobile 18

CUSTOMER SERVICE • Inbound orders -7%, inbound enquiry -18% • WECC - Affinity sales - £6m demand • My Account – 250k enquiry sessions / week • Enquiry to order ratio down 9% • Direct despatch +28% • Efficiency savings at DC • Next day cut off 5pm (2pm)  6pm AW12 19 N Brown Group

FIGLEAVES HIGH & MIGHTY • Revenue £13m • New stores H2 2011 • Returns down 1% • Revenue up 12% • Gross margin up • Gross margin down • Cost savings • H2 Breakeven • Menswear strong • Excellent profit 20 N Brown Group

INTERNATIONAL • • Revenue +53% Returns rate still too high • • Marisota > Simply Be direct mail Re-engineer business model 2013 • • Simply Be strong online Recruitment restricted to online PPC • • 60k Facebook fans Revenue -20% • • Losses reduced by £0.1m Losses reduced by £0.3m • System improvements H2 FY Revenue c. £12m: FY Loss c . £3.5m (LY, £4.8m) 21 N Brown Group

STORES • Revenue - £1.7m • Online halo • Jacamo in Metro Centre, Liverpool • Higher fashion demand • Replenishment sub-optimal • Loss £1.1m • Focus on Q4 trading • Q1 2013 evaluation 22 N Brown Group

INTERIM SUMMARY • Improving revenue trend • Gross margin down due to product, offer and customer mix • Customer base growing • Online dominating business model 23 N Brown Group

N Brown Group plc DEAN MOORE FINANCE DIRECTOR 24 24 N Brown Group

HIGHLIGHTS 26 weeks to 1 September 2012 2012 2011 vs.LY £m £m % Turnover 379.3 363.7 +4.3% Operating profit 45.7 47.0 -2.8% Trading profit 42.0 44.0 -4.5% Pre-tax profit 41.8 44.8 -6.7% Adjusted earnings per share 12.48p 12.10p +3.1% Dividends per share 5.45p 5.29p +3.0% Borrowings 188.1 196.7 -4.4% Receivables 509.6 485.8 +4.9% 25 N Brown Group

GROUP TRADING ACCOUNT 26 weeks to 1 September 2012 2012 2011 vs.LY £m £m % Group Turnover 379.3 363.7 +4.3% Gross Profit 202.1 199.6 +1.3% Gross Margin % 53.3% 54.9% -160bps Distribution Costs (31.7) (31.6) +0.3% Sales and Administration (124.7) (121.0) +3.1% Group Operating Profit 45.7 47.0 -2.8% Operating Margin 12.0% 12.9% 26 N Brown Group

GROUP PROFIT & LOSS ACCOUNT 26 weeks to 1 September 2012 2012 2011 vs.LY £m £m % Group Operating Profit 45.7 47.0 -2.8% Finance Costs (net) (3.7) (3.0) +23.3% Group Trading Profit 42.0 44.0 -4.5% Unrealised FX movement (0.2) 0.8 - Profit Before Tax 41.8 44.8 -6.7% Taxation (7.2) (10.8) -33.3% Profit After Tax 34.6 34.0 +1.8% 27 N Brown Group

REVENUE SPLIT 26 weeks to 1 September 2012 2012 2011 vs.LY £m £m % Product Sales 267.8 258.8 +3.5 Services 111.5 104.9 +6.3 379.3 363.7 +4.3 28 N Brown Group

PRE-TAX MARGIN 26 weeks to 1 September 2012 • Gross Margin Product -90bps Bad Debt /Financial Income Yield -70bps • Operating Costs Cost base savings +80bps • Finance Costs Refinancing -20bps • Pre-tax margin (11.1%) -100bps 29 N Brown Group

NET ASSET SUMMARY At 1 September 2012 2012 2011 vs.LY £m £m % Non Current Assets 134.4 129.6 +3.7% Inventories 81.5 84.1 -3.1% Receivables/Prepayments 535.6 508.1 +5.4% Creditors/Accruals (148.6) (153.8) -3.4% Retirement Benefit Surplus/(Deficit) 1.6 (0.2) - Net Borrowings (188.1) (196.7) -4.4% 416.4 371.1 +12.2% Gearing 45% 53% 30 N Brown Group

RECEIVABLES AND PROVISIONING 26 weeks to 1 September 2012 26 wks to 26 wks to Year to Aug 2012 Aug 2011 Feb 2012 £m £m £m Gross Trade Receivables 561.6 529.8 551.1 Opening Bad Debt Provision 49.3 45.1 45.1 Bad Debt Charge 30.5 26.8 58.0 Debtors Written Off (27.8) (27.9) (53.8) Closing Bad Debt Provision 52.0 44.0 49.3 Bad Debt Provision % 9.3% 8.3% 8.9% Bad Debt Charge % 8.0% 7.4% 7.7% Average Balance 359 345 354 31 N Brown Group

BAD DEBT PERFORMANCE 9.50% • Policy reversed to 9.00% recruitment 8.50% • Arrears stable 8.00% 7.50% • Cash collect strong 7.00% • Recovery rates stable 6.50% 6.00% Charge % Turnover Provision % Receivables 32 N Brown Group 32

OPERATING CASHFLOW 26 weeks to 1 September 2012 2012 2011 £m £m Operating Profit 45.7 47.0 Depreciation & Amortisation/Share Option Charge 10.3 9.1 Decrease/(increase) in Stock 1.1 (6.0) Increase in Receivables (14.3) (17.0) Increase/(decrease) in Payables 13.1 (3.1) 55.9 30.0 Pension Obligation (2.3) (1.8) Cash Generated from Operations 53.6 28.2 33 N Brown Group

GROUP CASHFLOW 26 weeks to 1 September 2012 2012 2011 £m £m Cash Generated from Operations 53.6 28.2 Taxation Paid (12.4) (7.7) Dividends Paid (21.5) (20.3) Investing Activities (12.0) (12.7) Share Issue Proceeds/(Purchases) 0.3 (0.5) Finance Costs (net) (3.6) (2.8) Net Cash inflow/(outflow) 4.4 (15.8) Opening Borrowings (192.5) (180.9) Closing Borrowings (188.1) (196.7) 34 N Brown Group

GROUP BORROWINGS At 1 September 2012 Facility Drawndown £m £m Securitisation Debt 250 220 Bilateral Loans 120 30 Overdraft 9 - Gross Borrowings 379 250 Cash in Hand (62) Net Borrowings 188 • All facilities in place until March 2016 35 N Brown Group

N Brown Group plc ALAN WHITE CHIEF EXECUTIVE 36 36 N Brown Group

KEY AREAS OF FOCUS 2012/13 BRAND MULTI- DEVELOPMENT CHANNEL – INTERNATIONAL STORES CUSTOMER PRODUCT SERVICE DEVELOPMENT KEY AREAS OF FOCUS ONLINE KEY VALUE TRADING INDICATORS TERMS CONTACT OF OPTIMISATION TRADE N Brown Group 37