N Brown’s sales have dropped more than 40 per cent in the last week amid the coronavirus pandemic and expects full year profits to be lower than £70m.
Updating the market this morning, the Manchester-based fashion group which owns brands including Simply Be and Jacamo, said the company was a taking a number of measures including suspending dividend payments for the foreseeable future, to deal with the drop in demand from customers.
The company said at this moment there was no way of ‘predicting the impact the virus will have on our sales, nor how long the pandemic will last and what effect it will have on customer behaviour.’
It said trading for the first two weeks of the new financial year was in line with expectations.
However, during the last week it saw a ‘very significant and sudden reduction’ in customer demand with daily product sales down in excess of 40 per cent compared to expectations.
It said it was anticipating a material reduction in demand through FY21.
As a result, N Brown said it has taken a number of measures to reduce costs and preserve liquidity.
This includes significant reduction in marketing expenditure, stopping and deferring all non-essential capital expenditure, working with HMRC to secure the deferral of all tax and national insurance payments and stopping stock purchases immediately, thereby aligning stock levels for SS20 with reduced customer demand.
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It has also frozen all recruitment and is reviewing organisational structures.
The group said it has financing facilities in place totalling £652.5m.
N Brown said: “Our objective in relation to all of these actions is to preserve liquidity in the business and allow us to manage the business effectively and prudently through this highly uncertain period. In addition, the Group is exploring all options in relation to the Government and Bank of England support packages for business.”
In regards to its staff the group said: “Our absolute priority has been to ensure the wellbeing of our colleagues, both in Head Office and across our distribution centres, whilst continuing to deliver the service and functionality for our customers to continue shopping our brands.
“Our colleagues and our supplier partners have been excellent in adapting to a more flexible way of working during this difficult period and remain as committed as ever to supporting our loyal customer base.”
As a result of the initial impact of Covid-19 the Board will not be recommending a final dividend for the financial year ended 29 February 2020 and will suspend dividend payments for the foreseeable future.
The board expects adjusted profit before tax to be lower than the previously guided range of £70m to £72m.