January 23, 2018 / 8:41 AM / 2 years ago

UPDATE 1-UK's N Brown shares fall on lower gross margin forecast

(Adds details on margins, share movement)

Jan 23 (Reuters) - Shares in British clothing retailer N Brown Group Plc fell 12 percent on Tuesday after the company trimmed its product gross margin forecast for the fiscal year as it spends heavily on promotions to drive sales.

N Brown, whose brands target women aged 30 and above and those of a larger frame, said it expects gross margin for the year ending March to be down between 225 basis points and 250 basis points, compared with its previous forecast of a drop of 70 basis points to 120 basis points.

Increased promotions, however, helped the company to report a 3.2 percent rise in third-quarter revenue, largely driven by gains at its Simply Be brand.

The company’s stock fell as much as 12 percent to 244.6 pence and was the biggest loser on the FTSE 250 index.

Sales at JD Williams and Jacamo, the company’s other two main brands, rose 3 percent and 4.6 percent, respectively, in the 18- week period to Jan. 6. (Reporting by Arathy S Nair in Bengaluru; Editing by Gopakumar Warrier and Saumyadeb Chakrabarty)

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