LONDON (Reuters) - British home-shopping group N Brown Group Plc (BWNG.L) said a trial of its brands in the United States had convinced the company it can take a slice of a plus-size ladieswear market worth $35 billion.
The Manchester, northwest England-based group, which targets older and larger shoppers with brands such as Simply Be, Jacamo and Marisota, is seeking business overseas to supplement revenues from a more mature home market.
“We’re very encouraged that the U.S. is a good place to be, the market’s huge,” CEO Alan White told Reuters on Tuesday. “We’re still testing what works and what doesn’t work but we’re convinced there’s a big opportunity over there.”
White was speaking after N Brown, whose High & Mighty brand offers sizes up to XXXXXL - equating to a 60-inch waist - beat forecasts with a 4.5 percent drop in first-half underlying profit and exceeded expectations for current trading, sending its shares up nearly 10 percent.
N Brown’s U.S. sales increased 53 percent to 3.4 million pounds ($5.5 million) in the six months to September 1, while losses reflecting start-up costs narrowed by 100,000 pounds to 1.7 million.
The company has found U.S. customers dress more casually and, for their age, are less fashion-conscious than their UK counterparts.
“Some people (in the U.S.) will look at the Simply Be catalogue and say ‘isn’t this for a customer in their twenties’, whereas actually in the UK it’s for someone in their late thirties, early forties,” said White.
This has prompted the firm to increasingly market its Marisota brand, which is focused on a 50-year-old customer in the UK, in the United States.
Pretax profit before one-off items of 42.0 million pounds ($67.4 million) for the six months to September 1 was ahead of analysts’ consensus forecast of 40.6 million but down from 44.8 million in the same period last year.
The shortfall reflected a 2 percent fall in ladies’ clothing sales due to wet summer weather, losses from opening Simply Be trial stores in the UK and a 1.6 percent fall in gross margin.
Total revenue increased 4.3 percent to 379.3 million pounds, while like-for-like sales were up 3.7 percent, having been up 1.9 percent in the first 17 weeks of the period.
Like-for-like sales have further accelerated to be up 9.4 percent in the first six weeks of the second half.
Britons have been cutting back on non-essential spending as their incomes suffer the worst squeeze for more than 30 years due to higher bills and government austerity measures, but N Brown is “mildly optimistic” that economic indicators will be a little more favorable in the second half.
It will pay an interim dividend of 5.45 pence, up 3 percent.
Shares in N Brown, up 19 percent over the last six months, were up 25 pence or 9.4 percent at 295p by 5.07 a.m. EDT, valuing the business at about 833 million pounds.
“N Brown has strong multi-channel capabilities, good cash generation and growth opportunities. This is not reflected in the current rating in our view,” said Investec analyst Bethany Hocking.
Before its latest advance, N Brown stock had traded on a multiple of 10.1 times forecast earnings, against UK sector average of 11.2 times, according to Thomson Reuters data. ($1 = 0.6230 British pounds)
Editing by Rhys Jones and David Holmes