Dividends have been postponed indefinitely at N Brown Group following a disastrous trading period. The business which operates the JD Williams, Simply Be and Jacamo brands has said that whilst trading for the first two weeks of the new financial year was in line with expectations, sales have since dropped by 40 per cent. The business has therefore begun to scale back or defer all non-essential capital expenditure whilst also reviewing whether it can find a buyer for its freehold property in order to release capital for investment.
The N Brown Group management team has said that it is entering into talks with HMRC to defer its tax and national insurance obligations and has also called an immediate halt to buying stock. Tellingly, it revealed that staff recruitment has been suspended whilst a review of its organisational structure is conducted. Market watchers say that they expect the business will identify where headcount can be reduced and that redundancies will be inevitable.
Like others, the N Brown Group is exploring its options in relation to the government and Bank of England support packages for business as it confirmed that it has almost reached the limit of its current funding arrangements. It is also re-working bad debt assumptions from its customer credit offering, to take into account the current health crisis.
The bad debt review will see the business re-adjust its profit before tax which is now likely to be lower than its previous guidance of £70m – to £72m. Rather than release its full year results on 29th April, it now says that working restrictions which will affect both its own teams and those of its auditors means they are likely to be delayed. The company has yet to offer guidance for the current year.
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