N Brown profits slump following insurance product controversy
The retailer behind Simply Be and Jacamo was forced to pay customers millions of pounds in compensation.
Simply Be owner N Brown’s profits have slumped after the company was forced to pay out millions in compensation to customers over its flawed insurance products.
Statutory profits at N Brown, the company behind retail brands such as JD Williams and Jacamo, fell 72% to £16.2 million.
The company reported a £56.9 million hit, which related to store closures, and a £40 million payout to customers in compensation payments.
The products, provided by a third party insurance underwriter, were sold to customers between 2006 and 2014.
For the year ended 3 March 2018, group revenue rose from £887.7 million to £922.2 million, an increase of 3.9%.
Revenue from N Brown’s financial services division was up by 3.5% £269.6 million.
Chief executive Angela Spindler said: “Against a challenging market backdrop I am delighted to be reporting profit growth, with Simply Be the standout brand. The second half was difficult for the fashion sector.
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“March was a challenging month for fashion retail, however, trade is improving through April, and at this early stage in the new financial year, our overall expectations are unchanged.”
Peel Hunt analysts said N Brown’s margins were still under threat due to the competitive nature of the industry, but there was “no material threat” to the retail group’s forecasts.
“Current trading has been challenging, but on an improving trend, a point that reflects the wider apparel market and weather conditions,” Peel Hunt said.