N Brown Group PLC (LON:BWNG) is taking crucial steps in its transition to being a pure-play online retailer (currently 77% of sales) and to strengthen its leading position in the under-serviced market for fashionable plus-size apparel. While strategic updates may be on hold until a new CEO is appointed, the company closed the loss-making portfolio of high-street stores in H119 and further brand consolidation seems inevitable. The shares trade on a low FY19e P/E of 5.5x and yield 7.2%.
Differentiated proposition
N Brown is a leading retailer of apparel, footwear and homewares for plus-size and other under-serviced niche customer groups. 77% of goods are sold online. OECD data report that 27% of UK adults are obese; among the highest rates in Europe but behind the US at c 40%. In our view, N Brown is differentiated in its design of flattering and fashionable clothing for this significant demographic. However, as evidenced by recent poor performance, including a 3.1% fall in product sales and a 5.0% fall in pre-tax profits in H119, past strategic decisions have eroded its competitive edge. The CEO of five years departed in September.
To read the entire report Please click on the pdf File Below..