Does N Brown Group plc have more investment potential than Tesco PLC, J Sainsbury plc and ASOS plc after H1 results?

Is N Brown Group plc (LON:BWNG) (BWNG.L) a better buy than Tesco PLC (LON:TSCO) (TSCO.L), J Sainsbury plc (LON:SBRY) (SBRY.L) and ASOS plc (LON:ASC) (ASC.L)?

N Brown Group
N Brown Group

The N Brown Group plc (LON:BWNG) (BWNG.L) share price has fallen over 3% today after the company released its H1 results. It has delivered strong Power Brand performance, with revenue rising 14.3% and active customer numbers up 7.5%.

The company’s JD Williams brand revenue increased by 12.1%, while its Simply Be brand recorded a rise in sales of 21%. Jacamo sales were up 6.7%, although Fifty Plus saw its sales fall 5.2%.

The company has continued to make good progress with its brand and retail partnerships. It has added a number of third-party brands and today announced partnerships with Amazon Fashion, Debenhams and Namshi to sell capsule collections online.

N Brown’s gross margin declined 190bps to 54% as expected. It was driven lower by negative forex headwinds. Against a subdued consumer backdrop, the business delivered a rise in ladieswear revenues of 9.5%, with a 90bps increase in market share.

In the last year the N Brown share price has risen 76%. That’s a better performance than other clothing retailers including Tesco PLC (LON:TSCO) (TSCO.L), J Sainsbury plc (LON:SBRY) (SBRY.L) and ASOS plc (LON:ASC) (ASC.L). The Tesco share price is down 7%, ASOS has gained 14% and Sainsbury’s is up 3% in the last 12 months.

In my view, N Brown faces a difficult future. Consumer confidence in the UK is under pressure as inflation has moved higher than wage growth. This could make consumers increasingly conscious of price and may mean the company’s margins are squeezed to some extent.

However, the company has a sound strategy in my eyes and is making good progress. It continues to win market share in a difficult set of trading conditions and this trend could continue. Therefore, I think it could perform relatively well when compared to its wider sector. But, for me, there may be better options available in other industries at the moment.

About Robert Stephens 3883 Articles
Robert Stephens is a CFA Charterholder and an Equity Analyst by trade. He is a passionate private investor who has been buying and selling shares for many years, owning a wide range of UK shares in the process. He has written for Citywire and The Motley Fool US and now runs his own business. To contact Robert, please email [email protected] or use one of the other contact methods available on the 'Contact Us' page