N Brown – I’ve bought some more

PUBLISHED: 06 Jun 2019 @ 10:15 | Comments (0) |

I’ve more than doubled my stake in N Brown (LSE:BWNG) at £1.30 per share following the release of the preliminary results a couple of weeks ago. It fits nicely into my Modified price earnings ratio portfolio. I first bought N Brown shares last August at £1.42, so I’m pleased to pick up more at an even lower price (the market price has now moved up to 147.30p – 148.30p, Market capitalisation is 284m shares x 148.3p = £421m).

N Brown derives most of its revenue selling clothes and homewares. But it loses money year after year on that.

Its profit comes from charging interest on credit granted to consumers. It is a company born in the era of large paper catalogues found in every home up and down the country, whereby people would pay off debt at a rate of £5 – £10 per month.

Today 80% of N Brown’s product sales come from online orders (mostly smartphones). And, just like in the old days, people pay a monthly amount which includes a hefty APR (59.2%), but they don’t seem to mind. N Brown has about 4m unique customers each year, and a goodly proportion take goods on tick.

The company targets the niches of clothing for larger people, the plus-size segment (size 20 and above), and the over-50s looking for fashion. By being clearly identified as specialists in serving bigger and older customers it generates customer loyalty.

The main brands are Simply Be for fashion conscious younger women who need well-fitted stylish large-sized clothing; J D Williams for the 50+ customer, and; Jacamo, for men ranging up to a size 5XL.

Demographic trends are toward a greater proportion of the population being older. Size trends (people are getting bigger) indicate that N Brown’s market segments will grow. It has the incumbent’s advantage in being long recognised for its expertise in “fit”, the depth and breadth of its range.

(Previous Newsletters on N Brown: 4-12 May 2017, 30 June 2017, 28 Nov – 1 Dec 2017, 21-30 Aug 2018, 1 Jan 2019)

Cyclically-adjusted price earnings ratio

Pence per share	Earnings (basic)	Earnings (adjusted)	Dividends
2019	-20.5	21.38	7.10
2018	4.41	23.06	14.23
2017	15.67	22.74	14.23
2016	19.23	24.02	14.23
2015	18.15	24.61	14.23
2014	27.09	27.74	14.23
2013	28.51	28.04	13.68
2012	29.28	28.84	13.03
2011	26.04	26.88	12.41
2010	22.83	24.77	10.79
2009	22.88	21.96	9.19
2008	21.16	20.27	9.06

Dividend yield

Dividend yield is 7

………………To read more subscribe to my premium newsletter Deep Value Shares – click here http://newsletters.advfn.com/deepvalueshares/subscribe-1

CLICK HERE TO REGISTER FOR FREE ON ADVFN, the world's leading stocks and shares information website, provides the private investor with all the latest high-tech trading tools and includes live price data streaming, stock quotes and the option to access 'Level 2' data on all of the world's key exchanges (LSE, NYSE, NASDAQ, Euronext etc).

This area of the ADVFN.com site is for independent financial commentary. These blogs are provided by independent authors via a common carrier platform and do not represent the opinions of ADVFN Plc. ADVFN Plc does not monitor, approve, endorse or exert editorial control over these articles and does not therefore accept responsibility for or make any warranties in connection with or recommend that you or any third party rely on such information. The information available at ADVFN.com is for your general information and use and is not intended to address your particular requirements. In particular, the information does not constitute any form of advice or recommendation by ADVFN.COM and is not intended to be relied upon by users in making (or refraining from making) any investment decisions. Authors may or may not have positions in stocks that they are discussing but it should be considered very likely that their opinions are aligned with their trading and that they hold positions in companies, forex, commodities and other instruments they discuss.