12 October 2023

HALF YEAR RESULTS FOR THE 26 WEEKS ENDED 2 SEPTEMBER 2023

Further strategic progress and robust liquidity, H1 Adjusted EBITDA in line with Board expectations

£m	26 weeks to 2 September 2023 (H1 24)	26 weeks to 27 August 2022 (H1 23)	% Change
Group revenue	297.0	331.5	(10.4)%
Product revenue	187.5	211.2	(11.2)%
Financial Services revenue	109.5	120.3	(9.0)%
Adjusted EBITDA1	17.5	27.9	(37.3)%
Adjusted EBITDA margin	5.9%	8.4%	(2.5)ppts
Adjusted profit before tax1	0.1	4.3	(97.7)%
Statutory (loss) / profit before tax	(4.1)	7.2	N/A
Cash and cash equivalents	49.1	47.2	4.0%
Adjusted net debt1	(258.4)	(243.5)	(6.1)%

Highlights

· Revenue reflective of market conditions; progress on gross margin

o Group revenue contracted 10.4%, reflecting the challenging market conditions including unseasonable weather through Spring and July to August:

§ Improvement in product revenue trend in Q2, with a decline of 11.2% for H1. Strategic brands down 7.4%, tracking ahead of the online pureplay market²

§ Lower retail sales and opening debtor book, resulted in lower FS revenue, down 9.0%

o Adjusted group gross profit margin increased 0.4ppts to 47.6%:

§ Product margin rate continued to improve, up 1.6ppts and benefiting from normalised freight rates

§ FS margin rate broadly in line with normalised FY23, whilst we have seen a lower underlying level of arrears

· H1 Adjusted EBITDA in line with Board expectations

o Despite the continued macro-economic challenges that saw softer trading and higher costs, H1 adjusted EBITDA performance was in line with the Board's expectations, supported by disciplined management of areas within the business' direct control

o Adjusted profit before tax of £0.1m. Following the impairment of non-financial assets in FY23, depreciation and amortisation has reduced by £7.2m against H1 last year

o Statutory loss before tax includes adjusting items of £4.5m relating to restructuring activities to right-size the cost base

· Continued to deliver strategic and operational progress

o Successful launch of new mobile-first website for Jacamo, the second of our three strategic brands to have transitioned to the new platform, and a key transformational priority

o Good traction in Net Promoter Score (NPS), up 5pts against full year FY23, benefitting from continued focus on operational improvements including extension in order cut off for next day delivery to 11pm

o Building on recent strategic progress, a clear set of priorities is in train for the year ahead to set the business up for 2024 peak trading

· Cost inflation offset successfully through ongoing mitigating actions

o Adjusted operating costs reduced by £4.7m, with volume-related savings and management actions more than offsetting c. £7m of inflationary pressures

o Cost base inflation increased in H2 23, and has flowed through into FY24 as previously flagged. Combined with negative operational leverage on fixed costs, this has resulted in an increase of 2.9ppts in adjusted operating costs as a percentage of group revenue

· Robust balance sheet and available liquidity

o Net cash generation of £13.6m in the period, after further investment of c. £9m in the transformation of the business

o Proactive moderation of intake and clearance of older stock items has driven a c. 20% reduction (£20m) in stock balances compared to H1 23, improving working capital efficiency

o Strong balance sheet with significant cash and cash equivalents, and total accessible liquidity of £133.1m. RCF and overdraft remain undrawn with limits of £75m and £12.5m respectively

· Current trading, outlook and guidance

o FY24 Adjusted EBITDA expected to be in line with market expectations³

o Trading during the first five weeks of Q3 reflects a further improvement over the Q2 run rate

o Macro-economic challenges of a high inflationary environment and low consumer confidence expected to persist throughout FY24

o Benefits from cost actions taken in H1, and planned for H2, are expected to mitigate the impact of slightly moderated full year revenue expectations, with H2 24 adjusted EBITDA margin expected to be marginally higher than achieved in full year FY23

o FY24 year end adjusted net debt expected to be better than FY23's closing position. Strategic investment will continue to be self-funded through carefully managed cash flows

o Continued confidence in strategic direction and in the benefits of the ongoing investment in our digital transformation, with a focus on delivering sustainable profitable growth

Steve Johnson, Chief Executive, said:

"We expected external market conditions to remain soft and for the first half of FY24 to be particularly challenging. In response, we acted decisively to adapt to the trading environment and maintain real focus and discipline in areas which we can directly control, remaining on track to deliver full year adjusted EBITDA in line with the Board's expectations.

"Alongside this, we're pleased with the delivery of our strategy as we position the business for medium-term growth. Our investment across JD Williams, Simply Be and Jacamo has led to new commercial partnerships and technology upgrades to drive performance. We have a clear set of transformational priorities in train and expect to continue to deliver further progress during the second half of the year.

"Good work by our teams, including more efficient stock management, has helped generate cash and further improve our liquidity position in the half, providing a solid base for the continued investment in our priorities."

Webcast for analysts and investors:

A webcast presentation of these results will take place at 9am on 12 October 2023 followed by a Q&A conference call for analysts and investors. Please contact Nbrown@mhpgroup.com for details.

For further information:

N Brown Group
David Fletcher, Head of Investor Relations	+44 (0)7876 111 242
MHP
James McFarlane / Eleni Menikou / Charles Hirst	+44 (0) 20 3128 8789 Nbrown@mhpgroup.com
Shore Capital - Nomad and Broker
Stephane Auton / Daniel Bush / Rachel Goldstein Fiona Conroy (Corporate Broking)	+44 (0) 20 7408 4090

About N Brown Group:

N Brown is a top 10 UK clothing & footwear digital retailer, with a home proposition. Our retail brands include JD Williams, Simply Be and Jacamo, and our financial services proposition allows customers to spread the cost of shopping with us. We are headquartered in Manchester where we design, source and create our product offer and we employ over 1,700 people across the UK.

¹ A full reconciliation of statutory to adjusted measures is included in the Financial Review.

² For the 26 weeks ended 2 September 2023, the online pureplay market according to IMRG declined by 9%.

³ The market consensus for FY24 Adjusted EBITDA was £44.7m as at 11 October 2023.

PERFORMANCE REVIEW

As set out within our guidance at the start of the year, the macro-economic challenges of a high inflationary environment and low consumer confidence persisted in the first half of FY24. Contraction in the online market, cautious consumer behaviour and unseasonable weather conditions, are reflected in a lower level of website sessions and orders for the period. However, our discipline and focus on factors we can directly control means that we have been able to deliver H1 Adjusted EBITDA in line with Board expectations, leaving us on track to meet our full year expectations.

Our strategy is predicated on five pillars and a short update on progress made against each is set out below. Our five pillars are underpinned by two key enablers: our people and talent, and a sustainable and efficient operating model. We have continued to invest in our strategic transformation, which aims to deliver value faster, through a simpler and more focused business. We are pleased to have launched our new Jacamo website, the second of our three strategic brands to transition to the new platform and one of the key transformational priorities outlined in FY23 results in June 2023.

In an unpredictable market, we are concentrating on elements we can directly control as a business, ensuring we deliver value for our customers in the most effective way possible. We expect the macro-economic challenges of a high inflationary environment and low consumer confidence to continue throughout the second half of FY24, but our balance sheet liquidity ensures we are well positioned for investing in the future. It provides a foundation from which we can continue to execute our strategy, and the Board remains confident in achieving the Group's medium-term objective of delivering sustainable profitable growth.

Strategic update

We outlined within our FY23 results the five transformational priorities which we would focus investment on to provide the capabilities required to enable us to grow in more favourable market conditions:

- New websites for all strategic brands - roll out our new mobile-first website experience and continuously iterate site launches with new features.

- A technology platform to support our Financial Services proposition - the platform will enhance the ways in which customers can choose to pay for the products they love and will be supported by the launch of a new FS brand.

- Data culture - further empower our colleagues to engage with data to identify and leverage analytical opportunities.

- A Product Information Management ('PIM') system - providing a single place to collect, manage and enrich product data, to provide a better experience for customers and a more efficient process for colleagues.

- A fully embedded agile operating model - evolving our organisational design so that all relevant colleagues will have moved to an agile way of working.

The progress which has been made against these transformational priorities is included within the following update against our strategic pillars. We are confident in making further progress during the second half of the year.

1. Build a Differentiated Brand Portfolio

Strategic objective: Build two multi brand and category platforms, one for women (JD Williams) and one for men (Jacamo), as well as one inclusive fashion brand for young women (Simply Be).

Our differentiated brand portfolio has progressed on our creative and marketing platforms, as we continue to concentrate on our target brand positioning.

Simply Be embarked on a journey of empowerment, focusing on fashionable fit with the introduction of the 'Serious about Shape' campaign, with a core group of diverse affiliates (our 'fit muses') to demonstrate 'Every body deserves fashion that fits'. This message was further reaffirmed by the launch of a new podcast hosted by the influential Fleur East. Our customers are more engaged and feel emotionally connected to our brand position, which is displayed through our Excellent rating on Trustpilot.

JD Williams set out to continue its transformative journey and drive customer engagement. During September, JD Williams partnered with ITV and Global as headline sponsor of My Mum Your Dad, a prime-time TV show. This vision was brought to life by brand ambassador Davina McCall, with the goal of driving greater brand awareness as we lead up to JD Williams' peak period of trade.

Jacamo led a transformative partnership with LADbible and paved the way for connection with where Jacamo's customers spend their time. This approach allows us to engage with our customers, through social media outlets, aligning with their passion points, and increasing the ability of the brand to drive more loyalty and retention. The outcome allows Jacamo to drive engagement and has heightened the brand's unique visibility.

2. Elevate the fashion and fintech proposition

Strategic objective: Elevate the fashion assortment, integrate the credit offer into the journey and create a credit brand.

Reflecting further progress within our own brand proposition, Anthology, a JD Williams own premium line, designed with an elevated approach to dressing which offers versatile quality fabrics, was launched in early September.

Our commitment to providing propositions that are inclusive for all, through diversity of choice, was demonstrated through the continued onboarding of successful third party brands onto our category platforms. Both the men's and women's branded offering continues to grow, with a good performance from our latest brands including FatFace and TALA, enriching our third-party offerings and elevating our fashion assortment.

The selling of our clothing ranges via partnerships with other retailers has also continued to gain momentum, providing additional exposure for our product, with Simply Be's swimwear proposition now a leading category in Next. The launch of Simply Be on Sainsbury's online platform during the first half and selected stores in early September, marked another significant milestone and provides enhanced exposure to a variety of different customer segments.

We developed a new credit limit strategy to ensure we continue to lend to our customers responsibly, minimising the impact of write offs and arrears on the business. Simultaneously, our innovative payment arrangement, providing extended reduced payment periods for those in need, demonstrated its worth by enhancing customer retention.

In line with the transformational priority set out previously, our new FS platform has progressed as expected through H1, proceeding through initial discovery phases. The platform is anticipated to give us further product flexibility to provide our customers with a choice of how they manage their payments.

3. Transform the customer experience

Strategic objective: Transform the customer experience, pre and post purchase, and drive conversion at checkout through a personalised experience.

We continue to make good progress in transforming the customer experience, with the launch of our new mobile-first website for Jacamo, the second of our three strategic brands to move to the new platform. The build and rollout were executed in less than a third of the time taken to deliver the new Simply Be website, the first brand to transfer to the new platform. This was a testament to our commitment to agile working and executing against our transformational priorities. We have seen positive initial performance of the Jacamo site, and each of the new Jacamo and Simply Be sites are 20% faster than legacy sites and have doubled Google lighthouse scores (an open-source measure of site performance). In tandem with the iterative improvements of our Jacamo and Simply Be sites' capability, we also intend to launch the new JD Williams site in FY24.

A significant milestone was reached with the validation of our Product Information Management (PIM) solution, another of our transformational priorities, and we remain on track for the integration of our first brand. The goal of the project is to provide our customers with a consistent offering regarding products sizing, fabric and specifications. It will elevate and ensure that our pre-purchase communication with customers remains effective and pertinent. Greater consistency in distributing enhanced content across all channels is anticipated to reduce returns rates, leading to a better customer experience.

4. Win with our Target Customer

Strategic objective: Grow our customer base through our existing core customer, high value lapsed customers and a new, younger generation.

To engage our target customer in an ever-challenging consumer landscape, we continue to foster close collaboration with strategic partners. By striking a balance between securing visibility to build our brand awareness and facilitating conversion in driving purchase, we have continued to integrate the capability of AI and Machine Learning in our marketing campaigns. By leveraging the data processing proficiency of AI systems, we ensure that campaigns are targeted to consumers with a high probability of purchase, further streamlining our customer proposition.

We continue to optimise our Customer Relationship Management levers, with an emphasis on acknowledging and rewarding our valued customers for their repeat purchases. With a focus on customer engagement, we have seen an increase in the number of customers opting into our loyalty programmes.

5. Establish Data as an Asset to Win

Strategic objective: Establish data as an asset to drive top line and margin improvements.

We have leveraged data-driven insights from the analysis of customer lifetime value models. We have used this to shape our prediction models for customer behaviour, ensuring customer benefit through a more personalised marketing approach and consistent experience. We have also used this insight to send targeted onsite messaging to customers who might benefit from using our credit proposition.

We have expanded the application of PriceTagger, our in-house tool which helps us optimally promote product using pricing elasticity. PriceTagger has allowed for AI driven pricing, by measuring how sensitive the demand and supply of products are to price changes. We continue to advance our prediction models to cater for seasonal trends in customer behaviour, and the impact this has on rate of sale, ultimately increasing our agility of price within the market space.

Key Enablers

The five pillars are underpinned by two enablers, the foundations of our strategy: a sustainable and efficient operating model, and our People and Talent.

The Financial Conduct Authority's Consumer Duty regulations have been delivered, through the continuous evaluation of all our products, services, policies and processes, ensuring all our colleagues understand their role in protecting customers.

Our employees are vital enablers of our success. We continue to nurture an inclusive culture celebrating diversity through our Embrace Strategy. Colleague-led communities help to make change happen within the business to further our inclusivity. To promote this, we are delivering a week of events in line with national inclusion week. Our commitment to progression is shown in our Employee Net Promoter Score scores, over-indexing the UK retail benchmark by 16 points in Q1 FY24, with one of our highest scoring statements being 'People of all cultures and backgrounds are respected and valued here'.

Our proud partnership with the Prince's Trust continues, including integrating Prince's Trust programmes and connecting those with disadvantages with real job opportunities.

Key Performance Indications ('KPIs')¹

As a digital retailer committed to accelerating our strategy, we continue to report various digital customer metrics, which provide operational measures of how our strategy is progressing. The following disclosure reflects our performance in the half.

	26 weeks to 2 Sep 2023	26 weeks to 27 Aug 2022 (Restated)	Change
Total website sessions2	95m	109m	(12.8)%
Conversion2	3.6%	3.8%	(0.2)ppts
Total Orders3	3.7m	4.5m	(17.8)%
AOV	£83.3	£78.7	5.8%
Items per order	2.8	2.9	(3.4)%
AIV	£29.2	£27.5	6.2%
Total active customers	2.4m	2.8m	(14.3)%
FS arrears4	9.8%	9.9%	(0.1)ppts
NPS	62	59	3

^{1 KPIs are defined on page 21.}

^{2 H1 23 website sessions and conversion restated to match definition post roll-out of new Simply Be website. The restatement is estimated based on brand specific metrics, with actuals using the new session definition.}

^{3 Total orders includes online and offline orders.}

^{4 H1 23 now presented on comparable basis with H1 24, including insolvency accounts now classified in arrears rather than written-off.}

Consistent with the broader market, we have continued to see the impact of macro-economic challenges and consumer behaviour, including a rebalancing of spend between offline and online channels.

This is reflected in broad trends in customers, sessions and ordering continuing from FY23. The lower active customers trend includes our Heritage portfolio of brands where our focus is on stabilisation and value protection rather than growth.

The reduction in orders has been partially offset by an increase in Average Item Value ('AIV') as we have seen a continuation of more intentional behaviour from customers, which has included buying into more premium ranges, and measured price increases supported by data tools, which have, in turn, offset an element of the inflationary impacts on our product costs. However, at the same time, we also invested in opening price points to drive value for money for our customers.

The Financial Services arrears rate is slightly lower than prior year, reflecting the resilience of the customer base despite cost of living pressures.

Our Net Promoter Score ('NPS') improved in the half and is significantly ahead of FY23's full year score of 57. This has been driven by a number of operational improvements including better delivery timeliness, an extension in order cut off for next day deliveries to 11pm, sharper opening price points, new "value" ranges and the launch of the new mobile-first website for Jacamo unlocking new features.

As we look forward, we are pleased with the strategic execution demonstrated through an efficient and successful launch of our new mobile-first website for Jacamo, with the initial site performance being positive. We are confident that the combination of delivering against our transformational priorities whilst seeking incremental improvements in all areas of the business will move us towards unlocking progress in our KPIs alongside an improvement in the macro-economic environment.

Environment, Social and Governance

We have continued to embed our Environmental, Social and Governance strategy into the business. Our sustainability plan, SUSTAIN, fully aligns our ethical policies with our commercial activities and our commitment to Our People and Our Planet.

A key pillar of SUSTAIN is our commitment to responsibly source own-brand product, and we have reached 44% of own brand designed Clothing and Home textile ranges with sustainable properties (from 0% in 2019) as we target growing this to 100% by FY30 in line with our Textiles 2030 commitment. From understanding our Textiles 2030 reporting data and our commitment towards addressing climate change, we have developed additional targets for each product division to further enhance our approach. We have implemented circular design workshops to educate internal teams on designing for longevity, with a reduced environmental impact, and we are developing a circular design handbook to illustrate the importance of our 2030 commitments.

Alongside mapping our Tier 2 supply base (currently at 66%) we have implemented our Supplier Sustainability Questionnaire for the first time to enable further understanding of how our suppliers are addressing the social and environmental impacts associated with their business and the industry (now implemented by over 50% of Tier 1 suppliers).

In continuing our commitment to increasing socioeconomic diversity and making a difference in the communities we serve, we engaged six colleagues with The Prince's Trust Mosaic Mentoring programme. The programme aims to help students build employability skills, raise their aspirations, and get excited about their futures. The colleagues volunteered their time over eight weeks to mentor groups of up to 30 Year 10 students across two schools identified in lower socioeconomic areas in Greater Manchester. Simply Be also released an International Women's Day edit, in collaboration with The Prince's Trust, which raised £19,091 by donating £1 from the sale of each item from the edit across an eight week period.

As part of our DEI & B (Diversity, Equity, Inclusion & Belonging) strategy, EMBRACE, we proudly sponsored Manchester Pride in August, with colleagues taking part in the Pride parade. We have also joined Manchester Pride's All Equals Charter. The All Equals Charter is a programme to help businesses understand, recognise and challenge any form of discrimination in the workplace.

Following the launch of our two new corporate charity partners, the Retail Trust and FareShare Greater Manchester, colleagues have so far raised over £30,000. Colleagues have also given over 500 hours of their time to charities through our Make A Difference Day scheme which encourages every colleague to give back to a charity close to their hearts.

FY24 Outlook

Trading during the first five weeks of Q3 reflects a further improvement over the Q2 run rate.

We continue to expect the macro-economic challenges of a high inflationary environment and low consumer confidence to persist throughout FY24.

FY24 adjusted EBITDA is expected to be in line with market expectations¹, reflecting slightly moderated full year product and Financial Services revenue expectations; offset by benefits in H2 from:

1. cost actions undertaken in H1 and also planned for H2;

2. better operational leverage through normal seasonality leading to greater weighting of sales towards H2;

3. year-on-year retail margin rate improvements, with H2 24 retail gross margin similar to that achieved in H1 24; and

4. improvement in FS margin rate driven by initiatives.

As a result, the H2 24 EBITDA margin rate is expected to be marginally higher than achieved in full year FY23.

As reflected in H1, depreciation and amortisation reduced following the £53m impairment of non-financial assets in FY23, with a full year reduction of around £15m against FY23. H2 24 finance costs are expected to be broadly in line with H1 24.

The business continues to be well positioned to invest in and deliver strategic change, with full year investment continuing at a similar level to that seen in FY23, aligned to our transformational priorities. We will continue to self-fund investment through carefully managed cash flows including tight control of stock. At the end of FY24, we expect adjusted net debt to be lower than FY23's closing position. We remain confident in our strategic direction and our digital transformation as we focus on driving sustainable profitable growth.

¹ The market consensus for FY24 Adjusted EBITDA was £44.7m as at 11 October 2023.

FINANCIAL REVIEW

Financial KPIs

Our non-financial KPIs are contained in the Performance Review. We also use a number of financial KPIs to manage the business. These are shown below and will continue to be reported going forwards.

	H1 24	H1 23	Change
Product revenue	£187.5m	£211.2m	(11.2)%
Adjusted EBITDA	£17.5m	£27.9m	(37.3)%
Adjusted EBITDA margin1	5.9%	8.4%	(2.5)ppts
Adjusted operating costs to Group revenue1	41.7%	38.8%	(2.9)ppts
Cash and cash equivalents2	£49.1m	£47.2m	4.0%
Total Accessible Liquidity1,3	£133.1m	£201.1m	(33.8)%
Statutory (loss) / profit before tax	£(4.1)m	£7.2m	N/A
Adjusted EPS1	0.15p	0.72p	(79.2)%

1 A full glossary of Alternative Performance Measures and their definitions is included on page 22.

2 During FY22 we agreed with our banks that the securitisation facility does not need to be fully drawn and that surplus cash can be used to repay drawings from time to time. The securitisation facility was fully drawn at H1 24. H1 23 excludes accessible amounts voluntarily undrawn against the securitisation facility of £45.5m.

3 Reduction includes £49.5m settlement of Allianz litigation in H2 23.

Reconciliation of Statutory financial results to adjusted results

The reporting includes Alternative Performance Measures ('APMs'), which are not defined or specified under the requirements of IFRS. These APMs are consistent with how the Group measures performance internally and are also used in assessing performance under the Group's incentive plans. Therefore, the Directors believe that these APMs provide stakeholders with additional, useful information on the Group's performance.

The adjusted figures are presented before the impact of adjusting items. These are items of income and expenditure which are one-off in nature and material to the current financial year, or represent true ups to items presented as adjusting in prior periods. These are detailed in note 5.

A full glossary of Alternative Performance Measures and their definitions is included on page 22.

		H1 24		H1 24		H1 24					H1 23			H1 23			H1 23
£m		Statutory		Adjusting items		Adjusted					Statutory			Adjusting items			Adjusted
Group Revenue		297.0				297.0					331.5						331.5
Group cost of sales		(156.6)		1.0		(155.6)					(175.0)						(175.0)
Gross Profit		140.4		1.0		141.4					156.5						156.5
Gross profit margin		47.3%				47.6%					47.2%						47.2%
Operating costs		(127.4)		3.5		(123.9)					(128.6)			-			(128.6)
Adjusted operating costs to Group revenue ratio						41.7%											38.8%
Adjusted EBITDA						17.5											27.9
Adjusted EBITDA margin						5.9%											8.4%
Depreciation & amortisation		(9.9)				(9.9)					(17.1)						(17.1)
Operating profit		3.1		4.5		7.6					10.8			-			10.8
Finance costs		(7.5)				(7.5)					(6.5)						(6.5)
(Loss) / Profit before taxation and fair value adjustment to financial instruments		(4.4)		4.5		0.1					4.3			-			4.3
Fair value adjustments to financial instruments		0.3				0.3					2.9			-			2.9
(Loss) / Profit before taxation		(4.1)		4.5		0.4					7.2			-			7.2
Taxation credit / (charge)		1.6		(1.1)		0.5					(1.6)			-			(1.6)
(Loss) / Profit for the year		(2.5)		3.4		0.9					5.6			-			5.6
(Loss) / Earnings per share		(0.54)p				0.15p					1.22p						0.72p

Reconciliation of Cash and cash equivalents and Unsecured debt and bank overdrafts to Unsecured Net Cash / (Debt) and Adjusted Net Debt

£m	H1 24	H1 23
Cash and cash equivalents	49.1	47.2
Unsecured debt and bank overdrafts	-	-
Unsecured Net Cash / (Debt)	49.1	47.2
Secured debt facility linked to eligible receivables	(307.5)	(290.7)
Adjusted Net Debt	(258.4)	(243.5)

Reconciliation of Net movement in Cash and cash equivalents and bank overdrafts to Net Cash generation / (utilisation)

£m	H1 24	H1 23
Net increase in cash and cash equivalents and bank overdraft	13.6	4.1
Voluntary flexible drawdown of securitisation loan	-	(14.6)
Net Cash generation / (utilisation)	13.6	(10.5)

Overview

The first half of FY24 has seen both our customers and N Brown continue to face a challenging environment, in part due to elevated levels of inflation. We had anticipated and planned for conditions during FY24 to remain challenging, particularly in H1, and our Adjusted EBITDA of £17.5m and Adjusted Profit before Tax of £0.1m leave us on track for our full year expectations.

The continued softer market dynamics and cautious customer behaviour, combined with unseasonable weather conditions, led to product revenue down 11.2% or £23.7m, with the ongoing impact on the debtor book from lower product revenue leading to FS revenue down 9.0%. Group gross margin progressed versus the prior year, reflecting further growth in the retail gross margin rate driven by freight rate normalisation, offset by slightly lower FS margin rate, which remains broadly in line with normalised levels.

Adjusted operating costs were £4.7m lower than H1 23 with cost inflation of c. £7m being offset by volume savings and management actions. This has partially offset the impact of lower revenue. The continuation of significant pressures on the cost base and lower operational leverage resulted in an increase in the adjusted operating cost to revenue ratio of 2.9ppts in H1. We have, and continue to, put in place actions to mitigate these pressures.

Interest costs were £1.0m higher than prior year due to greater utilisation of the securitisation facility. The interest rate payable has benefitted from the interest rate hedge in place and we also remain well hedged on foreign exchange. Depreciation and amortisation reduced by £7.2m following the impairment of non-financial assets in FY23.

We generated £13.6m of cash in H1 after investing a further £8.9m in the transformation of the business. Given the softer trading environment, proactive intake reductions and clearance of older stock items has taken place, driving a reduction of c. 20% (£20m) against the stock balance at the end of H1 23. Stock and wider working capital efficiency will remain a key focus area, freeing up cash and further improving the overall relevance and quality of the stock package which we hold.

Cash and cash equivalents amounted to £49.1m with Total Accessible Liquidity of £133.1m, which includes the fully undrawn RCF of £75.0m and overdraft of £12.5m, net of a low level of restricted cash. Our balance sheet remains strong, allowing us to continue to take a measured and well-managed approach to capital investment, with strategic progress made in the half including the launch of the new mobile-first website for Jacamo.

Revenue

£m	H1 24	H1 23	Change
Revenue
Strategic brands1	139.4	150.6	(7.4)%
Heritage brands2	48.1	60.6	(20.6)%
Total product revenue	187.5	211.2	(11.2)%
Financial services revenue	109.5	120.3	(9.0)%
Group revenue	297.0	331.5	(10.4)%

^{1 JD Williams, Simply Be, Jacamo.}

^{2 Ambrose Wilson, Home Essentials, Fashion World, Marisota, Oxendales and Premier Man.}

Group revenue declined 10.4% to £297.0m reflecting a 11.2% decline in product revenue and a 9.0% decline in FS revenue.

The product revenue trend for H1 24 in total was in line with that seen in H2 23 but includes an improvement in trajectory in Q2. The H1 24 performance reflects the continued challenging market for online pureplay retailers, which declined by 9%¹, and unseasonable weather conditions for selling summer ranges through Spring and July to August. Against this market backdrop, our strategic brands saw a decline of 7.4%. Our heritage brands, which are managed for contribution as opposed to growth, saw product revenue down 20.6%.

Looking ahead to H2, we continue to evolve our offering by ensuring our own designed product delivers the versatility required for our customers, both within our lead in price propositions as well as our more premium offering such as Anthology. At the same time we continue to evolve our 3rd party offer to complement the uniqueness of product we design in-house, by launching new 3rd party brands our customers are asking for such as Ted Baker, Fat Face, TALA and others, alongside those already in place. We have also strengthened transitional ranges between seasons and have an elevated focus on layering of products. Campaigns in place across our strategic brands reflect an increased focus on areas which matter most to our customers, such as Christmas, and offer more reasons to update their wardrobe.

The reduced level of product sales from this fiscal year and prior years resulted in a smaller customer receivables loan book, down 7.5% at the end of the half. This in turn drove lower FS revenue, down 9.0%.

Our responsible and flexible credit offering remains an integral part of our customer proposition, particularly in the current macro-economic environment.

^{1 IMRG view of online pureplay market.}

Adjusted Gross profit¹

£m	H1 24	H1 23	Change
Product gross profit	88.4	96.2	(8.1)%
Product gross margin %	47.1%	45.5%	1.6ppts
Financial services gross profit	53.0	60.3	(12.1)%
Financial services gross margin %	48.4%	50.1%	(1.7)ppts
Adjusted Group gross profit1	141.4	156.5	(9.6)%
Adjusted Group gross profit margin	47.6%	47.2%	0.4ppts

¹ A reconciliation of statutory measures to adjusted measures is included on page 12. A full glossary of Alternative Performance Measures and their definitions is included on page 22.

Adjusted gross profit margin progressed over prior year to 47.6%, reflecting continued growth in retail margin, partially offset by slightly lower FS margin.

Product gross margin improved 1.6ppts to 47.1% despite unfavourable trading impacts including lower full price mix and additional clearance activity of aged stock which adversely impacted the gross margin rate by c. 0.4ppts. c. 1.3ppt of the improvement came from normalisation of freight rates and c. 0.7ppt reflected a benefit from higher VAT bad debt relief due to the timing of debt sales¹.

The FX contracts used to hedge US $ spend are described in Note 6 to the financial statements and we remain well hedged through the remainder of FY24 with over 95% of the US $ cash spend hedged.

FS gross margin rate returned to more normal levels in FY23 (49.3%), with the rate broadly continuing into H1 24. H1 24 FS gross margin was 1.7ppts lower than H1 23 largely reflective of timing impacts between provisioning and write offs following the change in payment arrangement ('PA') strategy in FY23, with a stable level of PAs in H1 24 annualising against PAs building in H1 23.

¹ Included in product gross margin as they are only recoverable as we are a combined retail and financial services business, and they would not be recoverable as a standalone credit business.

Adjusted operating costs¹

£m	H1 24	H1 23	Change
Warehouse & fulfilment costs	(27.8)	(31.7)	12.3%
Marketing & production costs2	(32.7)	(35.6)	8.1%
Admin & payroll costs2	(63.4)	(61.3)	(3.4)%
Adjusted operating costs1	(123.9)	(128.6)	3.7%
Adjusted operating costs as a % of Group Revenue	41.7%	38.8%	2.9ppts

¹ A reconciliation of statutory measures to adjusted measures is included on page 12. A full glossary of Alternative Performance Measures and their definitions is included on page 22.

² H1 23 FS statement costs re-presented from Marketing & production into Admin & payroll costs, consistent with updated classification used in H1 24.

Total operating costs excluding adjusting items reduced £4.7m to £123.9m through a real focus and discipline in areas which the business can directly control. This included a headwind of c. £7m cost inflation being offset by volume savings and management initiatives. The inflationary pressure had increased the cost base in H2 23 against H1 23, for both supplier costs and internal pay awards, and this has flowed through and annualised into FY24 as previously flagged.

Adjusted operating costs as a percentage of Group revenue increased 2.9ppts to 41.7% reflecting the negative operational gearing on fixed costs. Although management actions have helped to mitigate the increase, we expect further benefits from actions taken in H1, and further actions planned in H2, to benefit the full year position, along with greater operational leverage in H2 due to sales seasonality.

Warehouse and fulfilment costs were £3.9m or 12.3% lower than the prior year, benefiting from the flexible cost base, with c. £6m of savings from lower core volumes. This was partially offset by a headwind of c. £2m across fuel surcharges and inflationary price impacts on carrier and resource costs.

Marketing and production costs were £2.9m or 8.1% lower than prior year reflecting the continued benefit from lower order volumes on performance marketing costs, more than offsetting cost inflation of c. £2m.

Admin and payroll costs increased by £2.1m or 3.4%, driven predominantly by the continuation of inflationary price increases, totaling c. £3m, including utilities, technology contracts and pay awards, as well as additional transformation investment of c. £1m, partially offset by cost savings.

Statutory operating costs, including adjusting items reduced by 0.1%.

Depreciation and amortisation

Depreciation and amortisation of £9.9m, down £7.2m versus £17.1m in the prior year. This was driven by the non-cash impairment of £53.0m against non-financial assets which took place in FY23.

Finance costs

Net finance costs of £7.5m, were higher than £6.5m in the prior year reflecting higher utilisation of the securitisation facility, with lower voluntarily undrawn amounts during the half than prior year. The Group has limited its exposure to interest rate movements through interest rate hedging which it continues to have in place.

Adjusting items

The multi-year transformation of the business has continued including the ongoing review of the operating model. A restructuring programme of the Group's operational and head office headcount to reflect the lower sales orders, was initiated at the end of FY23 and continued through the half with total redundancy costs of £1.3m incurred in the period.

During the period, the Board also approved the rationalisation of the Group's warehousing facilities following a review of the overall warehouse portfolio capacity, utilisation and associated operational cost base resulting in a £3.3m charge across provisioning and onerous lease impairment. Further details can be found in note 5.

£m	H1 24	H1 23
Strategic change	4.6	-
Other	(0.1)	-
Items charged to profit before tax	4.5	-

Profit and earnings per share

Driven by the trading environment remaining challenging and lower retail volumes, as anticipated, Adjusted EBITDA decreased by £10.4m to £17.5m and Adjusted EBITDA margin decreased by 2.5ppts to 5.9%.

Statutory operating profit decreased by £7.7m against the prior year, to £3.1m, reflecting the reduction in Adjusted EBITDA and £4.5m of Adjusting items, partially offset by lower depreciation and amortisation.

Statutory loss before tax of £(4.1)m, down £(11.3)m year on year (H1 23: profit before tax of £7.2m), reflecting the reduction in statutory operating profit, higher interest costs, and a lower fair value gain on financial instruments as a result of the movement in the US dollar driving lower foreign exchange mark to market gains.

The taxation credit for the year is based on the underlying estimated effective tax rate for the full year of 39.0%, and reflects movement in deferred tax in the year and prior year adjustments. Further tax analysis is contained in note 7.

Statutory earnings per share decreased to a loss of (0.54)p (H1 23: 1.22p). Adjusted earnings per share decreased to 0.15p (H1 23: 0.72p).

Financial services customer receivables and impairment charge on customer receivables

Gross customer trade receivables at H1 24 reduced by 7.5% against H1 23 to £528.9m, driven by the reduced level of product sales in the prior year and H1 of this year.

Arrears rates reduced by 0.1%pts against prior year to 9.8%, based on H1 23 being presented on a comparable basis, including insolvency accounts now classified in arrears rather than written-off. Macro conditions have resulted in pressure on customers, which is being carefully monitored and support is provided where required. Our customers have proved resilient to the conditions with book performance better than expected. Our macro-economic overlay held at FY23 year-end has reduced from £2.5m to £1.1m to reflect this.

The change in the payment arrangements debt sale strategy at the end of FY23 has meant that we have maintained a higher stock of customers who are on forbearance measures. The change in debt sale strategy is the main driver behind the expected credit loss ('ECL') provision ratio increasing to 14.3% from 13.9% in H1 23 as these payment arrangement balances are provided for at a higher rate than the receivables not on a payment arrangement. However, provisions on the normal book are lower at 11.6% compared to 11.8% in H1 23, reflecting improved book performance.

£m	H1 24	H1 23	Change
Gross customer loan balances	528.9	571.7	(7.5)%
ECL provision	(75.8)	(79.7)	(4.9)%
Normal account provisions	(54.3)	(62.5)	0.7ppts
Payment arrangement provisions	(20.4)	(17.1)	(0.9)ppts
Inflationary impacts	(1.1)	-	(0.2)ppts
ECL provision ratio	14.3%	13.9%	(0.4)ppts
Net customer loan balances	453.1	492.0	(7.9)%

The profit and loss net impairment charge on customer receivables for H1 24 was £56.1m, £3.2m lower than last year, driven by lower write-offs, fraud and macro-economic releases.

£m
H1 23 impairment charge on customer receivables	59.3
Lower write-offs due to book size	(2.6)
Macro-economic releases	(1.4)
Lower fraud	(1.4)
Lower recoveries and timing of sales	1.2
Payment arrangement strategy	1.0
H1 24 net impairment charge on customer receivables	56.1

Funding and total accessible liquidity ('TAL')

The Group has the following arrangements in place:

· A £400m securitisation facility (H1 23: £400m) committed until December 2024, drawings on which are linked to prevailing levels of eligible receivables but with flexibility around the level which the Group chooses to draw. As previously disclosed, in February 2023 the Group chose to proactively reduce the lender commitment from £400m to £340m to reflect the accessible funding level and reduce ongoing fees;

· A RCF of £75m, and an overdraft facility of £12.5m, both fully undrawn at 2 September 2023. As previously disclosed, these facilities were refinanced following the FY23 year end to a maximum limit of £75m and £12.5m respectively, and are both committed to December 2026;

· At 2 September 2023 Group TAL was £133.1m, comprising cash of £49.1m including restricted cash of £3.5m, the fully undrawn RCF of £75.0m and overdraft of £12.5m.

Net Cash Generation / (Utilisation)

£m	H1 24	H1 23
Adjusted EBITDA	17.5	27.9
Inventory working capital movement	11.6	(15.6)
Other working capital, operating cash flows and provision movement	2.3	19.8
Cash flow adjusted for working capital	31.4	32.1
Adjusting items	(3.1)	(3.3)
Capital investing activities	(8.9)	(11.2)
Non-operating tax & treasury	1.4	(0.6)
Interest paid	(8.1)	(6.5)
Non-operational cash outflows	(18.7)	(21.6)
Gross customer loan book repayment	26.3	5.4
Decrease in securitisation debt in line with customer loan book1	(25.4)	(26.4)
Net cash inflow from the customer loan book1	0.9	(21.0)
Net cash generation / (utilisation)	13.6	(10.5)

¹ H1 23 excludes voluntary flexible drawdown of the securitisation facility of £14.6m. The net movement in Cash and cash equivalents, including the voluntary flexible drawdown, is shown on page 13.

The business generated cash of £13.6m in the half, closing with £49.1m net unsecured cash. The inflow was driven by positive EBITDA generation and work undertaken to right-size the stock balance.

Capital expenditure of £8.9m (H1 23: £11.2m) has continued to be self-funded as we invest in delivering the ongoing digital transformation of the business. We expect higher capital investment in H2 than H1 as part of the continued transformation of the business, with full year investment expected to be broadly in line with FY23.

Net inventory levels at the end of the half were down 19.8%, at £82.6m (H1 23: £103.0m), driving a net improvement in working capital. We have been executing against our previously flagged plans to carefully manage inventory intake and reduce stock holding, with units at the end of the half nearly 1m below H1 23.

The net inflow from the customer loan book reflects the reduction in the customer loan book, partially offset by associated lower securitisation borrowings.

Adjusted net debt

Unsecured net cash / (debt), which is defined as the amount drawn on the Group's unsecured borrowing facilities less cash balances, closed the half in a positive position with unsecured net cash of £49.1m (H1 23: unsecured net cash £47.2m plus an additional £45.5m which was voluntarily underdrawn on the securitisation funding facility to optimise interest costs).

Adjusted net debt reduced by £39.0m in the half against FY23 year end, to £258.4m (FY23: £297.4m; H1 23: £243.5m). This is the net amount of £49.1m of unsecured net cash and £307.5m of debt drawn against the securitisation funding facility which is backed by eligible customer receivables. The £453.1m net customer loan book significantly exceeds this adjusted net debt figure. The reduction in net debt in the half reflects the net cash generation described above and lower securitised borrowings.

Dividend and capital allocation

As previously announced in the Group's FY23 results and in light of the macro-economic environment, our clear set of investment plans and the number of competing demands on our cash resources, the Board decided not to re-introduce a dividend in FY23 or FY24.

Pension scheme

The Group's defined benefit pension scheme had a surplus of £20.0m at the end of the half, which has reduced over the prior year (H1 23: £31.4m surplus) driven by lower returns on the scheme assets, offset partly by the increase in corporate yields and reduced long-term inflation expectations, remaining in line with the FY23 year end position.

KPI DEFINITIONS

Measure	Definition
Total website sessions	Total number of sessions across N Brown apps, mobile and desktop websites in the 12 month period
Total active customers	Customers who placed an accepted order in the 12 month period to reporting date
Total orders	Total accepted orders placed in the 12 month period. Includes online and offline orders.
AOV	Average order value based on accepted demand1
AIV	Average item value based on accepted demand1
Items per order	Average number of items per accepted order
Orders per customer	Average number of orders placed per ordering customer
Conversion	% of app/web sessions that result in an accepted order
NPS	Customers asked to rate likelihood to "recommend the brand to a friend or colleague" on a 0-10 scale (10 most likely). NPS is (% of 9-10) minus (% of 0-6). NPS is recorded on JD Williams, Simply Be, Jacamo and Ambrose Wilson
FS Arrears	Arrears are stated including both customer debts with two or more missed payments, or customer debts on a payment hold

¹Accepted demand is defined as the value of Orders from customers (including VAT) that we accept, i.e. after our credit assessment processes.

APM GLOSSARY

The Preliminary Results statement includes alternative performance measures ('APMs'), which are not defined or specified under the requirements of IFRS. These APMs are consistent with how the Group measures performance internally and are also used in assessing performance under the Group's incentive plans. Therefore, the Directors believe that these APMs provide stakeholders with additional, useful information on the Group's performance.

Alternative Performance Measure	Definition
Adjusted gross profit	Gross profit excluding adjusting items.
Adjusted gross profit margin	Adjusted gross profit as a percentage of Group Revenue.
Adjusted EBITDA	Operating profit, excluding adjusting items, with depreciation and amortisation added back.
Adjusted EBITDA margin	Adjusted EBITDA as a percentage of Group Revenue.
Adjusted profit before tax	Profit before tax, excluding adjusting items and fair value movement on financial instruments.
Adjusted profit before tax margin	Profit before tax, excluding adjusting items and fair value movement on financial instruments expressed as a percentage of Group Revenue.
Net Cash generation	Net cash generated from the Group's underlying operating activities.
Adjusted Operating costs	Operating costs less depreciation, amortisation and adjusting items.
Adjusted Operating costs to revenue ratio	Operating costs less depreciation, amortisation and adjusting items as a percentage of Group revenue.
Adjusted Net debt	Total liabilities from financing activities less cash, excluding lease liabilities.
Net debt	Total liabilities from financing activities less cash.
Unsecured net cash / (debt)	Amount drawn on the Group's unsecured debt facilities less cash balances. This measure is used to calculate the Group's leverage ratio, a key debt covenant measure.
Total Accessible Liquidity	Total cash and cash equivalents, less restricted amounts, and available headroom on secured and unsecured debt facilities.
Adjusted Earnings per share	Adjusted earnings per share based on earnings before adjusting items and fair value adjustments, which are those items that do not form part of the recurring operational activities of the Group.

The reconciliation of the statutory measures to adjusted measures is included in the Financial Review on page 12.

Unaudited Condensed consolidated income statement

for the 26 weeks ended 2 September 2023

		26 weeks to 2 September 2023	26 weeks to 2 September 2023	26 weeks to 2 September 2023	26 weeks to 27 August 2022	26 weeks to 27 August 2022	26 weeks to 27 August 2022
		Before adjusting items	Adjusting items (Note 5)	Total	Before adjusting items	Adjusting items (Note 5)	Total
	Note	£m	£m	£m	£m	£m	£m
Revenue		197.1	-	197.1	222.1	-	222.1
Credit account interest	4	99.9	-	99.9	109.4	-	109.4
Total revenue	4	297.0	-	297.0	331.5	-	331.5
Cost of sales		(99.5)	(1.0)	(100.5)	(115.7)	-	(115.7)
Impairment losses on customer receivables	4	(56.1)	-	(56.1)	(59.3)	-	(59.3)
Gross profit	4	141.4	(1.0)	140.4	156.5	-	156.5
Operating profit	4	7.6	(4.5)	3.1	10.8	-	10.8
Finance costs		(7.5)	-	(7.5)	(6.5)	-	(6.5)
Profit/(Loss) before taxation and fair value adjustments to financial instruments		0.1	(4.5)	(4.4)	4.3	-	4.3
Fair value adjustments to financial instruments	6	0.3	-	0.3	2.9	-	2.9
Profit/(Loss) before taxation		0.4	(4.5)	(4.1)	7.2	-	7.2
Taxation	7	0.5	1.1	1.6	(1.6)	-	(1.6)
Profit/(Loss) for the period		0.9	(3.4)	(2.5)	5.6		5.6
(Loss)/Earnings per share from continuing operations
Basic	8			(0.54)p			1.22p
Diluted	8			N/A			1.21p

Unaudited condensed consolidated statement of comprehensive income

for the 26 weeks ended 2 September 2023

	26 weeks to 2 September 2023	26 weeks to 27 August 2022
	£m	£m
(Loss)/Profit for the period	(2.5)	5.6
Items that will not be classified subsequently to profit or loss:
Actuarial losses on defined benefit pension schemes	(0.8)	(6.8)
Tax relating to items not reclassified	0.3	2.5
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign operations	(0.6)	0.1
Fair value movements of cash flow hedges	0.7	27.3
Reclassified from OCI to profit & loss	(5.0)	(0.2)
Tax relating to these items	1.0	(5.7)
Other comprehensive (loss)/income for the period	(4.4)	17.2
Total comprehensive (loss)/income for the period attributable to equity holders of the parent	(6.9)	22.8

Condensed consolidated balance sheet

As at 2 September 2023

		As at 2 September 2023 (unaudited)	As at 27 August 2022 (unaudited)	As at 4 March 2023 (audited)
	Note	£m	£m	£m
Non-current assets
Property, plant & equipment	10	50.8	58.6	50.9
Intangible assets	9	58.4	108.3	58.3
Right-of-use assets		1.2	0.7	0.5
Retirement benefit surplus		20.0	31.4	20.0
Derivative financial instruments	6	3.2	10.3	7.6
Deferred tax assets		29.2	11.5	29.2
		162.8	220.8	166.5
Current assets
Inventories		82.6	103.0	94.1
Trade and other receivables	11	477.8	516.3	504.7
Derivative financial instruments	6	16.5	21.1	19.1
Current tax asset		1.8	0.4	0.1
Cash and cash equivalents	13	49.1	47.2	35.5
		627.8	688.0	653.5
Total assets		790.6	908.8	820.0
Current liabilities
Trade and other payables	12	(75.1)	(103.8)	(72.5)
Lease liability		(0.6)	(0.6)	(0.3)
Provisions	16	(10.8)	(27.6)	(10.1)
Derivative financial instruments	6	(0.4)	-	(0.1)
		(86.9)	(132.0)	(83.0)
Net current assets		540.9	556.0	570.5
Non-current liabilities
Bank loans	14	(307.5)	(290.7)	(332.9)
Lease liability		(0.5)	(0.2)	(0.2)
Provisions		(0.3)	-	-
Derivative financial instruments	6	(0.1)	-	-
Deferred tax liabilities		(11.5)	(24.0)	(13.2)
		(319.9)	(314.9)	(346.3)
Total liabilities		(406.8)	(446.9)	(429.3)
Net assets		383.8	461.9	390.7
Equity
Share capital		51.2	50.9	50.9
Share premium		85.7	85.0	85.7
Own shares		(0.1)	-	(0.2)
Cash flow hedge reserve		11.5	22.7	15.7
Foreign currency translation reserve		1.2	1.1	1.8
Retained earnings		234.3	302.2	236.8
Total equity		383.8	461.9	390.7