Catalogue company feels squeeze

PROFITS at mail-order group N Brown will fall short of expectations despite a 3.3% increase in home shopping sales over the past 20 weeks, a growth rate well above the industry average.

Chief executive Alan White said margins dropped by 2.1 points, reflecting price cutting and higher bad debts. Industrial action at Royal Mail also cost the group about £1m by disrupting payments and Christmas mailings.

'We had to be aggressive on prices to get the orders in,' said White. 'It did the trick on sales, but margins suffered.'

Shares in the group, which specialises in the over-45s market, fell sharply in early trading as analysts lopped about £4m from their forecasts for the year to the end of February, taking them down to around £50m.

White said he was pleased with the solid sales growth in the core business, and that the active customer base had not only been maintained but increased by 5%.

He has high hopes for the new spring/summer catalogues, which carry more fashionable ranges.

The group has also moved to tackle bad debts, withdrawing its two-to-three-year interest-free credit on higher priced electricals and furniture. White also highlighted the success of its 'Simply Be' catalogue, aimed at the 30-35 age group. Its sales jumped by about 30%, around a quarter ordered on the internet.