Everyone at N Brown plays a role in delivering world-class fashion that fits - N Brown Group PLC

Everyone at N Brown plays a role in delivering world-class fashion that fits - N Brown Group PLC
Strategic report
Everyone at
N Brown plays
a role in delivering
fashion that fits.
We couldn’t do what we do
without the passion, energy
and dedication of our people
to deliver fantastic products and
a great service to our customers.
Our people are what defines
our business. They live and
breathe our GUSTO values
every day and are our single
most important asset.
Everything we achieve as a
business, we are achieving
together. We would like to
recognise and thank our
colleagues for working so hard
to make this happen, and we
are pleased to introduce you
to some of our great people
in this report.

Angela Spindler
Chief Executive Officer


                                N Brown Group plc
                      Annual Report & Accounts 2018   1
Everyone at N Brown plays a role in delivering world-class fashion that fits - N Brown Group PLC
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the UK.                               With the passion,
                                      energy and
                                      dedication to
                                      deliver fantastic
                                      products and a
                                      great service to
                                      our customers.

2     N Brown Group plc
      Annual Report & Accounts 2018
Everyone at N Brown plays a role in delivering world-class fashion that fits - N Brown Group PLC
Strategic report
plays a role
in delivering
fashion that fits.


                               N Brown Group plc
                     Annual Report & Accounts 2018   3
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behind a modern online
department store

Relaunching the JD Williams brand
Our influencers                           Midster report
A group of editors and influencers        Last summer we commissioned
designed to inspire our customers         our third state of the nation
by sharing their life moments. Made       report, in association with YouGov,
up of top lifestyle journalists, and      surveying over 2,000 women aged
fashion and home bloggers, they           45+. The report looked into body
are here to share their tips and tricks   confidence, style and shopping
with the JD Williams customers            behaviours, as well as women’s
across all our channels, from the         attitudes towards key life moments
Life.Style magazine to the weekly         such as relationships, dating,
blogs on our site.                        healthy living, life adventures
                                          and work-life balance.
Online stats
We have seen good growth in
our social media figures since the
launch of The Lifestore. With over
178,000 Facebook followers, and
engagement growing over 20%,
this is just one way we are
increasing engagement with
our customers online.

Online engagement growth
                                          Facebook followers

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Everyone at N Brown plays a role in delivering world-class fashion that fits - N Brown Group PLC
Strategic report


               The people behind
               the new brand
              Q: Why did you feel compelled                Q: Tell us about the JD Williams
                 to create the Midster report?                  product offering
              A: Beth – Middle age is no longer that        A: Jane – The product has been built
              middle ground between young and old           around the unique attitude and needs
              – it is a vibrant stage of life that is now   of the 45+ woman – we design specifically
              starting to be recognised as a distinct,      with ‘Her’ in mind and we understand our
              exciting phase full of new possibilities.     customers’ bodies in a way that other
              These days, women are better defined          retailers don’t. We take into account
              by their attitudes, passions, interests and   the way bodies change with age and
              ambition, rather than just a number, so       provide clothes that are on trend and
              we wanted to lift the lid on this and talk    in fashion but are relevant to her. We
              openly about these subjects.                  consider all occasions and we design to
                                                            offer solutions to the challenges women
              Q: What was the thinking behind
                                                            face as they grow older, considering fabric,
                 the repositioning of the brand?
                                                            sleeve length and styling details to help
              A: Beth – We recognised that women            her look and feel great.
              in their 40s and 50s were misunderstood
                                                            Q: What has the reaction been
              and underserved. Contrary to beliefs,
                                                                to the relaunch?
              these women are entering the happiest
              years of their lives – “middle” aged does     A: Becki – The reaction from our customers
              not imply “crisis”! They’ve reached a         has been overwhelmingly positive – one of
              stage in their lives where they know          our customers said “the fact that I can buy
              themselves better than ever and they          homewares, wide-calf boots, clothes,
              feel less guilty about looking after          underwear – everything under one roof and
              themselves a little more. We listened         the new fresh look makes me look and feel
              to our customers’ needs and wanted            more positive”. For us, it’s about ensuring
              to empower them and bring to them             that these women are represented – and
              a brand which inspires them to live life      celebrated! We’re really pleased with the
              to the full on their own terms.               performance since we relaunched the
                                                            brand – excluding the drag from recently
                                                            migrated Fifty Plus customers, JD Williams
                                                            revenue was up double digit for the year
                   More detail p36                          as a whole.

                                                                           N Brown Group plc
                                                                 Annual Report & Accounts 2018          5
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continued                                       Gareth

    Ross                                                                                        85.8%
                                                                                                Customer satisfaction score


                                                                                                user experience tests


The people shaping
customer experience
Q: How will Simply Be Perks                  business, alongside a significant cost saving
    increase brand loyalty?                   versus ad hoc market research agency fees.
A: Mandy – We wanted to let our               A: Ross – The user experience labs we run
customers know how important they             give us a much deeper understanding of
are to us and give them something back        how our customers use our websites and
as a thank you for their loyalty. We offer    apps. The tools on our sites allow us to
rewards designed to fit our customers         conduct hundreds of experiments to
perfectly by using internal data to tailor    scientifically prove which experiences
rewards to a customer’s lifestyle and         improve satisfaction and ultimately revenue.
known buying preferences, such as
                                              Q: How popular has the delivery
beauty products, or discounts on certain
                                                  subscription service been?
products. Our simple opt-in rewards
programme encourages long-term                A: Mandy – We are really pleased with
loyalty by giving everyone, not just high     the uptake of our delivery subscription.
spenders, monthly perks. How and what         We launched the offer for our Jacamo
we reward our customers is central to         customers over a year ago and we’ve
the rewards programme and having              seen a double-digit increase in both order
data-driven decisions underpin our            frequency and net sales per customer. We
programme has helped us to exceed our         are always looking for ways to improve our
members’ expectations. Our Simply Be          offering for our customers and this has been
customers are highly digital so it was        another successful step in delivering the best
also important that we developed the          possible service to our customers.
functionality for our customers to view
                                              Q: What have the upgrades to the
their rewards, interact with the Perks hub
                                                  Simply Be app meant for customers?
and redeem their rewards via all our online
channels, including our Simply Be app.        A: Ross – The subsequent releases to our
                                              iOS and Android Simply Be apps have meant
Q: What insights have you gained from
                                              that we can continue to improve our offering,
    your customer panels and User
                                              including features such as recently viewed
    Experience (UX) labs?
                                              items and predictive search, and ultimately
A: Gareth – Our customer panels               the experience for our customers. With an
are a great way to gain real customer         App store rating of 4.8 out of 5, we are seeing
opinions and insights on a whole host         the results of these improvements first hand.
of topics; from our product offering          By investing in our in-house app development
to feedback on our latest TV ad. Based        capabilities we can embed fortnightly releases
on the findings we have driven a              to improve the functionality and features of
number of actions throughout the              our apps and roll out onto our other brands.

6         N Brown Group plc
          Annual Report & Accounts 2018
Everyone at N Brown plays a role in delivering world-class fashion that fits - N Brown Group PLC

                                                                                 Strategic report
                    behind delivering
                    the best customer

Driving sales by refining
the customer experience
Improving our app offering            Launch of Simply Be Perks
We have seen some encouraging         After seeing positive results from
results with our Simply Be iOS and    the initial pilot of our new rewards
Android apps, with over 100,000       programme, Simply Be Perks, we
downloads across both platforms.      launched to our whole Simply Be
In February, we launched the          customer base in April 2018.
JD Williams app; our first app on     Designed to engage with our
our own platform and an important     customers on a personal and
step in bringing our technology       emotional basis, driving loyalty
capabilities in-house.                based upon a genuine value
                                      exchange, we have created a new
Customer panels and UX                experience to increase brand love
                                      and advocacy with our customers.
labs allowing agile ways
of learning                           Capturing customer loyalty
A combination of user experience
labs and testing, and our customer
                                      with delivery subscriptions
panels, which we have across all      With a delivery subscription
three of our Power Brands, allow      available on five of our key brands
us to easily and quickly gain real    entitling customers to 12 months
customer insights and the ability     unlimited next day or nominated
to test and learn in an agile way.    delivery for £9.95, we are seeing
                                      encouraging results demonstrating
                                      the loyalty we are driving through
                                      this offer.

                                               N Brown Group plc
                                     Annual Report & Accounts 2018           7
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 C    art

                                             Chris                                          Financial Services gross margin

                                                                                            Improvement in arrears rate

                                                                                            SERVICES (%)

The people behind
Financial Services                                                                              3.5%
                                                                                            Revenue growth

Q: How has the quality of the
    customer loan book changed
    this year?
A: Stuart – The quality of our book has
improved during each of the past few
years, which you can see through our
provision and arrears rates. We’ve         Most of our customers pay more than the
improved our lending decisions, which      minimum payment in any case, but, as we all
has significantly reduced the number       know from a personal perspective, there are
of first time credit defaulters and our    times of the year when we all want to spread
fraud rates, and at the back end of the    the costs a bit more.
book we’ve been proactive in helping
                                           A: Stuart – The customer take up was
customers in financial difficulties, in
                                           greater than we expected, and the area
many cases reducing or freezing the
                                           where we saw the biggest effect – which
interest we charge them during this
                                           was a positive for both customers and us
process. All of these we’ve been doing
                                           as a business – was in arrears, with far more
for several years now, and we continue
                                           customers paying the minimum charge
to benefit from these actions.
                                           and therefore not getting behind on
Q: C
    ould you tell us more about           their payments.
   the changes you made to
                                           Q: H
                                               ow are you using new technology in
   minimum payment changes,
                                              Financial Services, and how important
   and what you saw as a result?
                                              is this going forward?
A: Chris – We are always trying to find
                                           A: Chris – I view this as an important and
ways to give our customers more choice
                                           also really exciting part of my role. There is
and flexibility in how they shop with us
                                           so much to be gained – be that in terms of
and how they manage their finances.
                                           efficiencies, growth opportunities or just
With the uncertain economic outlook we
                                           working smarter – from using innovative
anticipated that pressure on household
                                           new technologies. I’m particularly excited
incomes was likely to increase. To ease
                                           about the latest developments in FinTech,
this pressure, we took the decision to
                                           for instance how AI is being used and the
reduce the minimum payment required
                                           increased access to data across the banking
for the personal credit account.
                                           industry. All of these developments should
                                           allow us to further improve the experience
                                           and ease of shopping for our customers.

     More detail p39

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Everyone at N Brown plays a role in delivering world-class fashion that fits - N Brown Group PLC
Strategic report
behind informed

Driving innovation
in Financial Services
Lower interest rate trials                Minimum payment changes
This year we’ve run several               At the end of the first half we
risk-based variable interest rate         reduced our minimum payment
trials, all in preparation for the full   requirement from 5% to 4%.
rollout of variable APR with our          We did this to give customers
new Financial Services systems.           even more flexibility to manage
This new platform went live on            their finances. We saw a significant
High & Mighty in July and will            effect on Financial Services gross
be rolled out to our other brands         margin, as a result of a better than
going forward, starting with              expected reduction in the number
Fashion World in the second               of customers getting into financial
half of FY19.                             arrears, a positive dynamic.
                                          Our overall approach to credit
In late FY17 we introduced lower
                                          customer risk management and
headline rates for new customers
                                          lending remains unchanged.
on our Power Brands, which
continues to see encouraging
results. This year we also trialled       Technological innovation
risk based pricing for a subset of        We continue to innovate and use
existing credit customers to gain         emerging technologies to further
learnings on customer behaviour           improve our Financial Services
and outcomes before our full              capabilities. Working with partners,
system is rolled out.                     we’re now trialling using virtual
                                          interviews and utilising social data
                                          to access richer information which
                                          we could use for lending decisions.
                                          We’ve also gone live with a trial
                                          using Artificial Intelligence (AI) in our
                                          credit and fraud decision making.

                                                                                                N Brown Group plc
                                                                                      Annual Report & Accounts 2018   9
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      behind our

       Our new approach is successfully
       accelerating our growth in the USA
       Focusing our marketing                   The launch of Global                      New international
       investment on                            Ship Anywhere                             partnerships with
       digital channels                         We’ve recently gone live with a           Zalando, Navabi, Namshi,
       We have served US customers              technology solution which will enable     Lamoda and THE ICONIC
       for several years, under both the        us to serve customers anywhere in the
                                                                                          Our partnerships involve us selling
       Simply Be and JD Williams brands.        world. This third-party solution allows
                                                                                          capsule collections of Simply Be,
       This year we changed our marketing       for currency and language translation
                                                                                          and in some cases Jacamo, through
       approach in the country, significantly   and is an important next step in our
                                                                                          other retailers’ sites. This allows us
       reducing our use of paper and            international ambitions.
                                                                                          to generate higher revenue and grow
       mail order marketing techniques,                                                   our brand awareness whilst providing
       and instead focusing on digital                                                    an important income stream of the
       marketing channels such as social                                                  future. Last year we went live on
       media, influencers and further                                                     ASOS and Tesco, and this year we’ve
       investment in our online content                                                   launched on Zalando, Navabi,
       and user experience.                                                               Namshi, Lamoda and THE ICONIC.

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                                                                                                                    Strategic report



                          Q: What role do you see
The people                   influencers playing in growing
                             US brand awareness?
driving our               A: Arieta – Influencers, be they bloggers,
international             vloggers or Instagrammers, are becoming
                          an increasingly important part of our
                                                                       Q: W
                                                                           hat will Global Ship
                                                                          Anywhere give the business?
growth                    marketing mix. They provide us with
                                                                       A: Jen – The release was an important
                          the opportunity to get huge reach
                                                                       milestone for us as it opens the door to
                          and become part of our customers’
     More detail p38                                                   so many countries that we haven’t been
                          conversations. Working in partnerships
                                                                       able to serve before. Using a third-party
                          with influencers provides us with a highly
                                                                       solution improves the efficiency, and also
                          engaged and in-tune audience to spread
                                                                       reduces the risk for us. We’re looking
                          the word of our brands. We try to make
                                                                       forward to getting valuable insight into
                          sure that everyone we work with,
                                                                       where in the world our brands resonate
                          whether they’re our models, stylists
                                                                       best with customers, which will then
                          or photographers, is socially connected
                                                                       enable us to invest more time and
                          with our customers.
                                                                       efforts into these countries.
                          Q: Looking forward, what’s in store
                                                                       Q: How are your partnerships
                              overseas in the coming year?
                                                                           going, and how do you see this
                          A: Rich – This year was an opportunity           area developing in the future?
                          to test marketing messages, channels
                                                                       A: Simon – We’re really pleased with
                          and above all new content. We also
                                                                       performance so far, and partners are
                          created our first bespoke collection
                                                                       keen to work with us – plus size is one of
US                        specifically for our US customers. We
                          worked with specific US models and
                          influencers and created content that was
                                                                       the fastest growing parts of the clothing
                                                                       market globally, and we believe – and our

revenue                   shot, produced and created for the local
                          audience. In addition, it is important for
                                                                       customers tell us – that we understand
                                                                       fit better than anyone. Selling capsule
                                                                       collections through partners is therefore
+21% in                   customers, influencers, celebrities and
                          members of the media to ‘touch and feel’
                          our product. With this in mind we will be
                                                                       a win-win – they get a great plus-size
                                                                       brand to offer their customers, and we

the second                creating experiential activities that will
                          showcase our fashion credentials and
                                                                       earn incremental revenue and grow
                                                                       brand awareness. We’re delighted with
                                                                       the partners we’ve started working with
Constant currency terms
                          demonstrate our expertise in fit.
                                                                       over the past year and are speaking to
                                                                       quite a few more, so I think this will
                                                                       continue to be a growth area for us.

                                                                                     N Brown Group plc
                                                                           Annual Report & Accounts 2018     11
At a Glance

What we do

    Power Brands

      An online department store, offering style for 45-plus customers
      and their families, with ranges for women, men, home and kids.
      Focusing on shape and fits that flatter, we create unique silhouettes,
      rather than scaling patterns; we use real bodies, rather than static
      mannequins; we design our products to fit – a unique and age
      appropriate point of view to empower women to feel their best.

      REVENUE GROWTH (%)                               REVENUE PERFORMANCE (M)

           3.2%                                        £163.4m

                                                                                    Simply Be has empowered women for over a decade to express
                                                                                    their true selves through perfect-fitting style, whatever their shape,
                                                                                    whatever their size. The brand is gaining significant momentum
                                                                                    both here in the UK as well as in the US market.

                                                                                    REVENUE GROWTH (%)                  REVENUE PERFORMANCE (M)

                                                                                             16.3%                      £132.8m

     A modern, challenger brand with a strong digital offer, Jacamo
     wants men of all shapes and sizes to look good and to enjoy
     fashion to express their own style. Collections are available
     in a market-leading range of sizes, from Small to 5XL.

     REVENUE GROWTH (%)                                REVENUE PERFORMANCE (M)

           5.1%                                        £68.6m

Revenue growth percentages are stated with reference to 2017 52 week numbers. See page 42.

12             N Brown Group plc
               Annual Report & Accounts 2018
Strategic report
We are structured in a matrix                                Our three Power Brands are our                    focus our efforts on the online channel
approach, buying by product                                  growth engines; here we aim to gain               within Traditional, and would expect the
                                                             new customers and grow market share.              offline element to therefore reduce over
category and marketing by                                    Our Secondary Brands are also in                  time. This will ensure that we continue to
brand. This allows us to run a                               growing markets, however they are                 offer customers a great product offering,
portfolio of brands effectively                              more niche and we therefore aim to                whilst allowing us to generate efficiencies.
and efficiently. All of our brands                           grow share of existing customer spend.
                                                                                                               Our Financial Services business operates
sell a wide range of clothing                                Our Traditional Segment has an online             across all brands, with the younger brands
and homewares products.                                      penetration of just under 40%, with online        typically having a higher penetration of
                                                             growing as a channel and offline (catalogues)     sales sold through credit.
                                                             declining significantly. Going forward, we will

   Secondary Brands

                                                             Secondary Brands focus on distinct                REVENUE GROWTH (%)

                                                             customer niches which are not served
                                                             by our Power Brands. These brands
                                                             have significant customer loyalty, good
                                                             growth prospects and are increasingly
                                                             online. We view our Power Brands as               REVENUE PERFORMANCE (M)

                                                             having the greatest growth potential
                                                             medium term, however, and therefore
                                                             our focus here is predominantly on
                                                             our existing customers.

   Traditional Segment

                                                             The titles in this segment are focused            REVENUE GROWTH (%)

                                                             on serving our loyal, traditional and
                                                             typically more mature customers. These
                                                             customers tend to prefer paper-based
                                                             marketing, such as catalogues and
                                                             direct-mail offers. This is an attractive         REVENUE PERFORMANCE (M)

                                                             and accessible market, underserved
                                                             by other retailers, and whilst not
                                                             a future growth driver we generate
                                                             a good financial return.

   Financial Services

   An important part of our overall proposition, strengthening customer                                        REVENUE GROWTH (%)

   loyalty and enabling our retail business to thrive. In order to offer our
   customers excellent convenience and flexibility, we allow customers to
   either pay us immediately or utilise a credit account for their purchases,
   spreading the cost of their purchases over time.
                                                                                                               REVENUE PERFORMANCE (M)

Revenue growth percentages are stated with reference to 2017 52 week numbers. See page 42.

                                                                                                                             N Brown Group plc
                                                                                                                   Annual Report & Accounts 2018        13
Chairman’s Statement

A year of significant
market share gains
        Against a challenging
        sector backdrop we
        delivered a good set of
        figures, with particularly
        strong performances
        from both Simply Be and
        Financial Services. I would
        like to thank all our
        colleagues across the
        business for their
        continued passion
        and dedication.

A STRONG POWER                                  FINANCIAL SERVICES                              STRONG
BRAND PERFORMANCE:                              PERFORMANCE DRIVEN                              ONLINE METRICS:
                                                BY ONGOING GOOD QUALITY OF

+8.0%                                                                                           +10%
                                                THE CUSTOMER LOAN BOOK:

Revenue increase
                                                Financial Services
                                                                                                Online revenue yoy

Increase in active
                                                                                                Of all traffic from
customers                                                                                       mobile devices

All figures presented on this page are stated with reference to 2017 52 week numbers. See page 42.

14              N Brown Group plc
                Annual Report & Accounts 2018
Strategic report
Looking back on the year                        Reflecting on my time as Chairman
This year has seen the business make            After serving nearly six years as Chairman,      Welcoming
further good progress with the strategy         I am stepping down in order to pursue
Angela put in place when she joined, with       opportunities in Private Equity. The Board
                                                                                                 Matt Davies
continued strong growth in the Power            has recruited Matt Davies, who joined us as      as Chairman
Brands, online penetration and market           Non-Executive Director and Chairman Elect
shares. The backdrop remains challenging,       in February, and will take over as Chairman
and was particularly competitive in the         when I step down on 1 May 2018.
second half, and we are not immune to
                                                Over the five years I have been with
this. Financial Services provides the Group
                                                the Group it has been through an
with additional resilience, however, and this
                                                unprecedented period of transformation.
can be seen in the financial performance
                                                This change programme has not been
this year.
                                                without its challenges, and there have also
Dividend                                        been external shocks and legacy issues we
We recognise the importance of cash returns     have needed to deal with along the way.
to our shareholders. Against a backdrop of
                                                One of the biggest changes over the
continued investment in the business to
                                                past few years has been in people, with
ensure future sustainable growth, we are                                                         We are delighted to welcome
                                                the vast majority of both the Board and
pleased to be recommending an unchanged                                                          Matt Davies to N Brown. Matt is a
                                                the Operating Board joining the Group
dividend on last year.                                                                           first-class retailer and brings a wealth
                                                over the past five years. This has been
                                                                                                 of experience of retail and online
Board changes                                   an important step forward in ensuring
                                                                                                 businesses. He will be a strong
This year has seen further changes to           that the Group has the expertise and
                                                                                                 addition to the N Brown Board,
the Board, as it continues to evolve, in line   experience to guide it on its path to an
                                                                                                 bringing knowledge, leadership and
with the changing shape of the business.        online retail model, driven by customers
                                                                                                 customer focus. He has a proven track
As announced in last year’s report, Fiona       but fuelled by technology.
                                                                                                 record of value creation across retail
Laird stepped down from the Board in
                                                There has been material people change            and online.
January, following her appointment to
                                                throughout the business, with many new
the Board of Newell Brands Inc in the USA.                                                       Matt was CEO of Tesco UK and ROI
                                                colleagues joining, bringing new skills and
At the same time, I was very pleased to                                                          until the end of April 2018, having
                                                capabilities. Much has been done to follow
welcome two new Non-Executive Board                                                              been appointed in May 2015. During
                                                our customers as technology has changed
members, Gill Barr and Michael Ross. Both                                                        his time at Tesco he successfully led
                                                the way people shop and interact with
bring with them very relevant expertise                                                          the turnaround of the UK business.
                                                retailers. This affects everything in the
and knowledge, and have already added                                                            Prior to Tesco, Matt was CEO of
                                                business from how we buy and source
valuable insight to the Group.                                                                   Halfords from 2012 to 2015 and
                                                product, to how we sell and distribute
                                                                                                 Finance Director (2001-2004) and
Gill is a Non-Executive Director of             to our customers. We have also made
                                                                                                 CEO (2004-2012) of Pets at Home.
PayPoint plc and Wincanton plc, and a           strides increasing the transparency of our
Trustee Director of Willis Towers Watson’s      Financial Services business and obtaining
master trust, LifeSight Ltd. She is also the    our full authorisation from the FCA.
Chair of the Customer Challenge Group
                                                People change is never an easy aspect of any
for Severn Trent Water Plc. She was
                                                business transformation and I would like to
previously Group Marketing Director
                                                thank all colleagues for their passion, energy
of The Co-operative Group, Marketing
                                                and dedication to the Group throughout my
Director of John Lewis and also spent
                                                tenure. As the title of this report says,
                                                                                                 “I am delighted and excited
time at Kingfisher Plc in a variety of                                                             to be taking on this role.
                                                N Brown is truly ‘powered by people’.
senior strategy, marketing and business
development roles.                              I have thoroughly enjoyed my time at
                                                                                                   I am really looking forward
                                                N Brown. It has been a privilege to Chair          to working with Angela,
Michael Ross is the Co-founder and Chief
Scientist of DynamicAction, a leader in big
                                                the Group and I look forward to following          her team and my fellow
                                                its progress in the coming years under             Non-Executive Directors to
data analytics and AI for retail. He is also
                                                Matt’s excellent leadership.
a Non-Executive Director of Sainsbury’s                                                            further develop and grow
Bank, and sits on the commercial                                                                   the N Brown business.”
development board at the Turing Institute.
He was previously the co-founder and                                                               Matt Davies
CEO of figleaves.com. Michael started his                                                          Incoming Chairman
career at McKinsey consulting in the early
                                                Andrew Higginson
days of the internet.

                                                                                                             N Brown Group plc
                                                                                                   Annual Report & Accounts 2018      15
Market Review

Good performance
in a challenging market                                                                           Macro-
Global trends                                  Demographic trends                                 trends
The global economic backdrop remains           Improvements in healthcare and lifestyle
                                                                                                  High inflation
uncertain, with the transition and exit from   are resulting in an ageing UK population,
the EU the biggest uncertainty at present.     with 18% of the population aged 65+                leading to
Exiting the EU presents our business with      according to latest figures from ONS.              economic
some potential challenges, particularly in     Obesity levels have steadily increased over        pressures.
terms of reliance of EU workers through        the last 15 years, and with latest reports
our distribution network. We are working       from the Health Survey for England
to ensure that the impact to our customers     showing the highest levels in 55-64 year
and our business is minimised as much          olds, our size and age inclusive approach
as possible.                                   are important differentiators which benefit
                                               from these population trends.                         How we are responding
                                                                                                     We continue to aim to mitigate
                                                                                                     input costs as much as possible,
                                                                                                     working closely with our suppliers
                                                                                                     and moving supply nearer to the
                                                                                                     UK in some cases.
                                                                                                     We hedge our dollar buying
                                                                                                     requirements on a rolling basis,
                                                                                                     to give us clarity over our
                                                                                                     buying rates.
                                                                                                     Our International business
                                                                                                     provides a small natural hedge
                                                                                                     which is a key area of focus as one
                                                                                                     of our strategic growth levers.
                                               The market remains highly
                                               competitive, with retailers facing
                                               cost pressures from high inflation
                                               as a result of the depreciation
                                               of sterling following the EU
                                               referendum, and households                    Online
                                               carefully managing their
                                               disposable income. The health                 Shopping globally
                                               and beauty sector is expected                 is increasingly
                                               to continue to see an uplift as
                                                                                             online; the British
                                               consumers seek to find small,
        Health and beauty gaining              inexpensive luxury purchases.                 Retail Consortium
        momentum in a highly                                                                 estimates that over
        competitive market.                                                                  20% of all non-food
                                                                                             retail spending now
        How we are responding                  Opportunities for growth                      takes place online.
        Continuing to invest in great          We already benefit from strong
        value products.                        customer loyalty, driven by our
                                               fit specialism and, for some
        Continuing to improve our health
                                               customers, personal shopping
        and beauty offering by partnering
                                               account. The launch of delivery
        with new brands.
                                               subscriptions and other loyalty
                                               drivers such as Simply Be Perks
                                               should further strengthen

                                               customer loyalty. By increasing
                                                                                                     How we are responding
                                               our third-party brand and
                                               product offering, we are widening                     Continuous improvements
        Ladieswear market share                share of basket to sectors which                      to customer experience, for
                                               are seeing the biggest growth                         example through personalisation
                                               and offering customers even                           and app development.
                                               greater choice.                                       Our new web platform will further
                                                                                                     improve our trading agility.

16         N Brown Group plc
           Annual Report & Accounts 2018
More detail p39

                                                                                                                                    Strategic report
Consumer spending has been
under pressure due to falling
real wage growth for some time,
and this is widely expected to       Consumer
continue. Inflationary pressures
remain across the retail sector.
Exchange rates have stabilised                                                        The retail credit market continues
somewhat since the EU                Continuing                                       to grow year-on-year, with data from
referendum however remain                                                             the Finance and Leasing Association
                                     improvement                                      revealing that the market grew by
unpredictable going forward.
                                     in the quality                                   9% in 2017. The competition which
                                     of our customer                                  the retail credit market faces from
Opportunities for growth             loan book.                                       other lending products means we
                                                                                      are continuing to look at ways to
The introduction of the UK Living
                                                                                      improve our offering and innovate
Wage has resulted in some cost
                                                                                      within this space.
increases, particularly in our
distribution centre, however
unlike many of our competitors
                                                                                      Opportunities for growth
we don’t have a large store
estate, which puts us in a                                                            Ahead of our new Financial Services
relatively stronger position. Our                                                     system being rolled out across our
personal credit account facility           How we are responding                      brands we have been trialling offering
enables customers to spread                                                           lower interest rates for new customers
                                           Our new financial services system
the cost of their purchases over                                                      on our three Power Brands, which
                                           will allow us to charge variable
time, which is a helpful customer                                                     has performed well. We are also
                                           interest rates reflective of individual
service proposition, particularly                                                     continuing to optimise the customer
                                           customers’ risk profile, which, in turn,
when real household incomes                                                           purchase journey, for both cash and
                                           will make us more competitive in our
are under pressure.                                                                   credit customers.
                                           credit offering.
                                           We constantly monitor the health
                                           of our customer loan book, and have
                                           seen the quality of the book improve
                                           further this year.

Despite GlobalData reporting
that online growth will fall
year-on-year in the next five
                                           Ethical sourcing                           SOURCING BREAKDOWN FY18
years, this is merely due to                                                                                         China
penetration saturating as the              As a business our key territory still
growth of online will see sales            continues to be China, particularly
                                           for homewares. For clothing, our                                          India
making up over one fifth of the
retail market by 2023. Online              buying trends are moving the mix                                          Pakistan
expenditure for the clothing and           closer to home.                                                           Bangladesh
footwear market is set to increase         This enables improved in-season                                           ROW
by almost 40% between 2018 and             flexibility and planning, delivering                                      Sri Lanka
2023, a promising outlook as our           shorter lead times and providing key                                      Turkey
online penetration increases.              seasonal products to the customer                                         Hong Kong
                                           at the right time.
                                                                                      Excludes direct                Thailand
                                                                                      dispatch products.
Opportunities for growth
As an online retailer, we continue
to make improvements to win
more share online and to further
improve the customer experience.

demand was generated online

                                                                                                     N Brown Group plc
                                                                                           Annual Report & Accounts 2018       17
Business Model

Creating value

 Inputs                                              Core activities

     Brand portfolio                                 Retail products
     We operate a trusted family of retail brands,   Without great products we have nothing. Our fit
     focused on fashion that fits. Our primary       specialism, at great value for money, is our USP.
     growth drivers are our Power Brands –
     JD Williams, Simply Be and Jacamo.
     We sell ladieswear, menswear, footwear,
     homewares and gifting across our brands.
     –– 3 Power Brands
     –– Secondary Brands                                                                      In-house
     –– Traditional Segment                                        Marketing
                                                                                             design team

     Total brand portfolio revenue 2018

     Engaged customer base
     Strengthening customer loyalty and
     gaining new customers is crucial for                       Sourcing and                    Quality
     sustainable growth. We put the customer                    merchandising                   and fit
     at the centre of every decision we make.

     Active customers

     N Brown people                                  Financial Services
     Without our people and relentless enthusiasm    Our Financial Services offer enables customers
     and passion we couldn’t do what we do.          to spread the cost of their purchase over time.
     They are our single most important asset.

     People employed across the UK

                                                               customers                     Modernising
     Systems and infrastructure                                                               our offer
     Ongoing development and investment
     in our systems and infrastructure remains
     crucial against a competitive sector. Our IT                             FINANCIAL
     investment approach this year has been to
     prioritise and focus on the developments
     that deliver the highest returns, such as
     Global Ship Anywhere and mobile apps.

     76% (+5ppts)                                                               Credit
                                                                            customer base
     Traffic from mobile devices

18      N Brown Group plc
        Annual Report & Accounts 2018
– Glow with pride

                                                                                                                                                               Strategic report
                                                                                             – Understanding is everything
GUSTO shapes our culture. GUSTO celebrates                                                   – Saving makes sense
positive attitudes and behaviours. GUSTO is                                                  – Togetherness is crucial
how we do things around here.                                                                – Opportunity exists everywhere

Value                                                    Financial outputs

                                                                                                                                             More detail p22
    Retail products                                             Value back to shareholders
                                                                Our shareholders are very important to us, and we
                                                                value the support and input they give us. We are                             More detail p34
    £652.6m                                                     focused on a progressive dividend policy.

    Total product revenue 2018
                                                                Dividend to shareholders

    Increase in revenue

                                                                Value back into business
                                                                to drive future growth
                                                                We invest into our business to ensure that we can drive
                                                                profitable, sustainable growth in the years ahead.
            of product
             revenue                                            £39.2m
                                                                Capex in 2018

        JD Williams                      25%             Non-financial outputs
        Simply Be                        20%
        Jacamo                           11%
        Secondary Brands                 23%                    Customer satisfaction
        Traditional Segment              21%                    We’re proud to make great products that people
                                                                love. Our clothes generate a feel-good factor for
                                                                our customers.

    Financial Services
                                                                We believe we should be a major force for good as

    Total Financial Services
                                                                well as a major force in fashion. It’s a huge responsibility,
                                                                and a purpose way beyond profit.
    revenue 2018

    Increase in revenue
                                                                          All People
                                                                         Dignity and
                                                                       respect through

                                                                                         One Planet
                                                                                       Ways of working

Revenue growth percentages are stated with reference to 2017 52 week numbers. See page 42.

                                                                                                                                   N Brown Group plc
                                                                                                                         Annual Report & Accounts 2018   19
Chief Executive’s Review

Focused on our
growth strategy
        Our strategy continues
        to deliver results, with
        market share gains in the
        UK, US revenue up 21%
        in the second half, new
        partnerships underway
        and almost three quarters
        of our revenues now
        coming online.
        Chief Executive


Power Brand online
                                US H2 revenue growth,
revenue growth                  constant currency

Revenue growth percentages are stated with reference to 2017 52 week numbers. See page 42.

20             N Brown Group plc
               Annual Report & Accounts 2018
Strategic report
Overview                                      performance. We are targeting the              Growth levers
We continue to benefit from the significant   second half of FY19 for Fashion World to
changes made to the business over the         migrate onto the new platform. We will         Gain share in the UK
                                                                                             We are focused on continual improvement
past four years, and these, together with     optimise the timing of these migrations
                                                                                             in our customer experience, further
a strong performance in our Financial         to mitigate any commercial risk.
                                                                                             development of our product offer and
Services business, enabled us to deliver a                                                   enhancing our brand cut-through. This
                                              At the start of the new financial year we
good performance for the year as a whole,                                                    growth lever is further driven by increasing
                                              went live with Global Ship Anywhere. This
in a challenging market.                                                                     the number of third-party brands on our
                                              is the key enabler for wider international
                                                                                             websites, many of which are extended to
I am delighted to be reporting profit         growth outside of our current US and
                                                                                             larger sizes on an exclusive basis, offering
growth, with Simply Be the standout           Ireland sites. This functionality translates   more choice to our customers.
brand. The second half in particular was      currency and overlays our site with local
                                                                                             During the year we gained market share in
difficult for the fashion sector. A good      delivery and payment options.
                                                                                             the UK in both ladieswear and menswear.
performance in Financial Services                                                            We continue to improve the flexibility of
                                              We have seen some encouraging results
provided the Group with resiliency to                                                        our supply chain, reducing lead times and
                                              with our Simply Be iOS and Android
enable us to continue to invest in our                                                       our speed to market. Our websites offer
                                              apps, with over 100,000 downloads
customer offer, successfully driving                                                         customers a wide range of brands, allowing
                                              across both platforms. Update releases
revenue and market share growth.                                                             them to shop for every occasion; we have
                                              to our apps have enabled us to continue        recently added brands including Monsoon,
Power Brands continued to outperform,         to improve our offering, including             Quiz, Jack & Jones, Ted Baker, Lyle & Scott,
with revenue up 8.0%. Within this,            features such as recently viewed items         Radley and Superga.
JD Williams revenue was up 3.2%. There        and predictive search, further improving
                                                                                             International expansion
was a headwind from migrated Fifty Plus       the experience for our customers. Our          The USA is our first priority, however, we
customers; excluding these, JD Williams       App store rating is currently 4.8 out of 5.    also intend to expand to other countries,
revenue was up a double-digit percentage.     In February, we launched the JD Williams       initially through Global Ship Anywhere
Simply Be was up 16.3% and Jacamo up          app; our first in-house developed app,         technology, which recently went live.
5.1%. We saw a good performance across        an important step in bringing our app          In order to achieve our international
all categories, with Footwear and             development capabilities in-house.             ambitions we will leverage our current
Accessories a standout performer.             By investing in our in-house development       organisational capabilities and embed
                                              capabilities we can embed fortnightly          a global culture throughout our business.
We continue to deliver strong online                                                         US revenue accelerated through the year,
                                              releases to improve the functionality and
metrics, with online revenue up 10%                                                          growing by 21% in the second half, driven
                                              features of our apps and plan to roll out
and online revenue of Power Brands                                                           by our new digital-first marketing approach
                                              apps onto our other brands in the future.      and enabled by our new web platform.
up 17%. Online penetration was 73%,
up 4ppts, with 76% of all traffic coming      Outlook                                        Partnerships
from mobile devices.                          The market backdrop remains                    This includes selling capsule ranges on
                                              challenging and as competitive as ever.        other retailers’ sites, on both a wholesale
We had a strong Financial Services                                                           and marketplace basis. We also see a
                                              We will continue to invest in our product
performance, driven by continued                                                             significant growth opportunity in influencer
                                              proposition and service offering, to
improvement in the quality of the loan                                                       marketing, working together with bloggers
                                              ensure we further strengthen customer
book, together with a reduction in                                                           and opinion formers to enable our brands
                                              loyalty. We have an industry-leading fit
arrears, partly as a result of minimum                                                       to reach new audiences and further
                                              specialism and market leading position         strengthen customer engagement.
payment changes.
                                              in our plus-size niche. We will continue to
                                                                                             During the second half we went live on
Technology and innovation                     work with passion, energy and relentless
                                                                                             ASOS and Zalando, and have recently signed
Our systems investment programme              focus to further build on this position.       partnership deals with THE ICONIC (Australia)
remains on track. We are pleased with the                                                    and Lamoda (Russia). All of our partnerships
performance of the High & Mighty and US                                                      involve us selling capsule collections of our
sites, which are both on the new Hybris                                                      brands on our partners’ sites. We are pleased
platform. Since the sites go-live we have                                                    with the performance to date.
                                              Angela Spindler
been releasing regular updates to add                                                        We have increased our use of influencer
                                              Chief Executive
further functionality and optimise                                                           marketing, most notably in the USA.
                                                                                             These activities have been very successful
                                                                                             in strengthening our customer relationships,
 Our strategic drivers:                                                                      increasing our share of voice and driving
                                                                                             sales. Examples of recent influencer
 Product                                      People
                                                                                             collaborations include Sarina Novak
 Fantastic quality and fit fashion, home      Obsessed with customers, enriched              (@SarinaNovak; 372k followers) who worked
 ranges, and relevant financial services      with data and powered by technology            with us on the Simply Be USA relaunch,
 Price                                        Place                                          La’Tecia Thomas (@lateciat; 806k followers)
                                                                                             for our Swim and Spring Break campaigns
 Great prices and flexible ways to pay        Whatever you want, wherever you are,
                                                                                             and Kelly Augustine (@kellyaugustineb;
                                              whenever you want it, we make it easy
                                                                                             63k followers) for our Valentine’s Day activity.

                                                                                                          N Brown Group plc
                                                                                                Annual Report & Accounts 2018           21
Our Strategy

Four drivers
of success

                                                                                Great product is the lifeblood of our business – it is the
                                                                                absolute core of what we do.

                                                                                Progress 2017
                                                                                We strive to continuously improve our product offering,
                                                                                both in terms of our retail and Financial Services products.
                                                                                All product categories saw positive revenue growth, a

                                                                                good result, with Simply Be the standout brand. We have
                                                                                continued to invest in our product design capabilities, and
                                                                                are also moving to 3D product fitting to further improve
                                       Fantastic quality                        our fit specialism.

Our vision                             and fit fashion,
                                       home ranges,
                                                                                Priorities 2018
                                                                                We will roll out 3D fitting across womenswear, cementing
                                                                                our differentiated position. Menswear delivered a good
To be the globally                     and relevant                             performance however we see scope for further growth in
loved experts in                       financial services                       this category. In Financial Services, we plan to go live with
                                                                                full variable APR in the second half, a significant milestone.
fashion that fits.                                                              Associated risks
                                                                                • Failure to change
                                                                                • Competition
                                                                                • Regulatory environment

Our mission                                                                     KPIs

We’ll do this by helping                                                        5.6%                       2.7%                 27.1%
                                                                                Ladieswear                 Menswear             Group returns
our customers look and                                                          market share,              market share,        rate (rolling
                                                                                size 16+                   chest size 44”+      12 months)
feel amazing through
our trusted family
of fashion brands.                                                              Relevance
                                                                                Value and convenient ways to pay are both as important
                                                                                to customers as they have ever been.

                                                                                Progress 2017
                                                                                The second half of the year saw a challenging retail market
                                                                                backdrop. The strong performance of Financial Services
                                                                                allowed us to strategically choose to invest more than

                                                                                initially planned in promotions during this period,
                                                                                successfully driving both revenue and market share.

                                       Great prices                             Priorities 2018
                                                                                We continue to ensure that our price points are
                                       and flexible                             competitive with the mid-market, offering great value
                                       ways to pay                              products throughout the size range. In Financial Services,
                                                                                our new platform will give customers more flexible,
                                                                                personalised payment options.

                                                                                Associated risks
                                                                                • Failure to change
                                                                                • Competition

                                                                                85.8%                      122k
                                                                                Customer                   New credit
                                                                                satisfaction               recruits (Rollers,
                                                                                rating, UK CSI             last six months)

                                       KPIs on this page are stated with reference to 2017 52 week numbers. See page 42.

22     N Brown Group plc
       Annual Report & Accounts 2018
Strategic report
                                         Without our people and their relentless enthusiasm and
                                         passion we couldn’t do what we do. They are our most
                                         important asset.

                                         Progress 2017
                                         We continued to develop our internal talent and hire
                                         great new people to our business. We launched our

                                         new intranet and an online leadership development
                                         hub. Our colleague satisfaction rating reached another
                                         record high.
Obsessed with                            Priorities 2018
customers,                               We will continue to focus on developing our talent,
enriched with                            rewarding achievement and instilling a global culture
                                         throughout the business.
data and powered
                                         Associated risks
by technology                            • People
                                         • Competition

                                         Customer satisfaction
                                         rating, UK CSI

                                         Customers shop how and when they want, and it is our job
                                         to exceed their expectations.

                                         Progress 2017
                                         Our speed of delivery improved further, by over 15% year
                                         on year. We rolled out delivery subscription offers across
                                         our largest five brands, with positive customer reception.

                                         We launched our new web platform in the UK for the first
                                         time, on our High & Mighty site, an important milestone.

                                         Priorities 2018
Whatever you                             We will continue the rollout of our new web platform, with
want, wherever                           Fashion World migrating in the second half. We recently
you are, whenever                        went live with Global Ship Anywhere, an important
                                         enabler for our international growth ambitions.
you want it, we
                                         Associated risks
make it easy                             • Failure to change
                                         • Competition
                                         • People
                                         • Cyber security

                                         73%                        5.3%               4.45m
                                         Online                     Conversion         Active customer
                                         penetration                rate               accounts

KPIs on this page are stated with reference to 2017 52 week numbers. See page 42.

                                                                           N Brown Group plc
                                                                 Annual Report & Accounts 2018     23
Key Performance Indicators

Measuring progress
against our strategy
 ACTIVE CUSTOMER                                POWER BRAND ACTIVE                          GROWTH OF OUR MOST                  CUSTOMER SATISFACTION
 ACCOUNTS (m)                                   CUSTOMERS (m)                               LOYAL CUSTOMERS (%)                 RATING (%)

 +3.6%                                          +2.4%                                       -380bps                             +210bps
  2017              4.30m                        2017                   2.17m               2017                      +3.6%     2017          83.7%
  2018                           4.45m           2018                               2.22m   2018    -0.2%                       2018                      85.8%

 Relevance to strategy                          Relevance to strategy                       Relevance to strategy               Relevance to strategy

 Definition                                     Definition                                  Definition                          Definition
 The number of customer                         The number of Power Brand                   We define our most loyal            Our latest overall customer
 accounts which made a retail                   (JD Williams, Simply Be and                 customers as those who have         satisfaction score, as measured
 purchase in the last 12 months.                Jacamo) customer accounts                   purchased from us in each of        independently by the UK
 The figures include all brands                 which made a retail purchase                the last four clothing seasons.     Customer Services Institute.
 aside from Figleaves, which                    in the last 12 months.
 is managed separately to
 the Group.

 Performance                                    Performance                                 Performance                         Performance
 We saw a good performance                      As with the revenue                         After a very strong performance     Our most recent rating was
 in customer metrics, with a very               performance, Simply Be was the              last year, driven by the recovery   85.8%. This places us second-
 strong first half, and then a                  standout performer, with active             in our Traditional segment,         highest in the non-food retail
 softer second half against                     customer growth of over 20%                 the number of our most loyal        sector, behind only Amazon.
 both a tough comparative and                   The migration of the Fifty Plus             customers was broadly flat          Our score is almost 4ppts higher
 competitive backdrop. In line                  title into the JD Williams brand            year on year. Given the difficult   than the retail sector average.
 with our strategy we continue                  (these customers are included               comparatives, and a challenging
 to prioritise new customer                     within the JD Williams customer             trading backdrop, particularly
 recruitment to our Power                       file) was a headwind to this                in the second half, this is a
 Brands, as they represent                      metric, as expected.                        solid performance.
 our biggest future growth

 Outlook                                        Outlook                                     Outlook                             Outlook
 We will continue to attract new                The conversion rate of recently             Further strengthening customer      Customer satisfaction is driven
 customers to our business                      migrated Fifty Plus customers               loyalty is a key business focus.    by a wide range of factors, such
 through our product offering,                  has been below expectations,                We do this by a continuous          as product quality, our value for
 marketing campaigns and                        due to the more conservative                improvement approach to our         money, our service proposition
 customer service proposition.                  fashion choices of this group.              product offering, service and       and how we respond when
                                                Actions are being taken to                  delivery proposition. Recent        things go wrong. We interact
                                                address this, primarily through             launches such as delivery           with our customers through a
                                                website personalisation, and the            subscriptions and the Simply Be     variety of channels every day to
                                                early signs are encouraging. We             loyalty scheme are both designed    ensure we are doing the best job
                                                therefore expect this headwind              to further strengthen loyalty.      we can to delight our customers.
                                                to reduce in FY19.

 Risk                                           Risk                                        Risk                                Risk
 • Failure to change                            • Failure to change                         • Failure to change                 • Failure to change
 • Competition                                  • Competition                               • Competition                       • Competition
 • People                                       • People                                                                        • People
 • Business interruption                                                                                                        • Regulatory environment

KPIs on this page are stated with reference to 2017 52 week numbers. See page 42.

24             N Brown Group plc
               Annual Report & Accounts 2018
Strategic report
                                                                                                                                 Key to Strategic Drivers
  Product                                                                                                                            Product

 LADIESWEAR MARKET                              MENSWEAR MARKET SHARE                      GROUP RETURNS RATE                        Price
 SHARE SIZE 16+ (%)                             CHEST 44"+ (%)                             (ROLLING 12 MONTHS) (%)

 +60bps                                         +30bps                                     +30bps                                    Place
  2017             5.0%                          2017            2.4%                      2017                  26.8%
  2018                             5.6%          2018                               2.7%   2018                       27.1%

 Relevance to strategy                          Relevance to strategy                      Relevance to strategy

 Definition                                     Definition                                 Definition
 Our market share in UK                         Our market share in UK                     The amount, measured in value,
 Ladieswear, in size 16 and                     Menswear, in chest size 44" and            of products which are returned
 higher. Market share is                        higher. Market share is calculated         to us by customers, over the last
 calculated using internal and                  using internal and Kantar data,            12 months.
 Kantar data, and these figures                 and these figures relate to the
 relate to the 52 weeks ending                  52 weeks ending 11 February.
 11 February.                                   Last year’s figure has been
                                                restated; on review they
                                                understated our market share.

 Performance                                    Performance                                Performance
 Against a challenging market                   Against a challenging market               We saw a slight increase in our
 we were pleased to grow our                    we were pleased to grow our                returns rate, after several years
 market share. This performance                 market share. This performance             of declines. The main driver of
 was driven by Simply Be.                       was driven by Jacamo.                      this was the relative performance
                                                                                           of womenswear, together with
                                                                                           the increase in participation of
                                                                                           sub-categories such as third-
                                                                                           party brands and occasionwear,
                                                                                           as these all naturally incur higher
                                                                                           returns rates. These factors were
                                                                                           partially offset by the ongoing
                                                                                           increase in the proportion of cash
                                                                                           customers, as these customers
                                                                                           naturally have a lower returns rate
                                                                                           than credit account customers.
 Outlook                                        Outlook                                    Outlook
 The trading backdrop remains                   We continue to see an                      Our returns rate remains below
 challenging. Against this, it is               opportunity to grow our market             the industry average, and over
 important that we focus on our                 share in menswear age 45 and               the medium term is linked with
 fit USP, ensuring that we continue             above, through the menswear                customer satisfaction of our
 to offer customers the best                    offering within JD Williams.               product offering, including fit,
 choice of products to fit and                                                             quality and value for money.
 flatter them, whatever their size.

 Risk                                           Risk                                       Risk
 • Failure to change                            • Failure to change                        • Failure to change
 • Competition                                  • Competition                              • Competition
 • People                                       • People

KPIs on this page are stated with reference to 2017 52 week numbers. See page 42.

                                                                                                                                   N Brown Group plc
                                                                                                                         Annual Report & Accounts 2018      25
Key Performance Indicators

 ONLINE PENETRATION                             ONLINE PENETRATION                        CONVERSION RATE                     TRAFFIC FROM MOBILE
 (%)                                            OF NEW CUSTOMERS (%)                      (%)                                 DEVICES (%)

 +4ppts                                         +4ppts                                    -30bps                              +5ppts
  2017                 69%                       2017                      77%            2017                        5.6%    2017               71%
  2018                              73%          2018                               81%   2018                 5.3%           2018                          76%

 Relevance to strategy                          Relevance to strategy                     Relevance to strategy               Relevance to strategy

 Definition                                     Definition                                Definition                          Definition
 The percentage of sales,                       The percentage of sales from              The percentage of website           The percentage of our total
 excluding stores and                           new customers, excluding stores           sessions which result in an order   online traffic which comes
 International, which comes                     and International, which comes            being placed.                       from either a smartphone
 to us online. Our second                       to us online.                                                                 or a tablet device.
 largest channel is through
 our contact centre.

 Performance                                    Performance                               Performance                         Performance
 Online penetration was 74% in                  This metric now exceeds 80%,              At 5.3% our conversion rate         Mobile devices include both
 the second half, and for the year              demonstrating the online nature           remains materially above the        smartphones and tablets; of
 as a whole online revenue was                  of our business. By brand,                industry standard. The ongoing      these, smartphones remain
 up 10%. Some customers are                     JD Williams again saw the most            increase in mobile devices as a     the device of choice for
 unlikely to ever migrate online;               significant increase, from 80%            proportion of traffic represents    customers, with web sessions
 we estimate that these account                 to 95%.                                   a drag on overall conversion        here increasing by 44% to
 for roughly half of the non-                                                             rates; we were pleased to drive     account for 54% of all traffic.
 online proportion.                                                                       an increase in the conversion
                                                                                          rate for smartphones year
                                                                                          on year.

 Outlook                                        Outlook                                   Outlook                             Outlook
 We continue to invest in both                  Our new customer recruitment              The continued increase in share     We adopt a ‘mobile first’
 our online platform, through                   campaigns focus primarily on              from mobiles represents a drag      approach to all of our digital
 both systems investments and                   online shoppers, and within our           to the overall conversion rate.     improvements, and expect the
 in hiring and developing digital               brand portfolio we continue               We are focused on increasing        trend of customers shopping
 talent. The online penetration of              to prioritise our three Power             the conversion rate of each         more and more on their
 new customers is an important                  Brands, which are all                     device type.                        smartphones to continue.
 leading indicator for overall                  predominantly online. We                                                      During the year we upgraded our
 future penetration.                            would therefore expect this                                                   Simply Be app and launched new
                                                metric to continue to increase                                                Simply Be USA and JD Williams
                                                looking forwards.                                                             apps. We also continue to drive
                                                                                                                              further improvements in mobile
                                                                                                                              optimisation through our
                                                                                                                              in-house digital marketing team.

 Risk                                           Risk                                      Risk                                Risk
 • Failure to change                            • Failure to change                       • Competition                       • Competition
 • Competition                                  • Competition                             • People                            • People
 • People                                       • People                                  • Cyber security                    • Cyber security
 • Cyber security                               • Cyber security

KPIs on this page are stated with reference to 2017 52 week numbers. See page 42.

26             N Brown Group plc
               Annual Report & Accounts 2018
Strategic report
                                                                                                                                    Key to Strategic Drivers
  Financial Services                                                                                                                    Product

 ARREARS RATE                                   PROVISIONS RATE                             NEW CREDIT RECRUITS                         Price
 (>28 DAYS) (%)                                 (%)                                         (ROLLERS)

 -120bps                                        -330bps                                     -5%                                         Place
  2017                             9.9%          2017                               10.8%   2017                         129,000
  2018                   8.7%                    2018                 7.5%                  2018               122,000

 Relevance to strategy                          Relevance to strategy                       Relevance to strategy

 Definition                                     Definition                                  Definition
 Arrears over 28 days are defined               Closing bad debt provision                  The number of new customers
 as customer debts with two or                  as a percentage of gross                    opening a credit account and
 more missed payments.                          trade receivables.                          rolling a balance in the last
                                                                                            six months.

 Performance                                    Performance                                 Performance
 We saw another strong                          The provision rate was 7.5%,                Although over the long term
 performance in arrears rate,                   down 330bps versus last year.               we aim to increase new credit
 down 120bps year on year                       As in FY17, this benefited from             rollers, the key enabler of this will
 against a 100bps decline in the                the sale of some high risk                  be our new Financial Services
 prior year. This was driven by                 payment arrangement debt,                   products which are not yet fully
 the continued improvement                      which we were able to sell for              live. We saw growth in this
 in the quality of our customer                 a slightly better rate than book            metric during the first half, and
 loan book, together with the                   value. It also benefitted, to a             then a decline in the second half,
 reduction in our minimum                       lesser extent, from the minimum             due to the wider challenging
 payments, which had a positive                 payment changes and the                     market backdrop. For the year as
 effect on the number of                        underlying improvement in                   a whole we added 257,000 new
 customers going into arrears.                  the quality of the book.                    credit rollers, an increase on the
                                                                                            prior year.

 Outlook                                        Outlook                                     Outlook
 We expect a broadly steady                     IFRS9 comes into effect in FY19,            We continue to trial variable
 arrears rate over the coming year.             which will significantly change             interest rates for new
                                                our provision rate accounting.              customers; the results of these
                                                You will find more details on this          trials to date are encouraging.
                                                within the Financial Review on
                                                page 43.

 Risk                                           Risk                                        Risk
 • Failure to change                            • Failure to change                         • Failure to change
 • Competition                                  • Competition                               • Competition
 • People                                       • People                                    • People
 • Cyber security                               • Regulatory environment                    • Regulatory environment

KPIs on this page are stated with reference to 2017 52 week numbers. See page 42.

                                                                                                                                      N Brown Group plc
                                                                                                                            Annual Report & Accounts 2018      27
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