If you eat a lot of full fat food and have a sedentary lifestyle, you put on weight. If you’re a bon viveur, unfortunately, you put on weight. If you exercise like Arnold Schwarzenegger and drink protein shakes 3 times a day, you also put on weight. A lot of the time what you do and what you eat have absolutely no bearing whatsoever on what shape you are. But anyway, one of the aforementioned styles of bulk looks better than the others – depending on who you are. After all, beauty is in the eye of the beholder!

Unfortunately for N Brown, the plus size / mature focussed online clothing retailer, we’re not afforded such subjectivity. Its share price looks like a long distance runner (thin & nimble) today after the company announced a sharp fall in annual profits amid challenging market conditions. It certainly looks like the N Brown share price has a lot on its plate, but the focus is on the ongoing re-organisation of its business – one of the last to give up letterbox marketing and serve up its offerings digitally.

Revenues were actually higher, indicating that increased costs are indeed to blame for a fall in profits. However, two profit warnings in 2015 can’t have helped – I would say those health warnings had borne fruit, but it’s more like pork scratchings  – and I’d wager that the closure of the Doncaster Jacamo / Simply Be store that sits virtually in the middle of the most obese part of the UK* hasn’t helped investor confidence either.

But all this probably makes the N Brown share price fairly attractive from a value perspective. The clothes look alright – I’d probably buy them, although the girls’ clothes are nicer. So it’s not the quality of the product. The websites look just as great too. Unseasonably warm weather is much bemoaned, but we can’t do anything about that save ask God nicely to make the weather more seasonal, which he won’t because, unlike his mate Moses, we’re all sinners.

The analysts’ outlook for N Brown sees FX headwinds continuing, with the Brexit dust devil whipping up the currency markets and of course seen pinning Sterling to the floor, while investment in price to gain market share (i.e. putting prices down) will see margins continue to fall. But this has all been mentioned. It’s out in the open. The brokers are going underweight overweight fashion right now. It won’t be long before the N Brown share price reflects this, surely.

Finally, be assured that N Brown’s focus on the plus sized, the old and the freakishly tall is not misguided. People are living longer, living better and it’s now OK to look normal. 14% of market value (on results day) is the price you pay for a little re-alignment hiccup, but with sentiment at its bearish extreme, now could be the time to play the contrarian.

Augustin Eden, Research Analyst (20 April)

*Source: ONS