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The team at N Brown (LSE:BWNG) sell clothes and other items in a competitive environment. But that has not stopped them producing, annually, underlying profits north of £50m in recent years. They seem to have created a strong culture within the organisation. Comments posted on Glassdoor by employees are generally positive. Two-thirds would recommend N Brown to a friend as a place to work and 78% approve of the CEO.
ities for personal
There are statements such as “Lots of opportunities for personal and professional development…super-friendly colleagues, good work-life balance…Company going through exciting times – really good to be part of it.”
It gets fairly high ratings for culture and values (3.6/5), senior management (2.9/5), compensation and benefits (3/5) and career opportunities (2.8/5).
Clearly the senior team are good at engendering loyalty and goodwill toward the organisation. Angela Spindler, CEO, very early in the annual report makes the point that the company is successful because of the quality and motivation of colleagues:
“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….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.”
There is an emphasis on people – employees and customers – first, and in second place come financial matters. That order of priorities is indicated by the carelessness over certain costs, such as the expense of closing shops, and in paying tax experts to discuss a disputed bill.
Ideally we shareholders would like brilliance at both people interaction and finance, but for a company of this nature it is most vital that the team are switched-on and committed to giving the customer a good experience by being excellent at merchandise selection, and then at offering good customer service through both the Product side and the Financial Services side.
This is the core of the business. PPI slip-ups, signing dumb shop lease agreements and signing blank cheques to tax experts are important, but are secondary (if kept within bounds) to the core mission of finding great clothes for customers at the right price.
The numbers indicate that they have served customers well year after year, not only producing underlying profits before tax of more than £50m but building up the number of customers who buy at least once a year to 4.45m.
Customer satisfaction scores (measured by the Customer Services Institute) rose from 83.7% in 2017 to 85.8% in 2018 (second highest in the non-food retail sector, behind only Amazon. almost 4ppts higher than the retail sector average)
I have no evidence that the esprit de corp is being lost, thus I have grounds to believe Product sales will at least continue at the current level (although the 2.8% decline in the 13 weeks to 2nd June is concerning), and Financial Services will keep producing profits.
The general shift to online retailing will benefit N Brown, as will broadening waistlines and longevity. Now that the new IT system is running there is a good base to become “a global online retailer” in its specialist niches. However, its results outside the UK so far have not been very encouraging. In the UK there is brand recognition and habits formed over decades which bring British customers to their websites. These factors can take time and a lot of money to build elsewhere.
The directors
Angela Spindler, 55, CEO since 2013, has experience at Coca Cola, Mars, and was chief at George at Asda. Fixed pay is set at £669,000, with a maximum of £2.37m.
In 2018 she took home £1.2m before tax. This
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