No thanks to ‘flawed’ insurance products, fashion retailer N Brown suffered a massive hit, and the worst isn’t over.
N Brown – known for brands JD Williams, Simply Be, and Jacamo – reported statutory profit before tax of £16.2 million for the year ended March 03, a nearly 72% plunge. This was attributed to costs worth £56.9 million, a big chunk of which related to payouts involving historic general insurance products.
Sold by N Brown between 2006 and 2014, the products were provided by a third-party insurance underwriter. The prospect of customer redress was initially announced after a review – prompted by an industry-wide request from the Financial Conduct Authority that firms ensure that general insurance products and add-ons offer value – identified flaws.
“As a result we incurred an exceptional cost of £40 million in the first half,” said N Brown. “We continue to explore mitigating actions to reduce the overall net cost although we expect these actions to take some time to be resolved. We expect the vast majority of the cashflow impact to occur during FY19.”
Store closures also impacted the Manchester-headquartered retailer’s statutory profit.