Simply Be and Jacamo owner N Brown has slashed its profit forecasts after blaming lower credit revenues and the promotion-driven retail market.
The retailer said it now expects pre-tax profits of between £70 million and £72 million for the year, down from its previous estimate of £78 million to £84.1 million.
Shares initially dived more than 20% after it downgraded its outlook, with the retailer adding that profits for the year after are expected to be at a similar level.
In the trading update, the company said total revenues decreased by 5% for the 18 weeks to January 4.
It said it was particularly impacted by a 4.6% decline in its financial services arm, which allows people to pay using credit.
N Brown also said product revenue declined due to the “managed decline of legacy brands”, while it also scaled back unprofitable offline marketing.
The retailer said womenswear revenues increased 1.1%, on the back of a 6.7% rise in digital revenues.
Simply Be saw sales increase 12.1%, while total revenues at JD Williams and Ambrose Wilson declined by 4% and 9.6% respectively.
N Brown said Simply Be sales were bolstered by strong sales of “party tops” and athleisure during the period.
Meanwhile, menswear sales increased 2.5% as the Jacamo business benefited from the introduction of new premium brands.
Steve Johnson, chief executive officer of N Brown, said: “This has been an encouraging period of peak trading for the business in a highly promotional market, as we delivered digital revenue growth across both womenswear and menswear with particularly strong digital growth from Simply Be and Ambrose Wilson as customers responded well to our ranges.
“Financial services revenue was down, reflective of our strategic approach to the retail business and continued tightening of our lending criteria.
“Our expectations remain that the retail market will continue to be challenging and promotional, but we are focused on our clear strategy of delivering profitable digital growth.”