British fashion retailer N Brown drops on margin, dividend cuts

* Revenue to be restrained on lower offline sales

* Dividend halved to 2.83 pence per share

* Shares (Berlin: DI6.BE - news) fall as much as 26 percent, near 14-year low

* Shares down 21 pct to 109.16 pence at 0948 GMT (Releads, adds analyst comment, context, updates shares)

By Sangameswaran S

Oct (Shenzhen: 000069.SZ - news) 11 (Reuters) - Shares in Britain's N Brown (LSE: BWNG.L - news) dropped by more than a quarter to a near 14-year low on Thursday after the plus-size fashion retailer cut its margin forecast and said it was halving its dividend as it undergoes a shift online.

"Whereas much progress has been made transforming the business into an online retailer, we have not yet achieved the growth in product or international that we would have hoped for," N Brown's chairman Matt Davies said in a statement.

N Brown closed its last 20 stores in August and is going back to its roots with its move online. The company, which was founded in 1859, used the development of the postal system in Britain to sell goods directly to customers.

Although the company posted a 5 percent drop in half-year adjusted pretax profit, it said online sales rose 3.8 percent and accounted for 77 percent of product revenue.

N Brown is focused on three core brands JD Williams, Simply Be and Jacamo, which contributed about 58 percent of overall product revenue in the six months ended Sept. 1.

The company said it had cut its margin forecast to between zero and a one percent drop for the full year, from an expected rise of 1 percent after its margin declined by 60 basis points for the six months ended Sept. 1.

While N Brown's overall revenue rose 1 percent for the period, its product revenue fell by more than 3 percent.

Jefferies said the retailer was still in transition and cut the stock's rating to "hold" from "buy", adding that the stock will likely be in limbo.

N Brown is looking for a permanent CEO after Angela Spindler stepped down last month and the role was taken on an interim basis by Steve Johnson.

The company said it plans more promotions as while moving online is helping sales, it requires promotions and ad placements on social media, as well as adding the cost of analytics needed to target the right customers. (Reporting by Sangameswaran S and Karina Dsouza in Bengaluru; Editing by Bernard Orr and Alexander Smith)