H1 FY19 Results11 October 2018

Matt DaviesChairman

3

Successful transition to an online retailer

• Substantial legacy issues

• Challenging retail backdrop

Rebased dividend

• More sustainable level from which to grow

Search for a new CEO is underway

• Next phase of our development

Strong base on which to build

• Significant online presence

• Industry leading expertise in fashion that fits

• Supporting financial services business

Opening remarks

Steve JohnsonChief Executive Officer

5

My background

• Joined N Brown February 2016 as

CEO of Financial Services

• Previously Financial Services Product

and Marketing Director at Shop Direct

• Significant experience of retail

businesses with strong FS proposition

• Product Director at Sainsbury’s Bank

6

8.6% Power Brands

online growth

£677.6mCustomer

loan book

77% Product revenue

now online

£30.6mAdjusted PBT

1.5%Reduction in

operating costs

* Excludes stores

1.0% Revenue growth

Highlights

Product* -3.1% FS +12.7% EBITDA +6.1% to £52.0m

Craig LovelaceChief Financial Officer

Revenue

8

£m

+1.8% -6.9% -11.2% +12.7% +1.0%

Q1: +0.4%

Q2: +1.5%

Product revenue* -3.1%

-26.9%

* Excludes stores

Adjusted profit before tax

9

£m

Adjusted EBITDA

up 6.1% to £52.0m

Gross profit

10

£m H1 FY19 H1 FY18 Change

Product

Revenue 311.4 323.5 -3.7%

Gross profit 166.3 174.8 -4.8%

Gross margin 53.4% 54.0% -60bps

Financial services

Revenue 146.4 129.9 +12.7%

Gross profit 82.0 73.5 +11.6%

Gross margin 56.0% 56.5% -50bps

Group gross profit 248.3 248.3 0.0%

Group gross margin 54.2% 54.8% -60bps

Income statement

11

£m H1 FY19 H1 FY18 Change

Group gross profit 248.3 248.3 0.0%

Warehouse & fulfilment (42.4) (42.5) -0.3%

Marketing & production (84.4) (88.2) -4.3%

Admin & payroll (69.5) (68.6) +1.3%

Adjusted EBITDA 52.0 49.0 +6.1%

Depreciation & amortisation (14.9) (12.9) +15.4%

Operating Profit 37.1 36.1 +2.8%

Operating Margin 8.1% 8.0% +10bps

Net finance costs (6.5) (3.9) +66.7%

Adjusted PBT 30.6 32.2 -5.0%

Unrealised FX movement 7.7 (4.9) +257.1%

Taxation (8.3) (6.3) +31.7%

Adjusted basic EPS 8.37p 8.77p -4.6%

Lower product volumes

Investment in systems

Note: Underlying trading performance excluding exceptionals and unrealised FX movement

Improved marketing

efficiency

Increased debt due to

customer loan book

growth

Underlying ETR of

21.8%

Exceptional items

£m H1 FY19

Previously announced:

Store closures 22.0

External costs related to tax matters 2.7

Announced today:

Customer redress 22.4

Welcom impairment 11.2

Figleaves goodwill impairment 7.1

Total 65.4

12

• Increased customer redress driven by Plevin / FCA marketing activity

• PPI deadline is August 2019

Net debt

13

£m

£346.8m

£420.5m

Core

Securitised

on loan

book

Leverage based on

core debt of 0.3x

Financial ServicesGood growth in revenue

14

KPIs H1 FY19 H1 FY18 Change

Customer account arrears rate (>28 days) 9.7% 9.3% +40bps

Provisions rate (IFRS9) 16.5% 19.7%* -320bps

New credit recruits (rollers) 90k 135k -33.3%

• Revenue up 12.7% driven by 14.2% increase in interest payments

• Credit arrears rate normalising following change to minimum payments

• Provisions rate benefited from disposal of high risk debt

• New credit rollers reflects trading performance

* Restated for IFRS9. The bad debt provision previously reported under IAS39 was 10.3%.

Financial ServicesImpact of IFRS9

15

• Main impact is reduction to net assets

• Broadly neutral for income statement given FY18 restatement

£m 1 Sep 2018 3 Mar 2018 Change

Gross customer loan balances 677.6 647.6 +4.6%

IFRS9 bad debt provision (111.9) (116.0)* -3.5%

IFRS9 provision ratio 16.5% 17.9%* -140bps

Net customer loan balances 565.7 531.6* +6.4%

* Restated for IFRS9. The bad debt provision previously reported under IAS39 was £48.8m (7.5%).

FY19 guidance

16

Product gross margin 0 to -100bps (was 0 to +100bps)

Financial Services gross margin -100bps to -200bps

Operating costs -1% to -3% (was +1.5% to +3.5%)

Depreciation & amortisation £32m to £33m

Net interest £13m to £14m (was £12m to £13m)

Underlying ETR c.22%

Capex c.£40m

Net debt £450m to £475m (was £425m to £450m)

Exceptional costs c.£67m (was £22m to £26m)

FX (100% hedged at 1.33)* £3m tailwind

* For FY20 the Group is 77% hedged at 1.34; policy is 100% hedged by end FY19.

Steve JohnsonChief Executive Officer

18

Observations on the Group

Transformation into an online retailer

• Great brands and strong team

Goal to become a world class digital retailer

• Leading expertise in fashion that fits

• Make customers look and feel amazing

Scope to improve performance

• Reduce offline costs

• Accelerate use of data analytics

• Be clearer on brand propositions

• Narrow international focus to USA and Ireland

• Systems migration

Our online transformation

19

Note: N Brown product revenue from continuing operations

£m

Online CAGR +8.9%

Power Brands +13.8%

We anticipate that the annual decline in offline revenue

will continue at a double-digit rate

-22.4%

+3.8%

PB +8.6%

Offline CAGR -6.5%

Power Brands Simply Be: Best performer again

20

Revenue up 8.0% to £65.3m*

• Go-to destination for size 12-32 women

• Larger sizes on an exclusive basis

• Further enhancing our beauty proposition

through partnership with L’Oreal

• More than our bodies AW18 campaign

* Excludes stores

Power Brands JD Williams: Underlying growth

21

Revenue down 3.1% to £78.6m

• Up 7.5% excl. Fifty Plus

• Headwind to soften in H2

• Championing ‘Midster’ women (45+)

• >50% unhappy with high street offering

• Industry leading experts in fit

• 200 measurements vs traditional 12

• Midster Live at London Fashion week

• ‘I AM’ AW18 campaign

Power Brands Jacamo: Continued progress

22

Revenue up 2.7% to £30.7m*

• 25 – 45 year old men of all shapes and sizes

• Distinctive Live YOUR Moment campaign

• Continuing theme into AW18 season

• Promote body shape inclusivity

* Excludes stores

Secondary Brands Focused on distinct customer niches

23

Revenue down 6.9% to £69.4m*

• Shifting marketing investment to our Power Brands

• Decline principally due to Marisota

• Increasingly used as product brand for JD Williams

• Stopped offline recruitment

• New Fashion World app

• Figleaves turnaround plan

* Excludes stores

Traditional segmentSwitching focus to online customers

24

Revenue down 11.2% to £60.5m

• Scaling back offline marketing & recruitment

• Most heavily weighted segment to offline

• Anticipate fastest rate of decline going forward

• Further opportunities for cost savings

25

International brandsDisappointing performance

Revenue down 7.9% to £15.3m

• USA decreased 16.7% and Ireland broadly flat

• Switched marketing expenditure to online

• Lower than anticipated online growth

• Poor conversion rates / incorrect targeting

• Reappraised digital marketing strategy

• Re-engaging with our target customers

Narrowed our focus to the USA and Ireland

26

PartnershipsGood progress

Capsule collections on 3rd party websites

• Good progress since commencing last year

• Already making positive profit contribution to Group

• New deals signed with Lipsy and Wehkamp

• Eleven partners to date; live on eight

• Access to new customers at relatively low investment

Summary

27

H1 adjusted profit in line with our expectations

• Online Power Brands and FS growth

• Disappointing wider product performance

Opportunities to drive profit

• Shift online / accelerate use of analytics

Full year expectations are unchanged

• First half trends continuing into H2

• Positive outlook for financial services

• Scope for further efficiencies

Appendix

Revenue by brand

29

£m H1 FY19 H1 FY18 Change

JD Williams 78.6 81.1 -3.1%

Simply Be* 65.3 60.5 8.0%

Jacamo* 30.7 29.9 2.7%

Power Brands* 174.6 171.5 1.8%

Secondary Brands* 69.4 74.5 -6.9%

Traditional Segment 60.5 68.1 -11.2%

Product total* 304.5 314.1 -3.1%

Stores 6.9 9.4 -26.9%

Product total 311.4 323.5 -3.7%

* Excludes stores

Revenue by category

30

£m H1 FY19 H1 FY18 Change

Ladieswear 139.4 143.4 -2.8%

Menswear 43.4 44.9 -3.3%

Footwear & Accessories 36.3 38.7 -6.2%

Home & Gift 92.3 96.5 -4.4%

Product total 311.4 323.5 -3.7%

Cash flow

31

£m H1 FY19 H1 FY18

Operating profit (28.3) (18.8)

Depreciation and amortisation 14.9 12.9

Impairment and disposal of assets 23.5 -

Working capital (29.7) 2.0

Provisions (2.3) 47.2

Other (0.4) 0.5

Operating cash flow (22.3) 43.8

Tax (1.9) (8.5)

Dividends (24.2) (24.2)

Capital expenditure (17.9) (21.8)

Net finance costs (7.4) (4.1)

Free cash flow (73.7) (14.8)

KPIs

32

Customer H1 FY19 H1 FY18 Change

Active customer accounts 4.3m 4.4m -3.2%

Power Brand active customers accounts 2.2m 2.2m -2.8%

% growth of most loyal customers +0.6% +2.4% -1.8ppts

Online

Online penetration 77% 71% +6ppts

Online penetration of new customers 84% 79% +5ppts

Conversion rate 4.7% 5.2% -50bps

% of traffic from mobile devices 75% 76% -1ppt

Product

Ladieswear share, size 16+ 5.6% 5.3% +30bps

Menswear share, chest size 44”+ 2.7% 2.6% +10bps

Group returns rate 27.3% 27.2% +10bps