N Brown expects another £30m hit from PPI claims, debt set to rise
Clothing retailer N Brown said on Thursday that it will need to make an additional provision of up to £30m following a surge in payment protection insurance information requests and complaints (PIRs) in the run-up to the August deadline, with debt expected to rise as a result.
The company said it received more than 10 times the average volume of PIRs seen in the months prior to this, with around 110,000 in August and more than 40,000 in the final week before the deadline.
N Brown, which has already paid out £108m in redress, said it is working through all additional PIRs received.
"Although it is not possible to be precise about the final outcome, the group now believes it will be necessary to make an additional provision in the range of £20m to £30m in its half year results for the six months to 31st August 2019," it said.
As a result, full-year net debt guidance is expected to rise to between £460m and £490m from between £440m and £460m.
The company said it will continue to work through the PIRs received following the deadline for submission of claims and will provide an update, including the size of provision, in its first-half results in October.
At 1215 BST, the shares were down 4.3% at 105.80p.
House broker Shore Capital said: "Ahead of interim results scheduled for 10th October, we leave our profit expectations unchanged though note the potential for slight downward pressure from higher finance costs.
"Whilst clearly unwelcome, we reiterate that FY2020 is expected to be a watershed year for N Brown as it will see the end to the painful cash headwinds from legacy issues that have dogged the company in recent years, so allowing for more robust underlying cash flow credentials to come to the fore."