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N Brown says trading subdued on bad weather, Brexit fears

By Aastha Agnihotri

(Reuters) - British plus-size fashion retailer N Brown Group Plc (BWNG.L) said trading in the new financial year has been subdued, hurt by lower demand for spring and summer clothing due to bad weather and as uncertainty over Brexit influenced consumer spending.

Shares of N Brown, known for its brands SimplyBe and JD Williams, fell as much as 13 percent, the top loser on the FTSE 250 midcap index (.FTMC).

"There's a slight downturn in consumer confidence, particularly for older customers and I think that's connected to uncertainty associated with Brexit," Chief Executive Angela Spindler told Reuters.

Britain will vote on whether to stay in or leave the 28-member European Union in a June 23 referendum and most opinion polls show the rival "In" and "Out" campaigns running neck and neck.

Market research firm GfK said last month its overall consumer sentiment indicator stood at zero in March, as Brexit and euro zone worries weighed on UK consumers.

N Brown said sales in the new financial year had been lower from a year earlier, citing a challenging industry backdrop since January and also a change in marketing approach.

Spindler added that there was lower demand for spring dresses and light-weight knitwear as consumers have not yet switched to spring and summer clothing.

"People aren't in a mood for spring/summer shopping until the weather starts to improve."

The Manchester-based company gave a full-year product gross margin outlook of negative 50 basis points to negative 150 basis points, hurt by foreign currency headwinds and clearance of aged inventory, among others.

It expects a hit of about 3 million pounds on full-year profit before tax in the new financial year.

"Low metrics reflect weak sentiment after missing revenues/profit expectations 18 months ago and slower-than-hoped strategic progress," analysts at N+1 Singer wrote in a note.

The brokerage cut its rating on the stock to "Hold" from "Buy".

N Brown, which has reduced its range of non-core home and electrical items to focus on fashion clothing, said it adjusted its marketing approach this season, shifting from large TV campaigns to a more phased approach, with increased investment in digital channels.

The retailer posted a 2 percent drop in underlying profit before tax to 84.5 million pounds for the year ended Feb. 27, in line with expectations.

N Brown's shares were down 12.7 percent at 275.16 pence on the London Stock Exchange at 0900 GMT.

(Reporting by Aastha Agnihotri in Bengaluru; Editing by Sunil Nair)