Could direct home shopping retailer N Brown Group (LSE:BWNG) be one of the best shares to buy now for long-term growth? Let’s take a closer look at the pros and cons of me buying the shares.
As a quick reminder, N Brown is a top 10 digital UK clothing and footwear retailer. With over 160 years history of trading, it employs close to 1,800 people in the UK. You may have heard of some of its retail brands including JD Williams, Simply Be, and Jacamo.
So what’s happening with the N Brown share price currently? As I write, the shares are trading for 25p. At this time last year, the stock was trading for 53p, which is a 52% decrease over a 12-month period.
Many stocks have come under pressure due to macroeconomic headwinds and the tragic events in the UK, and N Brown is no different. This includes many of my best shares to buy. Could this stock be a bargain with a view to a long-term recovery?
To buy or not to buy?
So what are the pros and cons of me buying N Brown shares?
FOR: I like the look of N Brown’s diversified business model. It is a leading retailer in the plus-size clothing market through its brands Simply Be and Jacamo. Furthermore, it also targets the more affluent 45-65 year old through JD Williams. Despite near-term challenges, this diversification could be the key to growing revenue and profit, and providing returns to its investors.
AGAINST: Well documented macroeconomic issues could hamper N Brown. Soaring inflation, the rising cost of materials, and the global supply chain crisis could have a material impact on profitability and operations. With costs rising, N Brown could see margins squeezed. In addition to this, operations could be affected due to supply chain constraints. All this could impact any returns I would hope to make as an investor.
FOR: I do understand that past performance is not a guarantee of the future. But looking back at N Brown’s track record, I think this is a positive point. I can see it has recorded consistent revenue and profit for the past four years. This was even during the challenging pandemic period. I want to see performance levels return past pre-pandemic levels, although 2022 results weren’t far off. Finally, the shares look good value for money on a price-to-earnings ratio of just seven.
AGAINST: The rise of online fast fashion, and the shift away from the high street has been seen as a positive by many. For N Brown, this is an issue for me as it means competition is more intense than ever. Competitors will try to take market share and this could have an impact on performance and returns in the longer term.
I think N Brown Group is a bit of a hidden gem with excellent growth prospects ahead. The shares currently look dirt cheap and I’m buoyed by its diversified business model. Its long trading history and roots also help me believe that it has the experience and know how to navigate stormy waters.
Overall I would be willing to add a small number of N Brown shares to my holdings and keep hold of them for the long term.