N Brown eyes German, U.S. deals if trials a hit

LONDON (Reuters) - The head of British home shopping group N Brown (BWNG.L) would consider takeover opportunities in Germany and the United States in two to three years time to drive growth if trading trials prove successful.

Speaking at the Reuters Consumer and Retail Summit on Wednesday, Chief Executive Alan White said the firm's plan is to build its business in both countries and achieve breakeven in three years.

N Brown, which targets older and larger customers, launched its "Simply Be" website and catalog in Germany in 2009 and will start a similar trial in the United States next month.

White said if the trials showed the firm could recruit customers cost effectively it would decide toward the end of the second year whether to accelerate growth by investing in more customer recruitment or by pursuing acquisitions.

"The alternative route to spending more money (on recruitment) would be to find businesses which might actually have a compatible database that we could market into to ramp up that growth," he said.

"It's something where we're talking medium term rather than short term but we're actively keeping tabs in terms of what's going on in those markets."

The CEO noted that fallout from the demise of Arcandor, owner of the Quelle home shopping business, was creating opportunities in Germany, while in the United States, some venture capital firms were looking to exit from their home shopping businesses.

With the U.S. outsize market worth $35 bln a year, success there could be transformational for N Brown.

LACK OF UK DEALS

N Brown last week purchased lingerie retailer Figleaves for 11.5 million pounds ($17.15 million) and White is keen to do more bolt-on deals in the UK.

However, he said there are few sizeable home shopping companies to buy.

"We would prefer to be buying bigger businesses because in some ways there's almost as much effort in a 10 million pounds turnover acquisition as a 100 million pounds turnover acquisition. But there just are very few companies that would fulfill that criteria," he said.

PRICES GOING UP

White said Tuesday's emergency UK budget, seen as the toughest for a generation, "could have been worse" but will be negative for retailers as it will take money out of customers' pockets.

The hike in VAT sales tax from January 4 will be passed on to consumers in the firm's spring/summer 2011 catalogues.

"The increase will be there but it will be disguised within the price pointing," said the CEO.

He also cautioned that the weakness of sterling versus the dollar and high commodity costs would mean further price rises of 5-10 percent later this year.

Shares in N Brown were down 2.6 percent at 273 pence at 1312 GMT, valuing the business at 760 million pounds.

($1=.6706 Pound)

(Additional reporting by Mark Potter; editing by Simon Jessop)