N Brown, the catalogue and online fashion retailer, indicated yesterday that bad debts among its customers had stabilised and may even have peaked.

The company, whose brands include Oxendales, Simply Be, JD Williams and Ambrose Wilson, admitted that there had been an expected increase in bad debts, but it insisted that it was comfortable with the situation.

Alan White, the chief executive, said: “Because we are both a retailer and a credit provider, we want customers to get out of arrears and back to buying and so we tend to be more amenable than the average credit card company. In terms of arrears, there’s some evidence in recent weeks that they’re bottoming out.

"It looks likely that the extra provisions we made in the second half of last year will not need to be repeated this year.”

He was speaking as N Brown, in an update at its annual meeting, reported that sales during the 18 weeks to last Saturday were up 5.1 per cent on the same period last year. It also revealed that the number of bad debtors was growing more slowly because of more cautious customer recruitment.

Shares in N Brown slipped 8½p to 211½p amid concerns that, owing to an increase in bad debts, gross margins had slipped by 1.5 percentage points.

However, Mr White insisted that the decline in gross margins would not hit the bottom line, since it had been offset by efficiencies in the company’s operations and by reduced interest charges.

He said that the company was “proactively managing” debtors who fall into arrears, with alternative payment schemes where possible. The average amount outstanding, per customer, was not considered significant.

Mr White said that N Brown’s newer catalogue brands — Marisota, which is aimed at women in their early fifties who have not previously considered catalogue shopping, and Jacamo, which is aimed at larger men — were enjoying good growth.

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