Following a recent acquisition by Next, Fatface has reported financial losses, despite efforts to align operations.
- Fatface recorded a pre-tax loss of £3.2 million in the 35 weeks leading to January 27, 2024, as it adjusted to a new financial period.
- The company’s revenue was £191.5 million, but exceptional costs of £7.9 million due to the acquisition led to losses.
- Fatface’s digital and physical store sales showed a significant discrepancy compared to the previous financial year.
- CEO Will Crumbie remains optimistic, focusing on maintaining robust operations amidst challenges.
Following its acquisition by FTSE 100 leader Next, Fatface has reported a concerning financial downturn. The Hampshire-based fashion retailer was procured by the Leicester-based conglomerate for £115.2 million in October 2023. Alignment with Next’s financial calendar resulted in a pre-tax loss of £3.2 million over the shortened 35-week period ending January 27, 2024. This period adjustment reflects the strategic integration of operations between the two companies.
Despite achieving a trading pre-tax profit of £4.6 million, Fatface faced substantial exceptional costs amounting to £7.9 million, primarily driven by acquisition-related expenses and system integrations. During this period, the company garnered £191.5 million in revenue. The figures marked a notable downturn compared to the prior full financial year’s results, where the company had secured £281.3 million in revenue and a pre-tax profit of £19.5 million. The restructuring appears to have been a costly affair, impacting the company’s profitability.
Analyzing sales figures, Fatface generated £121.4 million through its physical outlets and £71 million from digital sales in the 35 weeks. Comparatively, shop revenues in the previous year were £168.1 million, while online sales were £112.9 million. Geographically, UK sales stood at £172.5 million, US revenue at £14 million, with sales figures of £4.6 million and £1.3 million from the Republic of Ireland and Canada, respectively. These numbers reveal a contraction from the previous full-year figures, indicating challenges in maintaining sales momentum.
CEO Will Crumbie expressed optimism amidst the financial challenges, acknowledging the strong performance during an arduous period. He noted, “Against a backdrop of a challenging external environment, we have delivered a robust performance for the 35-week period.” Crumbie’s statement underlined a focus on full-price sales to bolster margins and maintain pre-tax profit stability. Furthermore, Fatface remains committed to enhancing both its physical and digital presence, while leveraging its relationship with Next to amplify brand reach and operational efficiency. Crumbie added, “This is an exciting time at Fatface as we look to leverage our new ownership with Next, harnessing the scale and expertise of this market-leading retailer.”
The workforce at Fatface increased slightly, with an average of 2,721 employees during the 35-week period compared to 2,490 in the prior year. This shift suggests an effort to sustain operations and expand capabilities amidst the integration process. The company appears to be focusing on leveraging its expertise and Next’s resources to revitalize its market position.
Fatface is navigating financial challenges post-acquisition, focusing on operational alignment and market adaptability.
