Fat Face sales rise but weak pound hurts profits

Fat Face has renegotiated its debt terms to offer the business more “material headroom” after the weak pound dented the retailer’s full-year profits.

The fashion retailer reported a 9% drop in EBITDA in the 52 weeks to May 28, 2016 to £22m, which it attributed to currency fluctuations and the weak pound.

The retailer’s sales increased 7.2% during the period to £220.2m, driven by a 20.6% jump in ecommerce sales, which accounted for 18.2% of the business’s overall revenue.

Fat Face operates 225 stores across the UK and Ireland and added a net eight new stores during the period, increasing its bricks-and-mortar space 11.8%, with plans to further expand its estate in the coming year.

The retailer said it expected “some inflation in the clothing market” as the fall-out of Brexit impacted sourcing costs and consumer confidence.

The retailer also renegotiated terms on its £149m debt with its lenders in January as a means of securing greater “material headroom”, which it said was a “prudent and proactive” response to the fall in the value of sterling.

Fat Face’s international revenue was flat during the period at £4.9m.

Read the full article here