Despite an uptick in sales in its last fiscal year, UK clothing retailer Fat Face has booked a dip in earnings after its bottom line was hit by the falling pound and investment in expansion and logistics.
In the 53 weeks ended 3 June, earnings fell to GBP10.7m (US$14.1m) from GBP16.6m in the prior year. Fat Face made an investment of GBP9.5m last year in a new distribution centre and expanding channels and trading partners. There are plans this year to launch a new web platform.
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Revenues grew by 2.4% to GBP226m thanks to a refocus on improved product quality and differentiation. Retail sales edged up 1% to GBP221.4m, while gross margin widened to 61% from 60%.
“Looking to the future FatFace is a resilient business with a strong track record in rapidly changing economic environments,” said chairman Lord Rose. “The General Election, in June 2017, and subsequent EU exit negotiations could adversely impact the retail market and these will be closely monitored.
“However, the group has robust strategic plans in place. Foreign exchange movements have been predominantly mitigated through hedging for the next 18 months. Overall, the outlook remains challenging but the group is well placed with a strong management team, differentiated retail offering, clear strategy and robust infrastructure.”
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By GlobalData
