The Original Factory Shop returns to the red as Covid support ends
The Original Factory Shop slipped back into the red during its latest financial year as the government’s Covid support measures came to an end.
The company, which is headquartered in Burnley, Lancashire, had posted its first pre-tax profit since 2019 in the 12 months to March 2022 after benefiting from reduced business rates.
However, during its most recent period to March 26, 2023, the firm went from a profit of £6.6m to a pre-tax loss of £286,000, according to newly-filed documents with Companies House.
Its revenue also fell from £124.4m to £118.7m over the same period while its headcount dipped from 1,936 to 1,877.
The Original Factory Shop has been owned by private equity firm Duke Street since 2007 and has almost 200 stores across the country.
A statement signed off by the board said: “The retail sector has faced significant challenges in the past year as a result of the cost-of-living crisis and the group has not been immune to the effects of this on both consumer sentiment and increasing overhead costs.
“However, despite the difficult environment, the group has delivered a robust financial result with an EBITDA of £4.6m compared to £8.5m in FY22. FY22 benefitted from government support during the Covid period in the form of reduced business rates.
“The group took the decision in FY22 to invest in a third party model to identify new store opportunities which best matched our proposition and target markets.
“This investment is bearing fruit as more high-quality sites have become available and we opened ten sites in strong locations during the financial year.”
The results come after The Original Factory Shop renewed its £12m flexible asset-based loan facility for a further three years in December 2023. The facility had been due to expire in April 2024.
The company added: “Total revenue of £118.8m was again stronger than pre-pandemic revenue, nevertheless did reflect the challenges the sector faced from the cost-of-living crisis when comparing to FY22 revenue of £124.4m.
“However, gross profit margin increased by 1.5% from FY22 and average basket value (ABV) continued to see year-on-year growth.
“The business also worked with our concession partners to develop and improve the ranges in stores and to help meet the demands of customers, with there being strong growth in concessions revenue during the year.
“Despite the uncertain environment the group was still ale to continue its investment in the store estate with ten new store openings and a significant investment in LED lighting upgrades. This programme of capital expenditure has continued into FY24 with a further, ambitious store opening plan being successfully executed.”
The Original Factory Shop added that the reduction in its headcount was due to factors including ‘natural attrition’ as well as the leases on a ‘small number’ of stores expiring.
In a statement managing director Phil Briggs said: “While general market conditions have proven challenging for the last 12 months, we’re entering this year with a strong cash position.”
He added that the company has plans to open a further five stores in the early part of 2024.
Mr Briggs said: “Our transformation plans remain on track and in December we successfully renewed our £12m asset-backed loan facility for a further three years.
“While FY22 and FY21 were significantly impacted by Covid, we have continued to show strong levels of profitability with EBIDTA this year of £4.6m, compared to £5.5m in FY20.”