Fat Face wins easier debt terms as profits fall
Fat Face has renegotiated its debt terms to get greater headroom after a profits slump. The Bridgepoint-owned fashion firm has completed a "covenant reset" to an external financing agreement as the last financial year saw falling profits and the declining value of the pound dented its current-year profits after the UK voted to leave the EU.
Although no figures for profits after June last year were available, in September the company had already reported profits down 9% to £22m in the year to May 28 2016. That was despite sales having risen 7.2% to £220.2m.
The company is vulnerable to exchange rate fluctuations as it sources much of its product in Asia but pays in US dollars.
But the company is staying upbeat and plans to add more new stores to the 10 it added in the last financial year. It will also invest further in e-tail as online sales head towards being one-fifth of its total turnover.
However, on the downside, Fat Face said it expects inflation to hit the clothing sector this year, again, as a result of the Brexit vote.
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