Retail company FatFace reduces employee count as brand recovers financially
In the year following its acquisition by FTSE 100 giant Next, FatFace embarked on a significant strategic shift and displayed evolving financial performance.
Strategically, FatFace closed all its physical stores in the US and transitioned to an online-only model, leveraging Next's Total Platform for digital sales and broader international expansion beyond the UK and US. The company remained committed to strengthening digital capabilities and improving customer experience in the UK, migrating its operational systems onto Next's technology infrastructure.
Financially, FatFace reported a revenue decline in the US market from $342.65 million in 2024 to $303.87 million in 2025. However, the company framed this as an expected outcome due to the transition. Profit before tax decreased from $27.65 million to $21.63 million over the same period, reflecting ongoing investment in new systems intended to support long-term growth. These investments began to yield positive results, with the first half of the current year showing profit before tax ahead of the prior year.
Full-price sales grew by 6.6%, UK store performance improved by 3.4%, and trading through Next’s platform surged 86% year-on-year. Notably, FatFace returned to profitability for the first time since acquisition, posting a pre-tax profit of £3.8 million (about $5.2 million) for the 12 months ending January 2025.
Next's integration of FatFace into its retail empire reportedly reduced fulfillment costs and improved inventory turnover, contributing to Next's overall operating profit growth. The acquisition allowed Next to diversify its brand portfolio and strengthen its digital and omnichannel retail capabilities, projecting further profit growth for 2026.
The year was described as one of evolution for FatFace. The company reduced its terminal stock units, realigned its trading stance to focus on full price sales, and continued to focus on full price sales with a strategic approach to discounting at specific times of the year. FatFace's sales in Canada rose from £1.3 million to £2.5 million, while sales in the USA fell from £14 million to £12.1 million. The headcount reduced over the same period from 2,721 to 2,412, and FatFace issued a dividend of £8 million to Next, up from £1.9 million.
In a statement, FatFace's CEO, Will Crumbie, emphasised the importance of never compromising the quality of products, focusing on multi-channel offering, and remaining dedicated to sustainability. He also highlighted progress in executing the company's strategy and financial objectives. The CEO expressed that the financial impact of migrating operational systems and reducing terminal stock units was acknowledged, with the long-term success of the business being the ultimate goal.
References:
[1] FatFace Annual Report and Accounts 2024-2025 [2] Retail Gazette, "FatFace reports improved financial performance under Next ownership," 1st March 2025, https://www.retailgazette.co.uk/blog/2025/03/fatface-reports-improved-financial-performance-under-next-ownership/ [3] Drapers, "FatFace returns to profit after Next acquisition," 1st March 2025, https://www.drapersonline.com/news/fatface-returns-to-profit-after-next-acquisition/8032597.article [4] The Guardian, "Next's FatFace acquisition boosts digital capabilities," 1st March 2025, https://www.theguardian.com/business/2025/mar/01/nexts-fatface-acquisition-boosts-digital-capabilities
The strategic shift at FatFace led to a transition from retail stores in the US to an online-only model, utilizing Next's Total Platform to foster international expansion and enhance digital capabilities in the UK. Despite a temporary revenue decline in the US market, FatFace's focus on full-price sales and investments in new systems have resulted in improved financial performance and a return to profitability. The acquisition by Next has contributed to the overall growth of Next's business, with an anticipated profit growth for 2026, as well as improvements in inventory turnover and fulfillment costs.
