Fat Face chief executive Anthony Thompson has called pre-Christmas discounting “a drug” that will require a “bigger dose” season after season if retailers do not take a stand.
The lifestyle retailer, which reported a 13% increase in December sales, held firm on its strict no-discounting policy and did not reduce prices until Boxing Day.
Thompson told Drapers: “We had to take a deep breath and decide we were not going to participate in Black Friday [November 28], as we felt very strongly about it. It’s important our customers know that if they buy a present from us [in November or early December], it won’t be on Sale 10 days before Christmas.”
He also commented on the deepening level of discounting by his peers on the high street. “Discounting was happening very early in the season and discounting is a drug; next time you are going to need a bigger dose to get the same effect.
“Perhaps there wasn’t a greater number of retailers discounting this year, but the mark-downs got increasingly deep and the ‘sea of red’ was replaced by a sea of deep red this Christmas. Businesses need to be aware of the unintended consequences of the Black Friday mindset.”
Thompson said Fat Face would apply the same game plan next Christmas and hold out for Boxing Day to discount, as the decision had been “vindicated” by the 2014 results.
Like many other retailers, Fat Face was impacted by the “unseasonably warm weather” in the second quarter of its financial year. Total sales for the 26 weeks to November 29 remained flat at £99m, while total EBITDA for the half was also broadly flat at £19.2m, up from £19.6m in 2013.
Thompson said in order to combat unfavourable weather patterns next year, the business was working towards more responsive lead times and producing collections closer to home.
“The entire market needs to look at itself in the mirror and ask: ‘Did we overbuy? Were our eyes bigger than our bellies?’ The unusual weather taught us a hard lesson that we can’t take anything for granted,” he added.
During the half, Fat Face’s store estate square footage increased by 7% with two new stores, four relocations, one refit and three extensions. Two new stores opened in December, bringing the total to 212. Thompson said there is still “lots of opportunity for growth” in the UK. He expects to open or relocate eight to 10 stores and refurbish a similar number in 2015.
The chief executive also told Drapers it was “highly unlikely” Fat Face would list on the London Stock Exchange this year. “We are in no great rush in terms of an IPO; it’s not a focus for us. Our focus is to deliver to our customers and provide a great service.”
In May Fat Face pulled the plug on its planned IPO, which was expected to value the company at £110m, due to fatigue in the market.