Original Factory Shop offers high street hope

Discount department store chain The Original Factory Shop has bucked the ongoing gloom on the high street to post a 16 per cent increase in annual sales.

The retailer, which owns more than 160 stores across the UK, said the results were "credible" given the challenging economic conditions. It reported a turnover of £136.1m in the 12 months to 27 March 2011, up from £116.9m a year earlier.

The increase came in a year when the Burnley business, led by Angela Spindler - the former managing director of Debenhams - opened 31 new stores, equalling the record number of new stores openings in the prior year.

Its strategy is to open outlets in catchment areas with a population of about 15,000, rather than city centre locations, and brands itself as the only "national non-food convenience retailer".

Like-for-like sales in its last financial year dipped 0.8 per cent although they were 5.9 per cent up over a two-year period. Since private equity firm Duke Street backed a secondary buyout in 2007, it has grown from a £60m turnover business.

The Original Factory Shop said it opened five stores in the three months to June 2011 and plans to open a further eight before next April. Its directors believe the company has the potential to trade from more than 500 stores.

Speaking last month, Spindler said: "Our breadth rather than depth of offer has helped us to buck the overall retail trend experienced over the past few years.

"For example, we were one of the few retailers to benefit from the snow in December as our customers were able to avoid treacherous journeys and walk to our stores to pick up their Christmas gifts.

"Not only did Christmas gifts sell well, but we sold large amounts of electric heaters, fleeces and jackets, boots and snow shovels."

EBITDA in the year to 27 March 2011 was £13.3m, down £1.6m from the £14.9m recorded last year. The company said gross profit erosion was the biggest factor following the increasing rate of VAT and higher rents. Pre-tax losses were £2.6m.

The company, which employs more than 2,500 staff, was reportedly put on the block by Duke Street in May 2010 with a price tag of up to £200m, but a sale has so far failed to materialise.

The chain was set up in 1969 as part of retailer Peter Black’s empire and sold surplus orders and seconds from Marks & Spencer.

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