Factory Shop looking to move into larger towns

DISCOUNTER The Original Factory Shop is considering expanding into larger towns and cities to fill gaps left by struggling retailers.

The group, which has traditionally focused on opening stores in small towns with catchment areas of about 15,000 people, is looking at locating in larger towns and cities where landlords are keen to fill vacant units.

It recently opened a ‘pop-up’ or temporary store in Princes Quay shopping centre in Hull city centre. It has a 16-week lease on the Hull store, and the store’s future will be reviewed after Christmas.

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The private equity-backed retailer, which sells a wide range of goods ranging from vacuum cleaners to trainers, added it is on course to open 15 stores in its current financial year.

“Desperate is probably the wrong word but it’s hard to let properties especially in small towns and cities,” said chief executive Angela Spindler.

“Say a development has finished and it’s 90 per cent let in time for peak trading, but there will be a vacant unit which they’ve not been able to let.

“It’s much better for the shoppers and the centre to be getting something rather than leaving it vacant.

“We do drive a hard bargain. However, that’s always been the case.”

Ms Spindler said the prolonged downturn means it has not yet seen major falls in rents.

But she said the “opportunity to consider is what large towns become more accessible as other people come out of them”. This would mean increasingly targeting towns with populations of 20,000 to 30,000.

“It’s something we might try in the event that we see movement on rents,” she said.

Founded more than 40 years ago in Keighley, TOFS now has 183 stores across the UK, employing about 2,800 staff. It has opened 10 sites since March, including in Hornsea, East Yorkshire, creating 150 jobs. It targets ‘secondary’ locations such as high streets in small towns, often eschewed by larger multiples which are increasingly chasing ‘prime’ sites. TOFS even invites landlords to submit potential sites on its website.

“We will always be committed to Britain’s small town high streets, and we see there being scope for a network of 450 stores across the UK over the medium term,” said Ms Spindler.

“We anticipate a good Christmas and look forward to continued momentum and growth in the remainder of the year.”

TOFS yesterday posted a 5.8 per cent increase in underlying sales in the six months to the end of September 30, versus a year earlier. Including new openings, total sales are up 13.6 per cent to more than £93m this year.

While the group did not detail its earnings, it said profits are up 30 per cent so far this year.

The retailer said September showed a strong performance, with like-for-like sales up 7.5 per cent, as fashion and footwear sales accelerated. Its average basket size was up six per cent year-on-year to £12.11 in September. Underlying customer numbers also increased 2.5 per cent last month.

“I’m hearing that the high street, with the cold weather, has improved the fortunes of the fashion and footwear retailers,” said Ms Spindler.

“It’s just the start of the winter season and we’re seeing the first uptick from that, but it’s not stellar.”

TOFS sells brands including Kangol, DKNY, Adidas and Kickers, as well as cut-label women’s clothes from major high street retailers.

“It’s interesting to see customers buying into high street brands and propositions,” said Ms Spindler. “They are trading up a bit. What they seem to be wanting is better quality products, rather than just cheap products.”

The retailer is due to launch a full transactional website today. It has been selling larger goods, such as sofas and beds, online for the past 18 months. Online sales now comprise about 2.5 per cent of its revenues.

“Our online offer has gone from strength to strength and the improved transactional website will continue to support our online growth,” said Ms Spindler. “That said, we know our customers still enjoy face-to-face interaction, and the helpful service they get at their local store.”