TFG Brands Sees Growth Despite Losses Following White Stuff Acquisition

TFG Brands (London) Limited is experiencing significant growth following its acquisition of White Stuff last year. Despite remaining loss-making, the company, which also owns Hobbs, Whistles, and Phase Eight, is pursuing expansion beyond acquisitions.

The company’s accounts for the year ending late March 2025 reveal a turnover increase to £377.5 million, up from £323.5 million. Adjusted EBITDA rose to £51 million (excluding White Stuff, £41.3 million) from £33.8 million, and operating profit increased to £23.2 million from £20.1 million. However, the company reported a loss after tax of £5.9 million, slightly wider than the previous year’s £5.7 million deficit, largely due to £18.9 million in interest charges on parent company loans – a recurring issue.

TFG Brands acknowledges ongoing global economic challenges but considers its FY25 financial results to be strong. The White Stuff acquisition, completed in October 2024, significantly contributed to this success, adding £81 million in turnover and £4.5 million in profit for the year. A more substantial impact from White Stuff is anticipated in FY26 with a full year of contribution.

Further positive developments include a growth in TFG’s direct channel mix to 69% from 56%. The company also expanded its physical presence with the opening of four new standalone stores in the US. Despite this, concession sales experienced a 14.7% year-on-year decline, reflecting broader macroeconomic headwinds and muted consumer spending.

The gross margin improved to 70.5% from 69.4%, driven by the increased direct channel mix despite a promotional retail environment. TFG Brands continues to invest in its store estate, acquiring 169 new locations through the White Stuff business and opening an additional 78, while closing 103 to optimize profitability. The group’s total store portfolio now stands at 699, up from 555 the previous year.

Overall, TFG Brands is demonstrating positive momentum, although performance varies across its individual brands. At Hobbs, turnover decreased to £117.5 million from £123.9 million, but adjusted EBITDA rose to £23.9 million from £18.6 million, and operating profit increased to £16.7 million from £13.9 million. Profit after tax also improved to £12.4 million from £9.8 million.

The improvement at Hobbs is largely attributed to a gross margin increase to 72.9% from 67.4%. Despite a 52-week financial year compared to 53 weeks previously, Hobbs saw its direct channel mix grow to 73.9% from 62.4%. However, concession sales were down 12.8%, contributing to the overall turnover decline. The brand focused on its strongest locations, opening six new stores and closing 18, resulting in a total of 123 stores and concessions, down from 135.

Phase Eight’s performance was less robust, with turnover falling to £82.5 million from £91.7 million and adjusted EBITDA rising slightly to £2.6 million from £2.2 million. The brand reported an operating loss of £0.5 million, an improvement from the previous year’s £1.3 million loss, and profit after tax more than doubled to £0.9 million from £0.4 million.

Phase Eight’s direct channel mix increased to 62.4% from 52.5%, with international sales reaching 12% of the total, up from 5%. While online growth was positive, concession sales declined by 15%. The implementation of a new merchandising system impacted trading due to supply disruptions during the transition, contributing to a 10% turnover drop. The brand opened nine new stores but closed 18, aiming for a “higher-quality, more profitable” core business, ending the year with 128 stores, down from 137. Despite improved gross margin and reduced distribution costs, lower turnover limited profitability.

Performance data for contemporary brand Whistles is currently unavailable as the accounts have been filed but are not yet accessible on the Companies House website. Updates will be provided when the information becomes available.