Fat Face seeks London flotation

Fat Face, the casual fashion retailer, has become the latest store chain to seek a listing on the London Stock Exchange amid what is shaping up to be an extremely strong year for initial public offerings.

Bridgepoint, the private equity group that owns the retailer, has appointed Citi and Jefferies to work on a flotation.

The listing, first reported by Sky News, is the latest in the retail sector. Other companies hoping to take advantage of increased investor appetite for retail stocks include Poundland, Card Factory, House of Fraser and Pets at Home.

Fat Face has been transformed under former Asda and Marks and Spencer executive Anthony Thompson. The retailer is also chaired by former M&S chairman and chief executive Sir Stuart Rose.

Mr Thompson took an axe to the company's policy of constant discounting, saying it was undermining its brand and price integrity.

Three years ago, the company was selling more than half of its products on markdown. Now the figure is less than a quarter. Fat Face is also one of the few retailers not to discount before Boxing day, and it has held this policy for the past four years.

Mr Thompson has in the past likened constant discounting to a drug, which is hard to kick once retailers and their customers become addicted to markdowns.

Fat Face's policy of not discounting paid off this Christmas, when sales rose 5 per cent in the five weeks to January 4. The strong Christmas trading followed a 15 per cent increase in sales in the first half of its financial year to £98.9m.

Earnings before interest, tax, depreciation and amortisation rose 57 per cent to £19.6m in the six months to the end of November.

The company has also tackled its borrowings, with Fat Face repaying a further £19.7m of debt, cutting net debt from £136.6m to £111.5m at the end of November.

Started in 1988 as a T-shirt and sweatshirt retailer in the French Alps, Fat Face is now eyeing expansion in the US, and plans to open a website and a small number of stores around the Boston area and coastal parts of New England within the next 18 months to two years.

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