Sarah Butler 

Fat Face prepares to expand across the Atlantic with first US store

UK fashion brand aims to put failed float behind it as it gears up for autumn launch of first American branch, in Boston area
  
  

Fat Face CEO Anthony Thompson
Fat Face CEO Anthony Thompson inside one of his stores. Photograph: Sean Smith

When Anthony Thompson, the boss of fashion chain Fat Face, decided the time was right to expand across the Atlantic, he had to put in some serious research - including a road trip in a soft-top Mustang from New York to Martha’s Vineyard, Massachusetts.

Altogether he visited between 40 and 50 potential east coast locations including Boston, Newport and Portland, Maine. Some of them required half a dozen visits, he said, and he used planes, trains and even bicycle journeys to explore all the angles and ensure Fat Face gets its first venture outside the UK and Ireland right.

Ice-cream parlours are particularly instructive about locations, evidently. Thompson explained that eating homemade vanilla ices in seaside resorts along the US east coast helped him identify the Boston area as the location for the brand’s launch over the Atlantic this autumn. “It’s got to be homemade and come in big portions. There has got to be a great vanilla and maybe toffee or butterscotch. If they do lemon meringue, the chances are we will open a shop.”

The link between selling an ice-cream and knocking out waterfall cardigans and hoodies at around £42 a go may not be obvious to all. But Thompson says: “We understand who our customers are and why they go to a holiday destination. You’ve got to have good ice-cream if you’re with the kids.”

Thompson, who as a middle-aged dad dressed in jeans and a sharp Gingham shirt is typical of the current Fat Face customer, adds: “You can’t de-risk a business completely but you can take risk away. You can do lots of homework. I believe you should follow the customer and design what you do for them. If it doesn’t work it won’t be because the customer isn’t there.”

The Fat Face brand has grown up since founders Tim Slade and Jules Leaver started the business by selling sweatshirts to fellow ski-bums in 1988, and Thompson believes it is now mature enough for an overseas adventure – even though so many British retailers – from mighty Tesco, Marks & Spencer and Sainsbury’s to tiddlers such as Mothercare and Laura Ashley - have had a meltdown in the US .

Scepticism among analysts and investors that Americans could really take a brand containing the word “fat” to their hearts, played a part in the firm’s failure to launch on the stock market last year. Fat Face had been hoping to raise £110m in a move that would have valued the group at around £440m.

But Thompson has taken his research very seriously, and in a manner not unusual for this former Marks & Spencer and Asda executive who gave up major corporates in favour of the privately owned Fat Face brand where he now tours stores in a camper van.

Fat Face’s first US store will open in the autumn in the Boston area. Thompson expects to have three open by May next year and “five to 10 in the next 18 months. But we will do it in measured stages based on performance,” he says.

The first store has been preceded by a US website and there are further plans for dedicated language websites and concessions in Europe backed by £180m refinancing secured last year after the IPO failed.

That cash also funded a payout to Fat Face’s private equity backers, Bridgepoint which has now controlled the company for nearly eight years. It bought the retailer for £360m at the peak of the credit boom but was forced to inject more cash just two years later on fears the retailer might breach its banking covenants as the UK economy struggled.

Bridgepoint’s attempt to cash out of the firm last year was foiled as investors were impressed by a flurry of other retail IPOs including Poundland and B&M.

“There was a rush for the gate and our timing was poor. We were unlucky in some ways and suddenly the window closed. It was a very straightforward decision,” says Thompson.

He said the company had to accept that the conditions were not right for a float, despite spending £4m on preparations. The waste of management time involved in the aborted float, was even more costly, he reckons. “It was distracting and tiring and we had to regroup after it. It slowed the momentum a little bit.”

Those extra costs and distractions, as well as a “very bruising” second quarter when the warm autumn hit sales of coats and knitwear, mean profits are down 5-10% on the £39m achieved last year. Underlying sales also slipped although total sales – which includes takings from new store space – are up by about 2% from the £200m recorded last year.

Undaunted, Thompson has plans for about 12 new stores in the UK and Ireland where Fat Face already has more than 200 stores.

The idea is to exploit demand from 30- and 40-something men and women who increasingly shun formal clothes for work and want a relaxed lifestyle with their kids at the weekend.

“I don’t wear a suit to work and I am never going to again. People are looking to be able to express themselves more individually outside of work and there is a much more blurred line between work and play as babyboomers come through,” he says.

Black Friday Anthony Thompson is determined to come up with a way to tackle the pre-Christmas Black Friday without resorting to a damaging blizzard of discounts .

Last year Fat Face didn’t participatein the US-spawned day of price cuts – but saw sales rise anyway as more shoppers hit the high street. This year Thompson is planning to mark the event by handing over 10% of the retailer’s net profits taken over the late November weekend to charity.

“To ignore it would be irresponsible for any brand. It was a phenomenon last year and I think it will be even bigger this year,” says Thompson. “Black Friday is born out of the Thanksgiving celebration in the US and we are going to do “thanks for giving.” We want to involve local communities and store managers in that.”

The company will donate up to a limit of £250,000 to local charities around its stores, depending on its takings. Thompson is convinced his shoppers will be much more taken with that idea than bargain clothes.

Fat Face is prepared to go it alone with the idea but Thompson said he’d like to see other retailers take it up. “I would love everyone to rip this off,” he says.

“There’s a good reason for doing something that kicks off the season and why not celebrate by helping worthy causes rather than discounting.”

“Cynical discounting is not a sustainable model for UK retail. It leads to a lack of creativity, newness in fashion and joy.”• This article was amended on 18 June 2015 because an earlier version said the US store would be Fat Face’s first venture overseas. This has been corrected to say first venture outside the UK and Ireland.

 

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