Fat Face IPO: Fashion retailer dresses up for London flotation

Company appoints financial advisers, plans market debut within months

Fat Face IPO: Fashion retailer dresses up for London flotation

iNVEZZ.com, Tuesday, January 21: British casual fashion retailer, Fat Face, has become the latest major label to seek a listing on the London Stock Exchange (LSE), in what is shaping up to be a strong year for initial public offerings (IPOs) from the UK retail sector.

In December, Fat Face and its owner, the private equity group Bridgepoint, hired financial advisory group Lazard to “review all options” regarding the company’s future. But following a buoyant Christmas trading period and increasing investor appetite for stock market listings, Fat Face has now appointed investment banks Citigroup and Jefferies to work on an IPO, Sky News first reported late yesterday, citing insiders.

The group’s stock market debut could take place within months and would see former Marks & Spencer (LON:MKS) boss Sir Stuart Rose become chairman of two publicly listed companies as he also sits at the helm of online grocer Ocado (LON:OCDO).

Fat Face is one of many retailers examining listings as the UK economy continues to recover, although the mixed fortunes of high street chains at Christmas suggest that investors may be wary of backing some of those looking to sell shares on the public markets.

Online fashion brand Boohoo.com is thought likely to come to the market in the first quarter after a first attempt in the autumn failed to get off the ground.

Pets at Home, the UK’s biggest pet retailer, has appointed financial advisers to work on an IPO, set to take place as early as this quarter (Pets at Home IPO: UK’s biggest pet retailer eyes £1.5 billion IPO).

Appliances Online, Poundland and Card Factory have also been tipped to join the public markets in the first half of 2014 after appointing advisers, although, unlike Fat Face, none of these stores has released information about their Christmas trading.

Department store House of Fraser, which is also considering a listing, released an upbeat Christmas trading statement, but some analysts believe its flotation hopes could be scuppered by the performance of fellow department store Debenhams (LON:DEB), which issued a profits warning after indulging in heavy discounting over the festive season.

No discounts strategy pays off

Fat Face has been reinvigorated by former Asda and Marks & Spencer director Anthony Thompson, who joined three years ago and axed the policy of having perennial discounts, saying it was undermining its brand and price integrity.

The policy of not discounting paid off this Christmas, when Fat Face’s sales rose five percent in the five weeks to January 4. The strong festive season performance followed a 15 percent increase in sales in the first half of its financial year to £98.9 million. The retailer’s earnings before interest, tax, depreciation and amortisation (EBIDTA) rose 57 percent to £19.6 million in the six months to the end of November.

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

CEO Thompson said earlier this month: "The further expansion of our UK store portfolio and the rapid development of our multi-channel offer has led to another half-year of double-digit sales and profit growth." His plans include the launch of three stores and a dedicated website in the US within the next 18 months.

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