Fat Face, the casual fashion retailer, is eyeing expansion outside the UK, after stabilising its domestic business by kicking the “discounting drug”.
Anthony Thompson, chief executive, said the privately owned retailer was looking at potential overseas markets.
“We are now investigating and researching it quite seriously,” he said. “The plan there is to, over the next 12 months, research various markets and filter down to a handful that we think our brand would travel well to.”
He expects Fat Face, which is owned by private equity group Bridgepoint, to begin its international expansion within a year.
“I don’t want to rush into it. I feel what is important is when you look to export your business, your home market is strong,” said Mr Thompson, a former senior executive at Asda and Marks and Spencer.
In the 53 weeks to June 2, Fat Face increased sales by 7 per cent year-on-year to £163.6m, helped by the performance of its online business, new space and existing stores.
Earnings before interest, tax, depreciation and amortisation were flat at £24.1m, after Fat Face took the decision not to pass on higher cotton prices to customers. It was also profitable at the pre-tax level, with a surplus of about £500,000, for the first time in some years.
The increase in sales came despite Fat Face’s “coming off of that discounting drug” in a highly promotional market, said Mr Thompson. The retailer was now discounting a third of the amount of goods that it marked down two years ago, he said.
At that time, 50 per cent of goods were sold on discount. The proportion marked down was now about 25 per cent, and Mr Thompson said he aimed to reduce this to 20-22 per cent over the next 12 months.
Fat Face would continue to hold its nerve, he said, and would again not begin its post-Christmas sale until December 26.
As well as overseas expansion, Mr Thompson saw scope for Fat Face to continue to open 10-15 UK stores a year for the next three years, with most opportunity around transport locations and holiday destinations.
Bridgepoint acquired Fat Face in 2007 for £360m. At June 2, net debt was cut from £150.6m to £140m year-on-year, helped by a repayment of £8.6m.
“We are highly cash generative business and that debt is coming down really quite quickly,” said Mr Thompson. “We have no issues with our covenants. We are very confident we will pass any covenant test over the next 12 months.”
He said trade in Fat Face’s first quarter had been tough amid a promotional high street, but the group was slightly ahead of plan. Trade was strong over the Olympics, ”and that positive glow seems to have continued over the last 10 days”.