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Facing forward: How Fat Face's bid to reduce discounting has paid off

When Fat Face took the bold step of turning its back on aggressive discounting at the height of the recession, it was a move widely applauded but few counterparts were prepared to follow its lead.

Maybe now the results are starting to pay, rivals might start to take note. Earlier this week, the lifestyle retailer revealed that its EBITDA has soared by 29% for the 53 weeks to June 2 on turnover up by 8% - record results for Fat Face and a strong performance by anyone’s standards.

For Fat Face’s straight talking chief executive Anthony Thompson, the 205-strong retail chain’s overall profitability is driven by its core offer of quality clothes that are priced honestly, but that is not to say it has been an easy to break the discounting cycle.

“Coming off the discounting ‘drug’ does take time,” he admits. “You have to take a deep breath and keep your eye on the medium-to-long-term especially as there will be points in the financial year where you are facing tough comparables.”

If you consider that when Thompson arrived in 2010, the retailer was on Sale for 48 weeks out of 52 - and it was estimated about half of its stock was sold at discount - it’s easy to see that there must have been some pretty hairy moments.

Sticking to his guns, he has now reduced this to 12-to-15 weeks, with around 20% to 25% of stock sold at mark down.

While Fat Face has simultaneously been working on improving other areas of its business, including the in-store environment and its customer service, Thompson admits it is the full-price strategy that has helped it to foster trust and confidence in its customers.

“They know they aren’t going to buy something this week and see it at a discount next week,” he says.

This has given Fat Face itself the confidence to look beyond the UK for its future growth – it is eyeing a store in the east coast of the US within the next two years, plus an ecommerce site.

According to Thompson, one of the reasons it had decided to focus on the east coast is based on the positive reaction to the quality, style and fit of Fat Face’s clothes.

But this is also a reflection – and a reward - of the confidence that Fat Face has shown in its own product by selling it at full price, no matter the weather.

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