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Fat Face to pay down debt as US plans accelerate

Fat Face will use nearly half of the £110m raised during its initial public offering (IPO) to pay down debt and allow private equity investor Bridgepoint to sell part of its holding in the company.

The lifestyle retailer launched its IPO on May 1, with plans to list on the London Stock Exchange. It is seeking around £110m from releasing roughly a quarter of its equity, valuing it at £440m.

Speaking with Drapers, chief executive Anthony Thompson said the bulk of the cash – just over £50m – would be used to drop its net debt to £60m.

Bridgepoint will also release some of its investment, although will continue to hold a “significant interest” alongside senior management.

Thompson noted that Fat Face was “very cash generative” and would not need to rely on the IPO to invest in future growth, which includes expanding in the UK and its anticipated US launch US.

“This is an established business – one that is well loved, with great customer focus, that is cash generative and growing. The IPO is timely after 25 years of existence. It’s time for the organisation to grow up a bit,” he said.

“Currently we trade off 300,000 sq ft – which is one and half floors of Selfridges, so not that huge. Over the next three to five years we expect to grow that to around 450,000 sq ft to 500,000 sq ft.”

Thompson said this would be achieved through a combination of new store openings, with an annual rate of between eight and 10 store launches, relocations to bigger stores and reconfiguring existing stores to create more selling space.

This would enable Fat Face to better show off its full range, with Thompson identifying accessories, footwear and kidswear as areas of opportunity that are often not shown to their full advantage, as well as the mainline.  

The US launch is also looking more imminent than the three-year plan previously mooted.

Following a series of research trips, Fat Face is now planning to launch a website in the next 12 months, alongside two or three stores on the East Coast and in the Boston area – “holiday locations and small stores”, Thompson said.

“We are not in a rush to do this. We want to do this well, with the right stores in the right locations,” he added. “This is the next stage of trialling – it will be a relatively modest toe in the water.”

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