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FatFace announces IPO plans

Article By: ,  Financial Analyst
May 1, 2014 5:49 PM

As has been expected for a while, UK-based fashion retailer, FatFace, is set to join the growing list of companies to have listed on the LSE this year.

Today (1st May), FatFace announced its intentions to raise around £110m in an initial public offering (IPO) set to take place this month.

The so-called active lifestyle clothing and accessories retailer intends to use some of the proceeds to pay down its debt (bringing it down to £60m).

Is there anything to like at FatFace?

Well, there’s more to FatFace than headlines regarding the fact that the company boasts Stuart Rose (Chairman at Ocado, ex-CEO of M&S) as Chairman.

Indeed, FatFace has fared relatively well over recent years – claiming top and bottom-line growth.

Here are the numbers…

For its full-year ended June 2013, the company took revenue of some £179m, up around 9% over the prior year; and it posted a 29% EBITDA increase at £31m.

And that trend has evidently continued at a steady pace. In the 35 weeks ended 1st February this year, FatFace took revenue of £142m. This represents growth of around 12% (some 8% on a like-for-like basis).

EBITDA over the same period came in at around £32m, up from £25m in the same period the prior year.

Those are decent numbers and shareholders can expect to enjoy a healthy piece of the company’s profits, with FatFace set to adopt a dividend policy initially targeting a total annual dividend range of between 30% and 40% of pre-tax profit.

Meanwhile, the company’s looking to capture further growth opportunities.

That includes plans to continue growing revenue generated online – the company’s online sales currently represent around 15% of total sales, up from some 12% in fiscal 2013.

FatFace also has intentions to enter international markets – starting with a trial of two to three stores in the US over the next two years as well as a launch of a dedicated website for the US.

FatFace’s timing

The company joins a series of other companies that have moved to list this year; including retailers Poundland and Boohoo.com.

If those events are anything to go by, there’s certainly investor appetite for retail players. Given its decent performance over recent years, FatFace looks set to also draw in its own fair share of interest.

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