Fat Face Ltd.

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Fat Face Ltd.

P.O. Box 1
Havant
PO9 2UA
United Kingdom
Telephone: ( +44) 870 6000 090
Fax: ( +44) 23 9248 5550
Web site: http://www.fatface.com

Private Company
Incorporated: 1968
Employees: 500
Sales: £45 million ($60 million) (2003)
NAIC: 448150 Clothing Accessories Stores; 315228 Men's and Boys' Cut and Sew Other Outerwear Manufacturing; 315999 Other Apparel Accessories and Other Apparel Manufacturing; 339920 Sporting and Athletic Good Manufacturing

Fat Face Ltd. is one of the United Kingdom's fastest-growing retail sportswear companies. Targeting the active lifestyle, outdoor sports enthusiast, Fat Face produces a full range of functional sportswear fashions, including clothing and outerwear and related accessories. Fat Face traditionally targets the complementary skiing/snowboard and surfing/windsurfing and sailing markets as well as enthusiasts of mountain biking, hang gliding, tennis, and other sports. This strategy enables the company to build steady sales year round. Fat Face has long resisted distributing its products through traditional third-party wholesale and retail channels, preferring to maintain tight control of its retail sales—and brand image. Since 1993, the company has built up an extensive network of retail shops through the United Kingdom and Ireland, with more than 80 shops in operation at the end of 2004. The company also operates four shops in the French Alps ski resort region and has plans to boost its total network of shops to more than 150 at mid-decade. While founders Jules Leaver and Tim Slade retain 60 percent control of the company (the remaining is held by investment group Isis), Fat Face is preparing to launch a public offering, perhaps as early as 2005. As part of that process, the company has boosted its management with the 2003 appointment of Louise Barnes, formerly with Monsoon, as CEO, and Stephen Sunnucks, former CEO of retail rival New Look, as non-executive director in 2004. Fat Face's revenues, growing at an average of 50 percent annually since the mid-1990s, topped £45 million ($60 million) in 2004.

Ski Bums in the 1980s

Like many of their peers in England, Jules Leaver and Tim Slade were avid skiers who went to work in the French Alps in order to finance their passion for the sport. Leaver had graduated from Plymouth University with a degree in business, then took off for France in the late 1980s. There, he met Tim Slade, who had completed a three-year stint as a policeman before hitting the slopes himself.

Slade and Leaver met in 1988 while tending bar at Meribel and discovered that they shared the same predicament. Both had been trying to earn enough money to support their skiing activities, and both found their schedule of waking early to ski and tending bar late in the night too exhausting. They began discussing ways of earning a living on the slopes and hit upon the idea of selling T-shirts and other clothing.

Rather than sell existing T-shirt designs, the pair decided to create their own. They hit on the idea to create so-called "Been There Done That" apparel—or, as Leaver himself described it: "We printed some T-shirts and sweat-shirts with messages pertinent to certain resorts and sports." The pair found a manufacturer in Leicester, England, willing to produce short runs of T-shirts according to their design and another company to print the slogan "Meribel 88" on the back.

Slade and Leaver literally began hawking their shirts on the slopes at Meribel and quickly sold out of their initial order. The money they earned enabled them to place larger and larger orders. Before long, Leaver became the pair's salesman, remaining in Meribel and selling the shirts from a backpack behind the bar where he continued working. Slade meanwhile went back and forth between England and France to retrieve and deliver new orders for their merchandise. As Leaver admitted: "Initially we were surprised at the demand for this kind of kit. But the demand quickly started to out-strip the supply, and it became obvious that there was a good business opportunity there."

Still in their early 20s, Leaver and Slade seized on the opportunity for travel that their new business afforded them. At the end of the 1988 ski season, the pair decided to travel around the world rather than return to England. Sales of their T-shirt and sweatshirt designs, adapted to each new location, provided funding for Leaver and Slade's travel and sports interests for some five years.

By 1993, Leaver and Slade had begun to look more seriously at their business. "Once we began to understand our marketplace—it was about affluent and aspirational people—then we realised that if we could tap into it, the business would probably catch fire. That was when we began to think seriously about it."

Founding a Retail Business in the Early 1990s

Returning to England, Leaver and Slade decided to open a retail shop for their ski apparel designs and founded Fat Face Ltd. Named after the Le Face ski slope in France's Val d'Isere, the company was financed with £12,000 raised by the sale of Leaver's Volkswagen van and a number of stock shares held by Slade. The partners quickly recognized that if they limited their inventory to the ski market, they would be in business only six months per year. Instead, Fat Face soon added a line of clothing targeting the summer-oriented surf and windsailing markets.

The company's first store opened on London's Fulham Road in 1993. Before long, Fat Face developed into a concept embracing a wider variety of active lifestyle and outdoor sports apparel. "Having a mixture of High Street and activity-based portfolio has worked very well for us," Leaver told startups.co.uk, especially as it appealed to a specific clientele. "The average age is early 30's, with an even split between men and women. Because people at this sort of age are often into a profession, coupled with the fact that watersports and snowsports are generally enjoyed by people with more disposable income, it has kept us in good stead."

Another important factor in Fat Face's rising sales was the enthusiasm Leaver and Slade shared with their customers for the active, outdoor lifestyle. Recognizing this, Fat Face's adapted its hiring policies to recruit sports enthusiasts to staff their stores. As Leaver pointed out to the Sunday Times: "When you buy a Fat Face product, you're not just buying the fleece, you're buying the chat in the shop about the quality of the snow in Val d'Isere or the surf in Cornwall. We can't afford to compromise customer service with growth."

Indeed, even as Fat Face began expanding its retail network, adding stores close to the United Kingdom's ski resorts and surfing areas, Leaver and Slade remained highly accessible to their customers, often taking phone calls and suggestions. The partners also recognized the importance of maintaining their brand's integrity as they steered the company's growth through the mid-1990s.

Fat Face rejected wholesale expansion, at least for the short-term, refusing to make distribution deals to place their brand in the larger national and international retail market. As Leaver explained: "We could wholesale the hell out of it and be in every ski or surf shop in Europe in a year. Within two years we'd have trashed the brand."

Instead, the company chose to roll over its steadily growing profits and cash flow into expanding its own retail store network. By 1995, sales had already risen to £750,000 pounds. Over the next three years, the company posted an impressive average annual growth of 85 percent, reaching £4.8 million in annual sales. The launch of a mail order business and the company's e-commerce Web site provided a new boost to its growth, and by 1999 the company's revenues had topped £9 million. By then, its store network stood at 31, including three stores in the Alps.

Expanding Lifestyle Brand in the 2000s

Fat Face now began preparations to expand. The company remained committed to its policy of avoiding wholesale distribution deals, emphasizing Fat Face as a lifestyle brand, as opposed to a fashion brand. As Leaver pointed out to the Sunday Times: "If you make the connection with lifestyle, not fashion, there is no reason why you can't sell for life, from toddler to grandpa."

Fat Face took a step toward that goal, launching a new line of children's clothing under the name "Brat Face" in 2000. The company then turned to outside investors to fuel the next phase of its expansion effort, selling a 40 percent stake to Friends Ivory & Sime Private Equity (later Isis) in exchange for £5 million in expansion capital.

The new funds enabled Fat Face to step up its store opening schedule. By the end of 2002, the group operated nearly 50 stores. The company's sales grew accordingly, and by the end of 2003, as the company's retail network topped 70 stores, Fat Face posted annual revenues of more than £30 million.

The appointment of former Monsoon executive Louise Barnes as company CEO in 2003 represented a new milestone for the company. Leaver and Slade had begun to distance themselves from the day-to-day operations of their company in order to make way for a more professional management structure. Barnes' arrival fueled speculation that the company was preparing a public offering in the near future.

Company Persepctives:

1988 . . . Meribel, French Alps . . . Two ski bums . . . Jules and Tim . . . money's running short . . . design a few sweatshirts . . . sell them from a rucksack . . . ski until Spring . . . head for the beach . . . Fat Face is born. Well guys . . . a few years later and we're still around. The kit remains true to those early days—designed for lifestyle and made to last. So if you ski, surf, sail, climb, fly, mountain bike, play tennis or just love getting amongst it, then Fat Face gear is for you. Remember . . . life is out there. . . .

Under Barnes, Fat Face launched a more aggressive store expansion drive, with plans to top 100 stores by the end of 2004 and expectations of reaching 150 stores soon after. Barnes also led the development of a larger store format. The company had also taken its first steps toward developing a global position, registering its trademark in a number of foreign markets, including North America, Australia, and New Zealand. By the end of 2003, the company's sales had topped £45 million.

Fat Face's public offering appeared increasingly imminent in late 2004, especially after the appointment of former New Look chief executive Stephen Sunnucks to the company's board of directors. Analysts now expected the company to list its shares by 2006, and possibly as early as mid-2005. Having literally grown from rags to riches, Fat Face had positioned itself as one of the world's fastest-growing lifestyle brands for the 2000s.

Principal Competitors

GUS PLC; Arcadia Group Ltd.; Coats Ltd.; JJB Sports PLC; Top Shop/Top Man Ltd.; Mr Price Group Ltd.

Key Dates:

1988:: Tim Slade and Jules Leaver begin selling T-shirts in order to fund their skiing season at Meribel.
1993:: Slade and Leaver open the first Fat Face store on Fulham Road in London.
1995:: Company sales top £750,000 as Fat Face expands its retail network.
1999:: The launch of mail order and Internet sales spur growth to £9 million; the company's retail network tops 30 stores.
2000:: Slade and Leaver sell 40 percent of the company to Isis in exchange for £5 million in capital funding.
2003:: Louise Barnes, formerly of Monsoon, is appointed as CEO and plans to expand the company's retail network to 150 stores.
2004:: Fat Face appoints former New Look CEO Stephen Sunnucks to its board of directors, sparking expectations of a public offering.