Fat Face: Louise Barnes
The company's chief executive on the latest stage of its evolution
Fat Face is a classic example of a business where the founders reach a plateau in terms of ability or desire to take it to a higher corporate level.
Ski and sail fanatics Jules Leaver and Tim Slade ran their outdoor lifestyle clothing brand for 15 years, after starting in 1988, at 23 and 22 respectively, selling T-shirts to supplement their skiing in the French Alps. The company opened its first retail outlet in Fulham in 1993 and grew organically from then on, gradually building the brand and the number of outlets. So when it came to an ambitious expansion programme they resolved it was time to restructure the senior team, cut back on their involvement and bring in heads with experience of such a growth phase.
Last year they hired a chief executive and a finance director, hastening the likely exit of the company's investor, ISIS Equity Partner (previously Friends Ivory & Sime Private Equity), as well as offering the route to a realisation of some of the company's value for themselves.
Former Monsoon brand director Louise Barnes was the person charged with bringing those plans to fruition and took over in March of last year. Monsoon itself underwent a rapid rise in its high street presence throughout the 1990s and Barnes played a central part in the company's expansion. Equally, finance director Stuart Owens had spent numerous years in high profile posts with both PC World and Dixons, as well as running small businesses in Spain, France, Italy and Greece.
With 80 outlets across the UK and four in France, and sales of £30.5m, it was perhaps inevitable that at some point the pair would move for somebody with the ‘been there, done that' experience of high profile retail chains, and step back from the day-to-day operational side of the business.
After all, the guys who charmed the City by cheekily opting out of donning suits and ties for meetings in the Square Mile, were seemingly never really cut out for conventional corporate life and the extensive administration and bureaucracy that goes with, for example, market listings. While incredibly serious about their business and ideals, achieving high acceleration growth was perhaps secondary to enjoying some of their money on the slopes or out on the water, which was arguably a key ingredient in the increased popularity of the brand. By the very nature of how they spend their free time, Slade and Leaver share an affinity with their customers. They understand exactly what they want or need and how they choose to live their lives. In turn shoppers feel they're buying from a company with a face and into the lifestyle they crave.
And now, one year into the job, Barnes is perfectly placed to offer an assessment of the company's state pre- and postrestructure, how Fat Face can continue to grow and what part its founders can play once they've handed over the reins.
Barnes acknowledges that what Slade and Leaver have created is “too big for the skills they've got”, but says their joint role as brand guardians aids her work. “They are the brand. It's not like Coca Cola – they are still there and make sure it's on track. As they get more confident they will leave an increasing amount to me and Stuart, although beforehand I was slightly sceptical they would leave me to get on with it.”
When we speak she's about to take her first holiday, venturing to Barbados. Unlike the founders, though, she's not going for the water sports, but to relax, read by the hotel pool and spend time with her three children.
And prior to joining, she didn't know too much about the Fat Face range. “They weren't on my shopping list,” she admits. And she had to do some investigation into Slade and Leaver too. “I saw a photo in Outthere (Fat Face's internal magazine) so knew what they looked like, but didn't meet them until I went for a meeting at ISIS's offices in the City.”
But she defends her credentials. “I love shopping and travelling, and creative stuff like doing up houses. It doesn't mean I don't understand the brand. We're not living the lifestyle, we're selling the dream,” she says.
Her target is to make Fat Face ‘future proof'. In the fickle world of retail, the caché of a brand can vanish almost overnight. Particularly with niche names where the customer's emotional attachment is lost as a company cashes in on its standing and overexposes itself. There's also the infrastructure to consider and whether the business can cope with such an extensive chain, between 20 and 25 store openings a year, and an enlarged workforce.
This is truly a crossroads situation and Barnes is all too aware of the dangers. “We could let it run away and expand, but the back office isn't very sexy and we're making sure we have strong management teams in IT, distribution, marketing, and home shopping. We need to be able to change the processes, procedures and controls without changing the culture.”
This, you imagine, is quite a challenge, particularly when you have a workforce used to operating in a certain way and who have perhaps had more inspirational leadership than structure. But Barnes claims staff have been receptive to change and appreciate the clear direction. “You have to communicate the vision,” she says. “And now our three year strategy is down on paper, everyone knows what they have to achieve every month in terms of cash and margins, although it was quite a test.”
“When I first got here only a small number of people in the business talked about how we were performing. There was a Monday review of what we'd sold. Now we review stores and potential sites, sales, forecasts for the month and where we are, and promotions.” Not rocket science, but still something to be handled delicately.
To gain that extra buy-in, Barnes introduced a profit sharing scheme, where previously only management were entitled to a bonus. Store employees now receive highly structured training on window layouts, visual merchandising and product displays. She says a strong marketing strategy didn't exist when she arrived and instead customers could ‘buy a T-shirt and win a bike' or something similar. “It wasn't geared closely enough to commercial activity. Now we aim to capitalise earlier on half-terms and bank holidays.”
Mystery shoppers have also been introduced to check on in-store customer service with performances reviewed on a regular basis. And Fat Face's team strategy days have been outsourced to expert third parties to get the most out of the company's managers, with days incorporating windsurfing to help “make you remember why you're doing it”.
She also appraised the relationship Fat Face had with third parties and admits private companies are sometimes reluctant to share what they're doing. “Partnership means sharing what you do. We are now much clearer and they are reviewed and told where we are going. It's a great two-way process and we get valuable feedback from property agents, garment suppliers and others. It shouldn't be ‘customer' and ‘boss' – humility and integrity are important.”
That sense of integrity was also influential when Barnes resisted suggestions she might move the company's head office from the Hampshire coast to London. She successfully argued it was important to be near to where people are living the lifestyle and offers staff the opportunity to take part too.
There was also the fact that her 65 mile journey from her south west London home takes little more time than her seven mile trip across town to her previous offices in Paddington. By purchasing a second home on the Hampshire coast she claims she now has the best of both worlds – much, it would seem, like Leaver and Slade.
FAT FACE: AT A GLANCE
1988: Tim Slade and Jules Leaver sell T-shirts in French ski haven, Meribel. Leaver takes care of sales, while Slade travels back to a firm in East London to collect stock
1993: Leaver sells his VW van and Slade sells some shares, raising the ?12,000 needed to open their first shop in Fulham, West London
1995-1998: Sales rise 85% from ?760,000 to ?4.8m
1996: Opens headquarters in Havant, Hampshire 1998: Launch of childrens? clothing range under names Brat Face and Baby Face
1999: Slade and Leaver secure ?3.5m expansion capital from Friends Ivory & Sime Private Equity (now ISIS Equity Partner in exchange for 41%)
2000: Opens 30th store, with 195 staff and a ?9.6m turnover
2002 Hits 50 store landmark, with 428 employees
2003 March: New chief executive Louise Barnes is hired. Slade and Leaver begin to step back from day-to-day operations
2003 August: New finance director Stuart Owens joins, prompting speculation about the company?s intentions to list on the London Stock Exchange
2003 October: Announces full-year operating profits of ?3.1m, 28% up on the previous year, on sales of ?30.5m, up 42% on 2002
2002 EXPANSION PLANS
The first year has been a relatively steep learning curve for Barnes. Already, during her tenure, the company will have opened 21 new stores by its year-end in May. It had previously opened 16 in 2002-03 and 12 the year before that, so this is ?going for it? as Barnes puts it herself. ?We could easily have 150 stores and as yet only have 50 in real shopping towns. The acquisitions list is huge.?
She admits that, while she offered direction at Monsoon, others took care of delivery. ?I was concerned about buying shops without the support there, but you soon find you know more than you think. It?s about putting outlets in the right places, so there probably won?t be a Fat Face in Watford or Basingstoke,? she says. ?It?s about keeping it a bit of a club.? She thinks most people wouldn?t realise the company has more than 80 stores and is eager to retain that small business feel, where customers believe each outlet is their own mini-discovery.
Focusing on affluent market towns, where Fat Face has been very successful, is key to its expansion strategy and Barnes says the company currently lacks a presence in Norfolk and the east coast, Scotland, Wales, Dublin and the Lake District, which she plans to rectify. It?s these areas where outdoor activities are popular and the company?s customer demographic tends to congregate.
It has also opened a store in Gatwick?s south terminal, to raise its international profile, and has tweaked the shop to make the most of the airport?s footfall. ?It?s all travel based,? confirms Barnes. ?The idea is you could turn up with nothing and buy everything for a trip away.?
There?s also some scope for a limited European expansion. There are already four Fat Face stores in the French Alps which, given the company?s origins, seems entirely appropriate. For further growth abroad she?s weighing up the pros and cons of wholly owned stores, a franchise operation or appointing licensed agents. ?Whatever we do will be done slowly and carefully. It?s not something profitability hangs on, but will help prove we?ve got longer legs.?