The Lust for Luxe

Never mind the gloomy specter of recession in Europe. Many luxe footwear brands are riding the sales wave, stepping up their efforts to outdo one another in 2012.

Not only do growing brands intend to expand doors in hot markets such as China but they also plan to explore emerging ones in such nascent locales as Kazhakstan. Competing to grab market share, luxury labels also are creating more exclusives and improving customer service in branded shops.

The moves come as fashion titans such as LVMH Moët Hennessy Louis Vuitton, Burberry and Richemont recently reported revenue increases in the double digits, with much of that growth driven by shoes and accessories. The category’s strength is also translating into robust results for footwear-only players, from Christian Louboutin and Manolo Blahnik to Nicholas Kirkwood and Charlotte Olympia.

“The shoe business is just excellent, as there’s such tremendous style in shoes right now,” said Maggie Gilliam, founder and principal of consulting firm Gilliam & Co.

Experts agreed that as the broader luxury market continues to experience a resurgence, footwear brands will likely experience a steep increase in demand.

Christian Louboutin, for one, is already seeing enthusiasm for his shoes surge to the point that it’s taxing his production capabilities.

“Thanks to this strong demand, our [inventory] level has been very low. We are working to increase our production capacity,” said Alexis Mourot, the firm’s COO. “We also are expanding our men’s business with new branded men’s stores thanks to great feedback [we have received on the first one].”

Other designers are making bold expansion moves as well.

Stuart Weitzman is launching a higher-priced line, called SW1, this fall, marking his first attempt to deliver accessories at price points on par with the likes of Manolo Blahnik and Jimmy Choo. The plan, said the brand’s parent company, The Jones Group Inc., is to create a major luxury brand across categories and across department stores outside the U.S.

“Stuart wanted something with a real strong creative [direction that could act] as an umbrella for his brand,” said Jones Group CEO Wes Card. “He wants this to be an international launch first and really get the brand [known] from that perspective.”

And emerging players are moving to tap into the luxury craze, too. Alexandre Birman, whose line previously sold as a contemporary label at Bergdorf Goodman, earlier this month moved to the designer shoe salon — a testament to the success of shifting toward higher-end production in Italy, as well as increased local demand for his exotic skin styles.

“We had 10 percent sell-through on the first day,” the designer told Footwear News.

For many brands, the U.S. and Asian markets continue to be hot spots, as firms carefully navigate around Europe during the challenging economic period.

For Manolo Blahnik, who recently bowed a special collaboration with Lane Crawford in Hong Kong, the U.S. continues to be the strongest market, said George Malkemus, the brand’s U.S. president. “We’re booking encouraging increases for pre-fall and had substantial growth throughout the world for spring ’12.”

At Louboutin, which plans to bow 14 new doors this year, Mourot said all regions are reporting strong double-digit sales increases, with the U.S., Asia and Middle East leading the way. And even with Europe’s economic woes, Mourot told FN he is unfazed, as the challenge is more about “finding very good Italian craftsmen who can manufacture our shoes.”

According to Peter Harris, president of Hong Kong-based Pedder Group, “China clearly has further potential as a consequence of the emergence of retail demand in the second- and third-tier cities. [Even if] Hong Kong and Singapore may be at a point of maturity, other countries such as Indonesia, Malaysia and Vietnam [represent new] demand in line with increased affluence.”

Chinese shoppers account for 25 percent of luxury sales worldwide, a figure that may grow to 46 percent by 2025, according to recent research by Goldman Sachs Group. Experts noted that up to 40 percent of the volume of flagships in European capitals are supported by Chinese tourism.

Those numbers have encouraged European labels such as Ferragamo, which generates more than 30 percent of sales in Asia, to open new and larger stores in that region in 2012.

“All [Ferragamo’s] stores in China are too small, or at least inefficient in terms of profitability, generating 1.7 million euros per store when the sector average is 4 million euros,” said Thomas Mesmin, luxury analyst at the Crédit Agricole Group’s Cheuvreux arm.

British designer Rupert Sanderson said his brand is performing best in Japan and China, prompting him to look into franchise options in new markets.

“We are also laying the foundations for a second store in Hong Kong in 2013,” Sanderson said. “We have seen expansion in France, Italy and Germany, and we don’t really ever feel that the demand for luxury is low.”

Younger designers, too, are finding good reason to be opportunistic. Nicholas Kirkwood, for instance, still counts the U.S. as its biggest growth market currently, but the brand is looking to plant its feet in farther-flung regions as well.

“For over a year now, we haven’t looked at mainland Europe as our first-priority growth market,” said Christopher Suarez, managing director for Nicholas Kirkwood. “We’re in talks with a number of people about franchises in the Middle Eastern market, potentially distributing in Japan and Kazakhstan; and concessions in Hong Kong, China and Singapore.”

The exec noted that the label also could launch men’s styles toward the end of 2012. “We are such a small company we haven’t met 97 percent of the customers that we potentially could have,” added Suarez.

 

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