Global ambitions for Karen Millen

Karen Millen’s quest for world domination, in the fashion stakes at least, gained further momentum last week when the womenswear retailer unveiled its newest recruit – its first global retail director.

From its tower block in Shoreditch, east London, the retailer has been rapidly building a global empire. It now trades in 44 countries, from Kazakhstan to Kuwait. Five years ago, 5% of its sales came from overseas; now the figure is more than 60%, and still growing.

When joint managing director Gemma Metheringham joined the retailer 12 years ago, Karen Millen was predominantly a UK business, but she saw its potential to travel well.

“Karen Millen has always felt like an international brand, there’s always been a level of polish to it,” she says.

“It always felt like Milanese or Parisian fashion.” Its international expansion has been rapid over the past decade. Now only a quarter of its 350 stores are in the UK.

New global retail operations director Sian Hession, former Long Tall Sally chief executive, is set to further propel overseas growth through the company’s ‘showcase’ stores. Hession will spearhead a project managing 40 of Karen Millen’s flagship shops, from Regent Street to New York, to boost their contribution to the business.

Best practice from this project, in disciplines from visual merchandising to online engagement, will be shared with other stores as the premium retailer further expands.

Metheringham says: “The mobility we have these days means someone in China is as likely to see our brand in Paris as they are in Beijing. To protect our brands we need to focus on our showcase stores around the world and offer the best brand experience in those stores.”

Spun off

Karen Millen’s hire comes a year after the chain was spun off from former owner Aurora Fashions, the company behind Oasis, Warehouse and Coast, to facilitate its global expansion. Referring to the split, Metheringham says: “In terms of what the brand is and the way we run the business, nothing’s changed. But in terms of feeling accountable and driving our own strategy, it feels really different.”

The spin-off fuelled rumours that a sale of the premium womenswear chain might be on the cards. Karen Millen and Aurora are 90% owned by nationalised Icelandic bank Kaupthing, following the collapse in 2009 of former owner, Icelandic investment group Baugur. The spin-off of Karen Millen will make it easier to sell it separately from the rest of the Aurora group when Kaupthing kick-starts the process of divesting its assets.

With other Icelandic banks offloading retail assets – Landsbanki sold frozen foods specialist Iceland this month while the sale of jewellery group Aurum is progressing – speculation is mounting that Karen Millen could be next.

Metheringham insists, however, she has been given no indication as to when a sale will happen and it is business as usual for the retailer.

That means further international expansion for the chain. The vast potential of China is next on the list, with two stores opening, Beijing in June and Shanghai in the autumn, along with a website.

Metheringham has high hopes for the region and thinks that its emerging middle class offers a big opportunity for premium brands like Karen Millen. “There’s a growing number of young, successful, professional women who want to buy into designer brands,” she says. “Luxury brands like Louis Vuitton and Burberry are unattainable for this [middle class] market but there’s lots of opportunity for bridge brands.”

Shopping malls are being pitched specifically for the retailers of lines that straddle the high street and designer, according to Metheringham.

In Hong Kong, the company’s like-for-likes have soared 59% over the past year, a surge the Karen Millen boss puts down to Chinese tourists. But the retailer’s ambitions do not begin and end in the Far East. And it continues to eye new target markets, such as South America, South Korea, India and Canada.

“In every market there’ll be a Karen Millen girl. Our clothes are bold and playful and our clients aren’t afraid of standing out,” Metheringham says. “All of us want to be a Karen Millen girl at some point. We all want to buy the shoes which are a bit bonkers but make us feel good sometimes.”

Metheringham joined Karen Millen from Next where she was head of design, a role she says was her dream job when she was at college. It was her second stint at Next after a spell working on its Directory. “I loved it – it was like designing a fashion magazine,” she says. However, she was finding the environment too corporate. Karen Millen represented a change to that structure.

“It ticked all the boxes,” she says. “It was small, private, creative. It’s changed dramatically during that time but it’s still retained that creative environment that I love.”

Focus on design

Metheringham is a self-proclaimed product person and believes that design is still at the heart of the Karen Millen business. The retailer has a working atelier at its head office and designs and cuts most of its patterns in-house. “I still sit in the middle of the design studio,” she says. “That’s always been the hook about the brand for me. We’re enabled to put so much love into the product.”

The focus on product is paying off. In its most recent accounts, pre-tax profit jumped to £10.2m for the 13 months to February 28, 2011 against a £1.9m loss in the comparative 11-month period. Sales soared to £189.3m, against £140.1m in 2010.

When Metheringham joined the retailer it was still run by its founders, designer Karen Millen and then husband Kevin Stanford, chairman of All Saints. The pair, who set up the business in the early 1980s selling tailor-made shirts via parties in people’s homes, sold their stake to Icelandic retail investor Baugur in 2004 for £120m.

Since then, Karen Millen has ramped up expansion, while plenty of overseas opportunities remain. But Metheringham says that in its home market store numbers will remain relatively static.

“I think the brand is a destination and our stores should be destinations,” she says. “It’s not about there being lots and lots of stores. You want something that’s quite special.”

She believes the retailer’s growing online business makes it more important than ever that its stores showcase the brand. “The web will make stores more about brand experience and offering something great – a treat.”

Metheringham says Karen Millen is focusing on “using ecommerce cleverly” rather than new space to drive sales. For instance, the retailer has stepped up the level of integration between the web and stores during the past year and launched Karen Millen Concierge. The move opens up store stock for web customers, meaning a Karen Millen product can be delivered from a store within 90 minutes if desired. Previously, online sales were fulfilled from the central distribution hub only, meaning customers were left disappointed if a product was out of stock in the warehouse.

The chain is also using technology to enhance the store experience. After a successful trial, it is rolling out iPads in its stores, which will give staff access to more product information, and mobile point-of-sale systems.

Metheringham says the technology has allowed its staff to improve the one-to-one service they give to customers. They can carry the entire Karen Millen catalogue around with them and discuss the product in greater depth. She says the technology will also be integrated into its international stores.

There is still a big opportunity to extend the Karen Millen brand into new areas. Karen Millen already has a thriving accessories business – about 18% of sales come from the category – and Metheringham sees the potential to grow that further. The brand is opening a concession in House of Fraser’s revamped accessories department this year and is exploring developing similar tie-ups with European department store groups.

The chain is also expanding its accessories range. To celebrate its 30th anniversary last year, it launched a series of gifts, such as crystal-encrusted iPhone ­covers, which had “phenomenal” sales, according to Metheringham.

However, she has bigger plans to grow the Karen Millen brand. “I would still really love to do lingerie,” Metheringham says. “I think that would be a great brand extension but it’s about finding the right route to market and right person to develop it. And I would love to do fragrance and bodycare.”

The retailer’s customers will, it hopes, have as big an appetite for Karen Millen foot cream as they do for its footwear.