LONDON — It was a year of ups and downs for Stella McCartney Ltd., which posted modest growth in sales and profits in fiscal 2017, and saw its damage to the environment decline by 8 percent compared with the previous year.
The London-based company, which will split fully from joint venture partner Kering in 2020, saw revenues in the U.K. climb 2.1 percent to 42.5 million pounds, while profits were up 1.5 percent to 7.1 million pounds in the 12 months to Dec. 31, 2017, according to an annual report filed at Companies House, the official register of U.K. businesses.
The figures refer to McCartney’s U.K. business and to royalties from licenses. McCartney’s full set of numbers is consolidated into Kering’s accounts and is not disclosed.
In an interview Frederick Lukoff, chief executive officer of Stella McCartney Ltd., said growth in 2017 was slower than in the previous year, when sales were buoyed by the weak pound which had fallen following the Brexit referendum. He also stressed that the 2017 figures only painted a partial picture of the business.
Growth last year came from a variety of places, including the launch of the Eclypse sneaker — the one with the pumped-up soles and rubber from renewable resources — and traditional categories such as ready-to-wear, handbags and the Kids collection.
Lukoff added that the first men’s wear collection, which launched at the end of 2016, had been received well, in Japan in particular.
The company continued its retail rollout in 2017, opening units in Paris, Manhattan, Florence, South Coast Plaza, and expanding its square footage at the Dubai Mall.
The retail streak continued into 2018, with openings on Old Bond Street in London, in Macau, Singapore, three outlets in China and at the Wynn Las Vegas. Most of the units are directly operated.
The company has also begun opening stand-alone Kids stores in Asia, and the plan is to roll them out in the West, too. Lukoff said the Kids business has been showing “remarkable growth every year, and now it is ready to stand on its own feet,” with more stores set to open in China in the next months.
Lukoff confirmed the business is on track with its split from Kering: Stella McCartney will be legally separated from the French luxury giant as of March 28, 2019. The business will have a further 12 months to work with Kering, if it needs its services.
With regard to McCartney’s latest environmental profit and loss account, the numbers fell — and that’s a positive thing. The brand’s negative impact on the environment was down 8 percent to 7.38 million euros, compared with the previous year and despite the 2.1 percent increase in revenue.
Kering, which also does an EP&L audit at group level and with other brands in its stable, models the impact of land use change and environmental pollutants on human well-being and converts them to monetary values.
Stella McCartney Ltd. said raw material production continues to be the biggest driver of negative impact across the supply chain, although in 2017, the impact was 18 percent lower than in the previous year.
The brand said it was able to reduce the raw material damage by eliminating virgin cashmere, a “high-impact material” due to the over-grazing of goats and the desertification of grasslands.
“To put it simply, it takes five goats to make one cashmere sweater,” said Lukoff. “By comparison, you can make five sweaters out of one sheep, so the impact on the environment from your goats is way bigger than that of the sheep. By working with (cashmere waste), we diminish that impact dramatically.”
The company also increased its use of steel and aluminum alternatives to its traditional brass chains as those metals cause much less environmental damage in the ore extraction phase.
Stella McCartney has also been ramping up the use of recycled materials and repurposing fabrics from previous years so that they do not go to landfill. There is still room for improvement: The impacts associated with the operations of Stella McCartney stores, offices and warehouses increased by 20 percent due to the new store openings.
The company said it’s looking at working with plant and animal fibers in a way that is regenerative and improves the ability of soils to act as “carbon sinks. Regenerative agriculture and regenerative grazing practices have the potential to be natural climate solutions,” the statement said.
Stella McCartney Ltd. also pointed out that as it prepares to become an independent entity, it will continue to collaborate with Kering on sustainability projects and undertake the EP&L, which was developed by Kering. “We have already begun the process of fully integrating the EP&L tool into the business,” the company said.
Asked if Stella McCartney Ltd. could ever achieve zero impact — or stretch beyond that and report a positive EP&L, Lukoff said that’s the aspiration. “Zero would be, ideally, a company that is truly sustainable. After that, you could keep on going on without drawing anything from nature. Every year we will endeavor, for sure, to reduce our number and become zero.”