LONDON — It’s not easy being green, but Stella McCartney is proving that an environmentally focused sourcing and production strategy can feed sales and profit growth.
The designer also has some major changes planned for London: WWD has learned that next spring, the label will move its flagship to Old Bond Street, taking over the former Joseph space.
According to documents filed this week at Companies House, the official register of U.K. businesses, turnover at Stella McCartney rose 31 percent to 41.7 million pounds in the 12 months to Dec. 31, 2016. Profits in the period were up 42.5 percent to 7 million pounds.
The numbers refer solely to Stella McCartney’s U.K. business and worldwide licensing revenue. They do not take into account wholesale sales or turnover from the brand’s directly operated stores outside the U.K. Stella McCartney is part-owned by Kering, which does not break out the full financial statements for its individual businesses.
In an interview, Stella McCartney’s chief executive officer Frederick Lukoff said while all categories performed well, the Elyse shoe — a two-tone platform brogue with a wavy sole — was a “global hit.” The shoe retails for about 580 pounds, while the sneaker version sells for 510 pounds.
Like other high-end companies with stores in London, Stella McCartney also benefitted from the steep decline in the value of the pound following the Brexit referendum in June 2016.
In another boost to sales, the company launched a stand-alone men’s wear collection in November with a big party at Abbey Road Studios. The see-now-buy-now Stella men’s wear is now it its third season.
Stella McCartney Ltd. has three directly operated stores in the U.K., two in London and one at Bicester Village, the luxury discount outlet center in Oxfordshire, England. It also has partnerships with Adidas for a sports line, Bendon for lingerie, Coty for fragrance and Kering for eyewear.
During the interview, Lukoff also revealed that in spring Stella McCartney will shutter her flagship on Bruton Street in Mayfair and move to nearby Old Bond Street in the former Joseph space.
That opening will come on the heels of new store openings this year in locations including Florence; Manhattan; Costa Mesa, Calif., and Paris. He declined to offer further details of the new London store.
Stella McCartney also released the results of its second annual environmental profit and loss account for 2016. As reported, the EP&L measures the impact of the business and its supply chain on the environment.
The total account increased by 2 percent in 2016, smaller than the growth of the business. The company said the environmental impact resulting from the rise in production and sales at the brand were largely offset by reductions in the impact from raw material use.
The company said in 2016 the total quantity of raw material was 5 percent higher compared with 2015, but the impact of the raw material production stage of the supply chain decreased by 8 percent.
The global 2016 EP&L is estimated to be a “loss” of 6.97 million euros, with 62 percent of that figure concentrated in the raw material production stage. The overall goal of the company is to whittle the “loss” down as much as possible.
Lukoff said 2016 was the first year that Stella McCartney started concentrating its efforts at the raw material level, working with materials such as sustainably sourced viscose. In previous years, the brand had already switched from virgin to regenerated cashmere fibers that would normally be considered as waste.
“We are working across all levels, and see our key achievement as reducing the impact on the environment while growing the business,” said Lukoff. “That is what running a modern business means.”
The company has continued to make strides on the raw material front. This week alone, the company touted a number of initiatives.
On Friday, in a fashion industry first, Stella McCartney was awarded a Cradle to Cradle Certified Gold level certification for its wool yarn by the Cradle to Cradle Products Innovation Institute, a nonprofit organization.
McCartney won the award for developing wool yarn in collaboration with the Italian supplier Zegna Baruffa. They focused on the entire process, from avoiding the use of pesticides on the wool, to optimizing the chemistry of the dyes, to improving the health, safety and sustainability of the materials. As a result, more than 70 percent of the yarn’s chemistry was optimized, according to Cradle to Cradle.
Earlier this week, the brand announced it was working with the Israel-based start-up developer and manufacturer, TIPA on environmentally friendly plastic.
TIPA makes bio-based, fully compostable and sustainable packaging solutions and Stella McCartney has committed to converting all of the brand’s industrial cast film packaging to TIPA plastic. Instead of remaining intact and damaging rivers and seas, the plastic breaks down into small pieces that are eventually eaten by bacteria, turning the package into fertilized compost.
To mark the new partnership, the envelopes for the invitations to Stella McCartney’s spring fashion show on Monday have been made by TIPA using the same process as the compostable plastic cast film.
In July, the company joined with Bolt Threads, a U.S.-based biotech company that makes fibers from scratch based on proteins found in nature. It aims to develop cleaner, closed-loop processes for manufacturing, using green chemistry practices.
For Stella McCartney, Bolt Threads created silk using yeast, making it vegan-friendly. As reported, the initial product of the partnership between McCartney and Bolt will be showcased through a one-of-a-kind gold shift dress commissioned for the Museum of Modern Art’s upcoming design exhibition, “Items: Is Fashion Modern?” that opens Oct. 1.