By Miles Socha
with contributions from Samantha Conti
 on June 22, 2015

MILAN — By expanding its retail footprint in Asia and growing its leather goods category, Alexander McQueen aims to double in size and become a 500 million euro brand in three to four years.

That business target was revealed during a field trip on June 19 with investors, according to a research note published today by luxury analyst Rogerio Fujimori of RBC Capital Markets.

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While cautioning that McQueen doesn’t have the scale to move the needle on parent Kering’s stock performance, Fujimori said the company, “seems to have found the right balance between artistic creativity and commerciality, with its creative director Sarah Burton being central to successfully bridging the brand’s creative vision with a stronger commercial approach in recent years.”

The Canadian bank estimates that McQueen has the potential to reach 15 percent earnings before interest and taxes margin in the next few years. It should also improve its sales densities from 15,000 euros per square meter last year to 20,000 euros in the same time frame.

According to the note, McQueen aims to double its directly operated stores to 90 in the next three to four years, double the 2015 count and bumping the retail channel to 54 percent of total sales versus 36 percent last year. E-commerce represents only 2 percent of revenues.

Leather goods account for 20 percent of brand sales, trailing women’s ready-to-wear at 38 percent, but ahead of men’s at 15 percent, Fujimori noted.

RBC considers McQueen under-represented in Asia Pacific, which accounts for 22 percent of sales versus 31 percent for the Americas and 43 percent for EMEA. Chinese already represent the English brand’s biggest clientele, accounting for 32 percent of global sales. Americans come in second at 23 percent.

In another report on the Alexander McQueen business, also based on the June 19 field trip, Barclays in London estimated the sales and EBIT breakdown of all the brands in Kering’s “other luxury” category.

Balenciaga is the largest, generating 21 percent of the category’s sales, followed by McQueen with 15 percent; Stella McCartney, 10 percent; Brioni, 13 percent; Boucheron, 9 percent; Sergio Rossi, 5 percent, and Christopher Kane, 1 percent.

In terms of EBIT, Balenciaga leads the way with 25 percent; McQueen with 16 percent; Stella McCartney, 13 percent; Brioni, 11 percent; and Pomellato 7 percent.

Barclays added: “Within the smaller luxury brand portfolio, we believe it is important to highlight that each luxury brand has the added advantage of shared expertise. We see this as a significant competitive advantage for the growth potential of the smaller brands in particular in terms of supply chain and logistics.”