LONDON — Jimmy Choo is forging ahead with retail expansion this year, while Asia and men’s wear will continue to fire up the business, which saw a 2 percent uptick in revenue at constant exchange for fiscal 2016.
It was a year of mixed fortunes for the brand, with growth slowing in the first half due to shop renovations at some of its major units — in Manhattan, Milan, Geneva and at The Landmark in Hong Kong — as well as headwinds in the U.S. market. The brand also marked its 20th anniversary last year, which boosted its profile — and sales.
Choo has been rolling out new stores and has updated older ones with the Art Deco-inspired design by David Collins Studio. Chief executive officer Pierre Denis said there are plans to open another 10 stores this year.
In a telephone interview, he called 2016 a “heavy year” due to the cost of taking Choo to the next level of business, adding that “2016 was a huge renovation year.” Last year, the number of net directly operated stores opened was nine, bringing the total to 150 as of Dec. 31. The company refitted 16 stores in the year, with more than 45 percent of the retail portfolio now showcasing the concept.
Although the openings and renovations will continue into 2017, costs won’t weigh as heavily on the balance sheet as they did last year, and the company will reap more rewards. “By the end of this year, we’ll have one to two good shops in all key cities worldwide,” he said.
Last year, Choo marked its 20th anniversary with special projects during the Oscars and with brands including Swarovski and Printemps. Denis said the events were crucial in raising awareness and contributed to the uptick in sales growth in the second half.
Revenue for the 12 months was 364 million pounds, or $495 million, a 14.5 percent increase year-over-year at reported exchange rates, and a 2 percent rise at constant ones. Choo, which is based in the U.K., benefited from the weaker, post-Brexit referendum pound, which boosted its balance sheet and drove sales growth in the U.K. market, where customers began snapping up luxury goods the minute the pound began falling against major currencies.
Denis said in 2017, Asia and men’s wear would continue to be growth drivers, with Japan in particular showing an appetite for men’s wear.
In 2016, the main driver of revenue growth was shoes, which represented 75 percent of sales, with 22 percent from accessories, and the balance from licensing and other categories.
The company said men’s shoes and accessories are its fastest-growing category, and now account for around 9 percent of revenue. Jimmy Choo has extended its Safilo license until 2023, and scheduled the launch of men’s sunglasses and eyewear for 2018.
The relaunch of the Romy stiletto last year was a sales driver on the women’s side, while the suede and leather Miami sneakers, which come with glitter fabrics and crystal embellishments, continue to be big sellers.
The one area where growth will continue to lag is the U.S. market. Denis said Choo is experiencing the same problems as other European luxury names in the region, and added he’s not expecting any major changes in trends this year.
Last week during a trading update, Burberry flagged promotions and early sales as endemic in the U.S., and said it had refused to take part in the discounting favored by its department store partners.
In its report following the Choo results on Thursday, Barclays called the U.S. a “headwind,” and said wholesale was a drag on revenue growth due to the weakness at U.S. department stores.
Choo sells at stores including Bloomingdale’s, Nordstrom, Bergdorf Goodman and Saks Fifth Avenue. American department stores originally served as the springboard for the brand’s expansion into that market.
U.S. market aside, Barclays is bullish on Choo’s current fiscal year.
“The group benefits from an under-penetration globally, and growth is boosted by its store roll out program. This is especially important in China — where it has high brand recognition with the group seeing a good retail performance helped by the capital controls put in last May encouraging spend at home,” the bank said.
Barclays said Choo has scope for at least 250 stores and said it expects the pace of the retail rollout to continue into the long term. “This is a key growth driver with China especially under penetrated,” it said.
On Thursday, Choo said retail sales for the year climbed 4 percent at constant currency, and represented 67 percent of overall revenue, boosted by store openings and renovations. Like-for-like sales were down 1 percent in 2016, reflecting the impact of the store renovations and downward retail price adjustments in some markets.
Online also grew and represented 6 percent of revenue growth in the period.
The company will publish full fiscal results in March. Shares in the company closed up 2.3 percent to 1.55 pounds, or $2.09, on the London Stock Exchange.