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| Mulberry Store Beijing |
Luxury British brand Mulberry has opened its first Asian flagship store in Singapore, despite issuing a profit warning earlier this week, in fact just a day after Mulberry Group PLC’s shares plunged by a quarter on a profit warning, the British fashion house opened its first Asia flagship store in Singapore, hoping to cash in on the region’s growing demand for luxury brands.
The flagship store located at Mandarin Gallery, in Singapore’s renowned shopping district along Orchard Road, spans across two-storeys and has been designed to reflect Mulberry’s dedication to craftsmanship and a sense of natural tactility, with limestone-tiled floors, curved timber follies and brass accents.
Designed by British architects Universal Design Studio the store has its own bespoke characteristics, such as a silver quartz stone cash desk in the service area, as well as a feature wall inspired by the brass folly in Mulberry’s London flagship. The Singapore flagship store stocks the full collection of core and seasonal accessories, as well as womenswear and shoes. The boutique will also sell a limited-edition pink glossy goat leather version of the Del Rey bag created to celebrate the store opening as well as the 40th birthday of Mulberry’s Asian partner Club 21.
The store will complement Mulberry’s offerings across the region – including its three existing stores in Singapore, 24 in South Korea, and other stores in Hong Kong, Japan and other key Asian markets. But the flagship store in Singapore, spanning almost 4, 000 square feet and spread across two floors, will be the first to offer the full range of Mulberry products—an indication of the luxury brand’s push to grab a bigger slice of the Asian market
Currently, 60% of Mulberry’s business is focused on the U.K.—a percentage Mr. Guillon wants to whittle down to 20%, hoping for a majority of sales to come from outside the brand’s home base. To that end, Mr. Guillon is trying to promote Mulberry’s U.K.-crafted bags as investment pieces, which retail for about US$1,500 and up.
Analysts say that the brand may be too late to the Asian game. It has one store in China and plans to open three more by the year’s end, while competitors already have a strong foothold there.
“In Asia, Mulberry is still very small and operates through a partner,” said Philip Dorgan, a London-based analyst at Panmure Golden. “It only had 14 stores in Asia-Pacific at the end of the last financial year, so while it is late, it doesn’t need to have that many to grow the contribution very fast.’’
Mr. Dorgan added that Asian customers often flock to Mulberry’s London stores to purchase the brand’s bags, and “time will tell” whether they can be as successful in their latest push, even as wholesale orders continue to be sluggish.
Damped demand in even the most robust of markets may complicate matters for Mulberry: China’s economic slowdown is hitting consumers, even as luxury brands make bigger investments there. Overall retail sales in China in September rose 14.2% on-year, which is slower than the 17.7% climb in September 2011, according to China’s National Bureau of Statistics.
Mulberry’s newest store in Singapore is crucial for its business, Mr. Guillon says, particularly because of the city-state’s status as a destination for shoppers from outside Singapore, particularly wealthy Indonesians, many of whom make frequent trips to the city and have money to spend as Indonesia’s economy grows 6.5% a year.
The profit warning Tuesday was a red flag, though. Mulberry now expects revenue growth for the current financial year – ending in March – to be below market expectations, though profits before tax for the company in the last fiscal year were up 358% to £23.3 million (US$37.3 million).
Mulberry blamed the results largely on a fall in wholesale shipments and “cautious ordering by franchise partners” in Asia, but it is confident it has room to grow in Asia and in the U.S., where top-tier brands have long enjoyed comfortable profits. Prada’s 2011 profits, for example, rose more than 72% on strong Asia sales, and LVMH Moet Hennessy Louis Vuitton SA MC.FR +1.56%– behind the Louis Vuitton, Givenchy and Celine brands, among others – saw a 16% sales growth last year, citing Asian demand.
Mulberry is known for tie-ups with celebrities like British television presenter Alexa Chung and singer Lana Del Rey, whose eponymous bags have stirred a buzz in the fashion world. Ms. Del Ray graced the flagship store’s opening event Wednesday, mobbed by hundreds of fans outside the new boutique on Orchard Road. Many vied to get their hands on a limited-edition fuschia Del Rey bag, priced at £795 (US$1, 276) and created for the store’s opening.
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| Alexa Chung with bag named after her Alexa patent |
But the brand’s low-key, practical British look may dissuade some Asian buyers who are unwilling to pay more than US$1,000 for a lesser-known bag without a flashy design or monogrammed label. Mr. Guillon is banking on the bags’ understated look and their U.K. provenance.
“We are absolutely not a flashy brand,” he said. “Asian consumers used to be focused on more flashy products and monograms, but not anymore – they want to buy a bag with a story behind it.”
The Wall Street Journal & Drapers(pics) also contributed to this post.
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