Blog: Taking control is the name of the game
Leonie Barrie | 19 July 2010
Burberry's goal of keeping a tighter rein on its brand around the world took another step forward last week with news the luxury goods firm is to buy out its franchise partner in China for GBP70m (US$107.7m).
Not only will the deal give the company more control over the brand and the way it is presented to consumers, but it also makes financial sense too, with income from the stores expected to add GBP20m to group profits in the next financial year. And perhaps most important of all, the changes will give Burberry a great platform to accelerate its short and long term growth in the world's largest luxury growth market.
The buy-out news came just a couple of days after the company booked a 24% jump in first quarter sales, helped by international growth and demand for outerwear lines like its iconic raincoats.
British mother and baby products retailer Mothercare is also shoring up its market position after agreeing to buy the Blooming Marvellous maternity wear brand. Rolling out the Blooming Marvellous line across its stores will strengthen Mothercare's product mix, analysts say, while Blooming Marvellous will benefit from Mothercare's global network.
Mothercare, which has 1,167 stores in 53 countries, also said group revenues were up 0.4% for the first quarter of this year, helped by a 20.4% jump in international retail sales.
Spanish fashion chain Mango is also continuing with a relentless expansion which has taken it to 100 countries in recent years. Speaking exclusively to just-style, international expansion director Isak Halfon said the retailer has stepped up this year's target to 250 new points-of-sale on the back of a fresh strategy to roll out more department-store corners - mainly in the US where it has struck a joint venture with department-store giant JCPenney. Mango will continue to set its expansion sights on Asia, Europe and Eastern Europe in coming years, Halfon added.
At Japanese fashion group Fast Retailing, meanwhile, the focus is on shoring up its global supply network to support the roll-out of its stores around the world. It also hopes to reduce its reliance on China, where around 90% of all garments in the Uniqlo casual clothing chain are currently made.
A joint venture to make fabric and garments for Uniqlo in Bangladesh is making "satisfactory progress," according to one of the partners in the project, with a small-scale garment plant already in operation. Fast Retailing has also revealed plans to set up a socially responsible joint venture in Bangladesh in September that will both make and sell clothing in the country. Its new subsidiary, Uniqlo Social Business Bangladesh, will form the venture with Grameen Bank.
But apparel buyers sourcing from Asia are also likely to see shipping costs increase this year, shippers have told just-style. While trade - mainly out of the Far East towards Europe and the US - is now recovering after the global downturn, the amount of ship space has not kept pace. The likely outcome is higher freight costs in the run-up to the Christmas season.
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