moving on up

The Foxconn of fashion eyes Paris, London and Milan

July 15, 2013
Obsession
How We Buy
July 15, 2013

Luxury shoe brands like Prada or Givenchy might consider this variation on an old maxim: Teach a man to fish and he’ll steal your fish—or at least he’ll try. Stella International, a shoemaker founded in Taiwan that manufactures for Prada and LVMH as well as Clarks, Rockport and Timberland, is expanding its offering of lower-priced luxury shoes in Paris.

Stella is adding two shops by the end of this year to the one it already operates in Paris, chief executive officer Stephen Chi of the company’s woman’s footwear and retail business told Bloomberg news. Chi said the company wants to leverage its experience making shoes for luxury retailers to sell more of its own brands. Listed in Hong Kong, Stella is one of few Chinese firms expanding ambitiously in the global luxury retail sector. Makers of Chinese haute couture have so far failed to produce a brand that can compete with international luxury labels.

Chi says the company doesn’t intend to compete directly with brands like Prada or Miu Miu. But it may have the ability to capture a lower rung of the luxury shoe market, especially among emerging luxury shoppers. The company sells its own brands such as “Stella Luna,” “What For,” and “JKJY” in mainland China, Taiwan, Thailand, the Philippines, Lebanon, Kuwait and the United Arab Emirates. (It started its retail business in 2006 and, as of the end of last year, had 455 stores.) In its existing Paris store on the famous Boulevard Saint-Germain, Stella’s shoes cost between €250 and €600 ($327-$785), which is about a third of Prada’s prices. Stella has said it plans to open stores in Milan and London by 2016.

But Paris, London and Milan are tougher luxury markets to crack than those in Asia and the Middle East where wealthy tastes are still developing and the markets aren’t as saturated. Revenue from Stella’s retail business in 2012 grew 20% to $119.4 million, up from $99 million the year before—but that makes up only a sliver of the group’s total profits. Last year, retail sales made up only 7.7% of the company’s total revenue. Stella says it hopes that figure will reach 20% within five years, but it still has a long way to go.

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