Karen Millen flags price rises, expects benefit as luxury shoppers switch to premium
Karen Millen is the latest UK fashion retailer to say its prices will have to rise due to the weaker pound following last year’s Brexit vote.
The company expects prices to go up by around 5%, although entry level pieces and the most expensive items that the retailer sells will maintain current pricing levels, with the firm’s CEO saying the overall rises will barely be noticed by customers.
CEO Beth Butterwick told the Press Association that the increase in the minimum wage will also weigh on costs but that it’s currency issues that have had the biggest impact as imported goods and raw materials are now more expensive than a year ago.
The price changes will kick in this autumn with the middle tier of the company's offer to bear the brunt of the rises although the wide variety of product on offer should also help cushion the blow. “From an external point of view, entry and exit, I don't think the consumer will feel any different,” Butterwick said. "It's about the prices at the mid-market where you can put some up, and there's still an option there for consumers to have different price points.”
Whether this will alienate any mid-tier shoppers remains to be seen but Butterwick thinks that the retailer could benefit via its upper-end pieces as a tougher economy sees some higher-end shoppers trading down. "Consumers might scale down from luxury to premium, which is what we are," she told the PA.
The price rises will come as rumour persist that the firm, which is still controlled by failed Icelandic bank Kaupthing, could be sold. Other UK retailers wrapped up in the problems surrounding Baugur and Kaupthing - Coast, Oasis and Warehouse - are currently on the auction block. But Kaupthing executives have consistently denied that Karen Millen would be sold. This is despite two consecutive years of significant losses and a sales dip from £178m to £161m in the latest year for which accounts have been published (the 12 months to end-February 2016).
The company is currently in the early stages of a review of its global operations with the CEO saying it could expand or contract in certain markets and also possibly close some of its 234 stores, although she does not expect mass layoffs. Half of its 1,200 employees are in the UK where it has 40 standalone stores and 73 concessions.
The review is designed to strengthen its UK operations, among other goals, with a new strategy clearly laid out by year-end.
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