Charles & Keith, the once-humble local shoe retailer, is now partly owned by French luxury giant Louis Vuitton Moet Hennessy (LVMH).
The Wong brothers, who own the company, have sold a 20 per cent stake to L Capital Asia, the private equity arm of LVMH, for more than $30 million, sources told The Straits Times. The deal, which values the company at close to $200 million, was completed in November after L Capital fought off a slew of rival suitors that included other private equity funds, high net worth investors and even a manufacturing firm.
The feeding frenzy is testament to the growth of the local firm, which has shot to prominence since brothers Charles Wong, 37, and his brother Keith, 35, opened their first store in Singapore’s Amara Hotel in 1996.
But the deal is more than just about the money, said the elder Wong, the chief executive, confirming the deal from Shanghai, where he is now based. The younger Wong is the chief operating officer and designs the shoes.
It will give Charles & Keith access to the branding expertise of LVMH, owner of the world’s top fashion labels including Marc Jacobs, Dior and Givenchy, and allow the firm to benefit from being taken under the wing of LVMH as it expands around the globe.
The company wants to conquer the United States, China, India and Western Europe. It already has 229 stores across mainly Asia and the Middle East under its Charles & Keith and Pedro brands.
Charles & Keith sells women’s shoes while Pedro carries footwear for both men and women. Recounting events of last year, chief financial officer Dicky Koh said the brothers had been happy the business was running at a good speed – it has grown at a compounded annual rate of 28 percent for the past decade.
In the end, it was the promise of the chance to conquer China that appeared to have swung the deal. Wong had witnessed the worldwide success of Sephora, a global women’s cosmetics chain owned by LVMH, especially in China, and felt that Charles & Keith could learn from Sephora’s growth strategy.
There are now six Charles & Keith stores in Shanghai, although they are not yet profitable, Koh said. Charles & Keith wants to open 100 stores there in the next five years. It plans to own all the stores, as its does the stores in Singapore. The company franchises its stores everywhere else.
Recently, the company also went with people from LVMH to meet potential partners in the US, a market it has not yet ventured into, said Wong. Charles & Keith will also leverage on its new owners and send staff to Paris, or get trainers to come to Singapore, so they can attend marketing and visual branding courses that will help in-store display concepts and marketing campaigns.
Eventually, Charles & Keith came up with a "wish list" of what it wanted from its new partners. It would receive training from LVMH and get LVMH senior management on its board.
That was how it was agreed that one board seat was to go to Levy, who resigned last week from LVMH to take up a position as adviser to Guess founder Paul Marciano. Wong could not comment on whether or not Levy would remain on the Charles & Keith board.
With the French luxury giant taking the company under its wing, will Charles & Keith still retain its value-for-money image? Wong said that while it is true that the company is looking to slowly move its branding more upmarket, it will always produce affordable shoes for the masses.
"(Spanish clothing retailer) Zara is a very good name for that – it is fast fashion and affordable. We want to make sure that our consumers see our brand as high fashion and also suitable for them," he said.
The company will also remain separate from LVMH’s stable of designer brands. "We don’t want to ride on that brand. We want to maintain our DNA in terms of how we grow our two brands. We don’t see the need to associate, not even with Sephora," Koh said. Wong said: "My goal is to make sure that our brand is in all countries and cities, to make this a true global brand from Singapore."
from Singapore Straits Times
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