Shoe and handbag retailer Kurt Geiger said its sales rose about 10 percent last year, benefiting from fashion fans switching to more affordable luxury items amid the cost-of-living crisis.
The company said its revenue rose 9.4% in the 12 months to the end of January 2024. Like many luxury brands that have increased prices, the company has cut prices by 5% compared to three years ago, which has led to a surge in handbag sales.
The British retailer’s revenue has also increased thanks to its expansion in the United States, where Kurt Geiger is now worn by the likes of Kylie Jenner, Jennifer Lopez and Paris Hilton.
The company’s sales increase comes at a tough time for the clothing and footwear market overall, and luxury brands in particular, as the cost of living crisis squeezes household incomes.
Kurt Geiger chief executive Neil Clifford said underlying profits rose 34% to £40.4 million on sales of around £361 million, putting the group back in line with pre-COVID performance and that he expected further growth this year.
“I think the strategy of raising prices when consumers are struggling to get the same sales from fewer people hasn’t worked (for other companies),” he said. “We put a lot of effort and creativity into our products, but our prices are lower than our competitors, and I think that’s working.”
Clifford said fashion items needed to become more affordable because of increased competition from other options such as travel, events and fine food. Kurt Geiger handbags range in price from £59 to £289.
“Everyone wants to look great but not everyone earns more than £100,000 a year and even if they could afford it they might not want to do it – they might rather go on holiday,” he said.
He said that by cutting back on discount events while lowering everyday prices and focusing on affordable luxury, sales of Kurt Geiger sandals were up 50 percent from last year and handbag sales up 45 percent, despite Europe’s dreary summer.
The growth comes as many luxury brands, including Mulberry, Burberry, Gucci and Yves Saint Laurent, face consumer spending cuts as their typical customers — “aspirational” shoppers who can afford to splurge on big-ticket items every once in a while — are forced to prioritize rising mortgage payments, heating bills and other basic needs.
But Pippa Stevens, senior analyst at GlobalData, said Kurt Geiger was likely to have benefited from shoppers upgrading from high street brands rather than downgrading from designer labels, due to the trend towards investment fashion – seeking items that last longer and can be traded on resale sites rather than disposable fashion – seeing shoppers downgrade from designer labels.
“Luxury high street stores are doing well as people are upgrading from the mass market and looking for better value,” she said.
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Stevens added that Kurt Geiger’s growth is also being driven by international expansion.
The company, owned by private equity firm Cinven, has been stepping up investments in marketing, including hiring model and actress Emily Ratajkowski to lead its marketing campaigns.
The group has only one directly operated store in the U.S. (in Orlando) but plans to open four more this year, including in New York and Los Angeles, with a long-term goal of opening 50 stores in the U.S.
No new store openings are planned in the UK, where Kurt Geiger has 58 stores, including one on London’s Oxford Street which opened a year ago.
Clifford said sales of Americana-themed denim bags and shoes have also been strong, driven by artists like Beyonce and Taylor Swift.
