Our goal is to pursue growth without compromising the Jimmy Choo brand. This is achieved by successful product collections driving positive LFL sales, opening new DOS and expansion in Asia and selected new markets.
Shoes are at the heart of Jimmy Choo and will remain the core offering. Shoes represent just over three quarters of revenue, which we do not expect to change substantially. Jimmy Choo is a specialist luxury shoe company focused on growing our relationship with our customers and clients. Growth will always be pursued within the context of protecting the Jimmy Choo brand identity and luxury positioning. We believe that Jimmy Choo’s unique brand DNA and experienced design team will enable us to continue to deliver collections that resonate strongly with our clients.
We aim to deliver earnings growth and returns through focusing on growth ahead of the market and margin expansion, together with good cash flow conversion.
Revenue growth is supported by the store opening programme, through which the Group plans to open 10 to 15 new DOS each year, as well as the roll out of the recently introduced New Store Concept across the estate. In addition to our DOS expansion plans, we intend to pursue growth through our multibrand, franchise and JV channels. All of these are important for Jimmy Choo’s business model as they provide access to new markets.
Our aim is to grow towards a regional mix more in line with the wider luxury market through growth in Asia and selected new markets, while maintaining our presence in EMEA and the Americas. Jimmy Choo’s revenue growth strategy is focused around the following key pillars:
- Market outperformance: we believe that Jimmy Choo’s client insight, design approach and systems which we have developed as a specialist will enable us to outperform the wider luxury market. Jimmy Choo has the right specialist resource, knowhow, skills and people to excel in this attractive and complex category.
- LFL growth: through continued performance of our collections and investment in our DOS network, with selected openings, relocations and New Store Concept renovations in Jimmy Choo’s existing developed markets of Europe, USA and Japan.
- Retail led growth driven by:
- Door growth opportunity: expansion of DOS in Greater China, where Jimmy Choo is currently underpenetrated compared to our peers and potential franchise buyouts and JVs in fast growing markets, including the Middle East and South Korea. It is expected that around half of Jimmy Choo’s DOS development will be in China each year.
- Online: the Group will continue our investment in online which has proved to be one of the key elements of growth in the current environment. Recent investments into the supply chain and systems upgrades are expected to position the Group to capitalise on the growth of the global online trend and provide an Omnichannel distribution offering in the medium-term, starting progressively in the USA and Europe.
- Wholesale entry: exploration of potential franchise opportunities in new markets where Jimmy Choo currently has a limited presence, particularly in Latin America, Eastern Europe and Travel Retail, alongside continued development of our existing business.
The business is now scaled for growth. Our expectation is that the revenue growth initiatives described above, together with increased control over distribution, should drive gross margin improvement in the business. Direct costs will grow broadly in line with retail revenue and indirect costs will grow slower than overall revenue. The new systems and logistics investment will help the management team to improve inventory efficiency, thereby reducing markdowns and increasing cash flow. In 2015, margin expansion was hindered by headwinds in market growth and macro-economic conditions; however we have taken steps on our cost base to create the conditions for margin expansion to resume in 2016.