Nov 27, 2017
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Cath Kidston plans Japan expansion, scales back China, shifts production

Nov 27, 2017

Cath Kidston plans to grow fast in Asia with a boost to its store count in Japan, South Korea and Thailand, despite taking step back from the Chinese market.

Cath Kidston

The company, known for its fashion, accessories and homewares in whimsical prints, has seen low profits in China and will scale back its presence there. But it wants to open 30 stores in Japan over the next three years with the firm having employed outside consultants who said that it has potential for to to 60 locations there.

CEO Kenny Wilson told Nikkei Asia Review that it will speed up its Japanese openings in locations such as Tokyo's Shibuya and Shinjuku shopping hubs, as well as key cities including Chiba and Shizuoka.

It will also focus more on web sales and work to build a stronger omnichannel proposition.

Wilson said the label’s appeal for Japanese customers lies in its perception as a brand that’s ‘kawaii’, appealing to the trend for cuteness in a market that values the pretty, the feminine and the colourful. He also said the hand-drawn nature of all the prints makes it stand out in a market that favours crafts.

The company is targeting double-digit growth over the next few years outside of its domestic UK market and Wilson said that it has seen recent growth of 20% in Asia-Pacific, with Japan its most important market. But he told the newspaper that South Korea and Thailand are the next big growth areas.

However, china has proved to be a problem and the firm is cutting its store numbers there. Wilson said that while the stores are profitable, they aren’t generating enough income and high rents add to this, underscoring the logic of his decision to divert resources to far-more-profitable Japan. 

Cath Kidston

However, China remains important as an online market for the company’s products and not all of its stores there will close.

Wilson said the firm is also looking at its supply chain following the plunge in the value of the pound since the Brexit referendum last year. It had currency hedging deals in place but as these expire, it is looking at lower-cost manufacturing countries such as Vietnam and Cambodia. Importing products into Japan from these two countries attracts much lower duties that importing them from China.

In the year to March, Cath Kidston saw an 8% revenue rise to £129 million as its increased its leathergoods offer and saw strong demand for its Disney collaboration.

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