Monday, March 21, 2011

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Local shoe retailer sells 20 percent stake for S$30m

Local shoe retailer Charles & Keith is now partly owned by French luxury giant Louis Vuitton Moet Hennessy (LVMH).

Starting out in their first shop in Amara Hotel in 1996, 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 S$30 million, reported The Sunday Times.

The deal puts the company's value at approximately S$200 million, and was completed last November after L Capital fought off a slew of rival suitors which included private equity funds, high net worth investors and even a manufacturing firm.

Charles Wong, 37, the chief executive of the company, confirmed the deal from Shanghai, where he is now based. Younger brother Keith, 35, is the chief operating officer and designs the shoes.

The deal will give Charles & Keith a global standing as it can leverage on LVMH's branding expertise. The French luxury giant currently has many top fashion labels under its name, including Marc Jabobs, Dior and Givenchy.

The company is looking to conquer the US, China, India and Western Europe markets. Currently, the shoe retailer 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.

Wong said he was happy with the deal, which took a long time to come together.

"There have been a lot of companies talking to us and we spent a lot of time considering all the options. We were definitely reluctant to sell the stake, but in the end it was more for the company to grow to the next level. We were looking mainly at knowledge transfer and for someone to help us understand certain markets deeper.

"We are looking at the bigger picture and how we can grow our company's revenue to three to five times what it was last year in a short time. We hope we can, through them, expand, improve and learn. That's the main reason we let them have the stake."

It is understood that the reason Wong decided to cut the deal with L Capital was because of the promise of a chance to conquer the China Market.

Wong made it is personal mission to succeed in China after witnessing the worldwide success of Sephora, a global women's cosmetics chain owned by LVMH, especially in China, and felt that Charles & Keith had much to learn from Sephora's growth strategy.

This prompted him to move to China permanently to oversee the business one-and-a-half years ago.

There are now six Charles & Keith stores in Shanghai, although they have yet to bring in profit, said Wong.

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," said Charles & Keith's chief financial officer, Dicky Koh.

Mr Wong added, "My goal is to make sure that our brand is in all countries and cities, to make this a true global brand from Singapore."

Financial advisor Regina Sin, 34, is a big fan of the Charles and Keith line.

She told Yahoo! Singapore that she knew the brothers since early 2000 when they had their first outlet at Amara Hotel.

"I found them to very humble. Despite being the owners, they were serving customers in the shop just like any salesperson, kneeling on the floor and helping people find the right size of shoe. It's rare that local designers make it so big and I'm happy that they are so successful now. They deserve it."

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