Stockists of the highly lucrative sheepskin boot brand Ugg Australia were largely unconcerned that US parent company Deckers had axed its eight-year long UK and Republic of Ireland distribution agreement with AMG Footwear this week in favour of selling the brand direct.
Stockists told Drapers that they expected Deckers to be at least as vigilant on distribution of the brand when it takes back control on January 1, 2011, as AMG had been.
AMG was rumoured to have strict regulations on retailer orders, including introducing a rule whereby a maximum of 45% of each order could be dedicated to the sheepskin boot’s classic styles.
It also famously restricted the number of pairs available in the market, which helped ensure continued demand and longevity of the brand.
One stockist said: “I expect that Deckers will be even more strict on supply than AMG was. I will have to build a new relationship, which is fine, but I would be worried if I was a retailer that doesn’t buy across the Ugg range as Deckers doesn’t like that.”
A second stockist said: “Deckers will work hard to manage the process and keep the distribution in line with AMG’s policies. I have no concerns about the changes.”
AMG is understood to have already sold about one million pairs of Ugg boots into the UK market for autumn 10. It is the brand’s second largest market after the US.
The termination of the Deckers distribution deal, which also includes the Simple and Teva brands, will come as a blow to AMG. Ugg made up the bulk of its sales.
AMG group managing director Stephen Newlands said he would offset the loss of Ugg by making new brand acquisitions and signing new footwear distribution and licensing deals.
He pointed out that the AMG outdoor business, which comprises the Wayfayrer and Rossignol brands, was unaffected.
Deckers’ UK office will be on Foley Street in central London. It said in a statement: “By dealing directly we expect to capture additional sales and gross margin.”