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UK luxury brands 'diluted' under foreign ownership

The UKs top 20 luxury businesses under foreign ownership, such as Dunhill and Pink Shirtmaker, are growing more slowly than independent UK luxury brands, new research has found. 

Research by private wealth law firm Boodle Hatfield has revealed that the top 20 overseas-owned UK luxury businesses had revenues of £798m in the past year, rising 1.5% from £775m two years earlier.

In comparison, the top 20 luxury businesses with independent UK-based owners, such as Burberry and Mulberry, recorded a turnover rise of 5.5% per year from £4.49bn to £4.99bn over the same period.

Boodle Hatfield’s research also showed that the top 20 overseas-owned UK luxury brands made a combined loss of £106m last year, and only five of the top 20 made a profit during the period. 

Boodle Hatfield says the figures show that staying independently UK-owned may be best to drive long-term growth. 

Jane Ireland, partner at Boodle Hatfield, says that many luxury fashion entrepreneurs view a sale to a foreign luxury conglomerate or private equity investor as the best way to reach the next level of growth for their businesses. However, she claims there is a risk that British luxury brands added to a stable of major fashion labels could end up being “forgotten” by their owners, and eventually see their growth tail off.

Ireland said: “Seeing your brand acquired by one of the luxury brand giants is the dream for a lot of British fashion entrepreneurs. These figures suggest that staying independent might be the better long-term choice.

“Some brands that have been subsumed by a major luxury multinational have had to compete for capital and management attention. There’s also a chance that their owner won’t fully understand the appeal of the brand, and their brand values will get diluted.”

Many household-name luxury clothing brands in the UK have overseas ownership, including Pink Shirtmaker (which rebranded from Thomas Pink last year) and men’s fashion brand Dunhill, which are owned by luxury conglomerates LVMH and Richemont respectively. Bootmaker Hunter is owned by a US private equity fund.

However, two of the largest and most successful UK luxury fashion brands in Boodle Hatfield’s research are Burberry and Mulberry, both of which stayed independent until floating on the London Stock Exchange in 2002 and 1996 respectively.

Ireland added: “Burberry is an excellent example of how a British luxury brand can be built. Their success has been founded on understanding their market and consistently delivering products that meet consumer demand.

“Being backed by the capital and distribution of a global fashion business certainly has advantages, but getting the product right is also a key concern. That can be done while staying independent.”

 

Readers' comments (1)

  • This is slightly misleading and simplistic in its analysis. There are many factors involved and ownership is just one of them. It would be better to provide a more holistic analysis.

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