Nelly Sees Own Brand Growth as Web Retailer Goes Global

Source: Nelly.com

The Nelly website. Close

The Nelly website.

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Source: Nelly.com

The Nelly website.

Nelly, the Swedish online fashion retailer with 1,000 brands, said sales of its own labels will grow to account for as much as 40 percent of total revenue as the company expands outside its European main markets.

The retailer’s own brands, which include Estradeur and NLY Eve, currently account for about 30 percent of total sales -- a number that will probably rise to 35 to 40 percent in coming years, Chief Executive Officer Magnus Maansson said in an interview at Nelly’s headquarters in Boraas in southern Sweden.

Nelly, which also sells brands including Converse, Paris Hilton and Ugg Australia, is benefiting from growing demand for online fashion in its domestic market as well as abroad and late last year started an international website shipping goods to markets outside the European Union such as Australia and the U.S. The company’s sales have grown 60 times since 2007 after it expanded into countries such as France, Germany and the U.K.

“Now we have the opportunity to take the next step and that is geographic expansion,” Maansson said.

Nelly has its own website in 11 countries in Europe, and also ships goods to more than 60 countries outside the European Union -- from Canada to South Africa and Chile to Singapore.

The company, which started off as an underwear subscription business in 2004, is a unit of CDON Group AB (CDON), whose biggest owner Kinnevik AB also owns a stake in German online retailer Zalando AG. CDON’s fashion unit, which includes Nelly, reported an 11 percent gain in sales to 932.6 million kronor ($142 million) last year. The operating loss narrowed to 16 million kronor from a loss of 77 million kronor in 2012.

CDON shares rose as much as 1.7 percent to 24.1 kronor in Stockholm trading, and traded at that level as of 10:36 a.m. local time. The stock has declined 24 percent so far this year.

Online Expansion

Nelly’s global expansion comes as retailers such as Inditex SA (ITX), Europe’s largest clothing company, and Hennes & Mauritz AB (HMB), the region’s No. 2, expand their online offerings. Nelly, which mainly targets women aged 18 to 24, also faces competition in that age group from Asos Plc (ASC) and Boohoo.com Plc (BOO), which was listed on the London stock exchange last month.

The online push by Nelly’s competitors is likely to benefit the company as it draws more people to online shopping, Maansson said. While Nelly’s focus is on the web, it may open a physical flagship store in the future, he said.

The company is also trying to win customers through other channels. It regularly does a night-club tour branded “Nelly high-heels party,” where it gives away free shoes to the guests who turn up first. The event, which has so far taken place in countries such as Germany and the U.K., will be expanded to other markets in Europe, according to Nelly.

Party dresses and party shoes are the best-selling items for Nelly, with womens wear making up about 90 percent of sales.

“She’s young, trendy, she likes to party and likes to buy something affordable for the weekend,” Emina Alivodic, Nelly’s head of design, said, describing the company’s typical customer. “High heels is one of our strongest weapons.”

To contact the reporter on this story: Katarina Gustafsson in Stockholm at kgustafsson@bloomberg.net

To contact the editors responsible for this story: Celeste Perri at cperri@bloomberg.net Niklas Magnusson, Kim McLaughlin

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