Stockmann Oyj’s Lindex AB (STCBV) is considering opening shops in China on its own after its local franchising partner canceled their agreement last month, threatening the fashion retailer’s plans to expand in the world’s most populous country.
“We have invested a lot in knowledge, so when we now gather our troops we have learned so much that we consider opening our own stores,” Chief Executive Officer Goeran Bille said in an interview yesterday at Lindex headquarters in Gothenburg, Sweden. “China is a really big and growing market, so we would actually prefer to work on our own.”
Lindex had planned to open as many as 100 stores in China by 2018 as part of its biggest international investment ever before Chinese partner Suning unexpectedly pulled out of the project. Lindex said on March 20 that it will “investigate other opportunities to expand into the Chinese market.”
Bille said Lindex will look for a new franchise partner in China if it doesn’t decide to run its own stores, though that strategy would probably mean a slower expansion pace than with Suning. A first Chinese store may open next year, he said.
Going it alone would contrast with moves by other European retailers in China. Marks & Spencer Group Plc (MKS), Britain’s largest clothing retailer, said last week that it’s seeking a local partner in China after trying to expand by itself. Kingfisher Plc, Europe’s largest home-improvement retailer, has also said it’s looking for a partner.
Lindex, which was acquired by Helsinki-based Stockmann in 2007, started as a lingerie shop 60 years ago and now has more than 470 wholly owned and franchise stores in the Nordic region, eastern Europe, Russia and the Middle East. The chain has more shops in its home country than Swedish rival Hennes & Mauritz AB (HMB), Europe’s second-biggest clothing retailer.
Stockmann rose as much as 0.8 percent to 11.09 euros and was trading up 0.1 percent at 11.01 euros as of 10:30 a.m. in Helsinki, valuing the company at 795.7 million euros ($1.09 billion). Stockmann reported sales of 2.04 billion euros last year, of which Lindex accounted for 34 percent.
Lindex plans to open about 30 stores in total this year, Bille said. Lindex plans to enter a new market in western Europe in addition to a Chinese opening, Bille said, adding that countries such as the U.K. and Germany are of interest.
During the past few years, Lindex has focused on making its clothing more fashionable by collaborating with external designers such as Italian fashion house Missoni, known for its zig-zag patterned knitwear.
Lindex, which started selling its first products for men in October, also plans to expand that offering. While the items are currently only sold online, Bille said he’s “convinced” Lindex will open dedicated men’s stores in the future.
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