Karen Millen has announced that it will raise its prices by five per cent to deal with increasing cost pressures from the devalued pound while embarking on a strategic review.
The retailer‘s new chief executive Beth Butterwick, who joined after a five-year stint at Bonmarch, warned that Karen Millen was struggling to stem the tide of currency fluctuations and wage rises, but that customers were unlikely to notice the price hikes.
“Our prices are going up about 5% in the autumn overall, but that’s from an internal point of view,” Butterwick told the Press Association.
“From an external point of view, entry and exit, I don’t think the consumer will feel any different.
“It’s about the prices at the mid-market where you can put some up, and there’s still an option there for consumers to have different price points
Butterwick remained optimistic that shoppers may be poached from the luxury section as prices across the sector continued to rise, offsetting any customers the retailer may lose through price hikes.
“Consumers might scale down from luxury to premium, which is what we are,” she said.
“So I think there is an opportunity for us certainly to capture consumers that perhaps once shopped in luxury and now want the quality but maybe the average disposable income has come down slightly.”
This news comes amid a pledge to “redefine and strengthen” its presence in the UK. The retailer is majority owned by Kaupthing, the failed Icelandic bank, and has started a review of its 234-store global estate.
Despite conceding that this could mean closures elsewhere Karen Millen‘s 40 UK stores and 73 concessions, making up over a half of its total workforce, will remain largely unaffected.
In the 12 months to February 17 last year the retailer published losses of £10.5 million, before any Brexit related cost pressures were felt.
Kaupthing added: “Kaupthing is under no pressure to sell Karen Millen and indeed it is not for sale.
“We are very focused on supporting the relatively new management team at Karen Millen in delivering its exciting long-term growth plan, which we consider is in the best interests of the business, Kaupthing and our shareholders.”