Cath Kidston: Booming sales for the kitsch retailer

• Read more about Cath Kidston on Retail Week Knowledge Bank

Cath Kidston’s flower power has made it one of the success stories of the downturn. The brand, which is synonymous with 1930s-inspired floral and polka dot designs, turned over £69m in its financial year ended March 2011, compared with just £12m five years ago.

It has been an impressive rise for the kitsch retailer, which was founded by designer Cath Kidston when she set up a small store selling vintage fabrics in Holland Park, London in 1993.

The retailer, which has 47 UK and 30 overseas stores, was snapped up by US private equity group TA Associates in 2010 in a deal understood to be worth more than £100m. Kidston remains creative director.

In recent years Cath Kidston’s quirky prints have built it into an iconic brand, synonymous with the middle classes. The retailer has expanded its range of quintessentially English printed products across a range of homewares, clothing and accessories, from key fobs to kidswear.

Various ranges are manufactured under licence such as Churchill China and Fulton Umbrellas. The retailer has also published a series of books including Make!, Sew! and Stitch!

It has established a wide audience, from teenagers to housewives, and its strong gifting bias has helped it thrive during the downturn.

The retailer’s series of high-profile collaborations with manufacturers has also helped heighten its brand awareness. It teamed up with Millets in 2005/6 to create Cath Kidston tents, along with Nokia and Carphone Warehouse in 2006 to produce a mobile phone.

It also collaborated with grocery giant Tesco to produce eco-shopping bags.

Sales and store numbers have been growing steadily over the past five years, but under the ownership of TA Associates the retailer has expanded particularly aggressively. Both sales and store numbers have doubled in the past two years and, despite the rapid expansion, pre-tax profit has also soared. Cath Kidston made £4.6m in its 2009 year, jumping to £14.7m in its last financial year, although it made a £3m pre-tax loss at group level, in part due to the structure of the private equity deal.

With new ownership came new management. Former Somerfield boss Paul Mason was brought in as chairman following the acquisition and former Claire’s Accessories European president Kenny Wilson joined the retailer last October as chief executive.

Wilson worked with Mason for a spell during his four years at Levi Strauss Europe.

The international experience of the recent recruits is a clear indication of where the private equity firm wants to take the brand.

The retailer, which had a fledgling seven-store Far East operation in early 2011, now has more than 30 stores in Japan, South Korea, Thailand and Taiwan. It is also understood to be mulling a move into China and Hong Kong. 

Further overseas expansion could also be on the cards. The retailer had a US subsidiary that it established early in its history but ceased trading in 2008, which could be revived.

As well as expanding its retail network, Cath Kidston is committed to developing its mail order and wholesale businesses. The majority of its sales – 77% –  still come from retail, but wholesale and licensing businesses have grown from £9.8m in 2009 to £15.8m in 2011. 

However, Retail Week Knowledge Bank observed that its rapid expansion across all channels could lead to brand fatigue and market saturation, because it could lose its original element of exclusivity.

As well as its growing number of retail stores, Cath Kidston products are available in a host of third-party retailers, including John Lewis and House of Fraser, as well as online, via Amazon and Asos.

And in the short-term hopes are high for the retailer as it stands to benefit from the Queen’s Diamond Jubilee with its range of nostalgic British products that are bound to strike a chord with a patriotic audience.