Louboutin walks tall in Middle East

Christian Louboutin, famous for making shoes with hot red soles and spiked heels, above, will spend up to $10m on stores.

They have heels at least 12 centimetres high, red soles and are so hot that every woman wants a pair. Christian Louboutin's shoes could soon be strutting all over the Middle East as the company is set to open three of its own stores in the region. With stocks limited at Harvey Nichols in Dubai, the only retailer in the Emirates licensed to sell the shoes, the openings are expected to be popular with discerning buyers of footwear all over the region.

The company will spend between US$6 million (Dh22m) and $10m rolling out stores in Beirut, Riyadh and Mall of the Emirates in Dubai as part of a new joint venture with one the Middle East's largest luxury retailers and distributors, Chalhoub Group, to develop the brand in the region. The partners opened the first store in Jeddah in January. Alex Mourot, the general manager of Christian Louboutin, said the move would help strengthen the company's market share in the region, which stood at about 2 per cent.

"Our global strategy, in terms of distribution, is to move more and more from wholesale to distribution," he said. "We are very selective in terms of point of sale. We have seen that, even during the crisis, some areas do very well. There are a lot of customers asking why we don't have stores in this region. So we think the Middle East is a strong retail market for free-standing stores." Louboutin, which spent three years looking for a joint-venture partner, also plans to develop its accessories line, such as handbags.

Luxury conglomerates such as LVMH and Gucci Group have tapped sales of accessories, including lipstick, watches and sunglasses, which can rake in about 60 per cent of a designer's revenue. "This is something we're building more and more," said Mr Mourot. Patrick Chalhoub, the chief executive of Chalhoub Group, said Louboutin was the only brand the company was taking on this year. The group, which has 350 shops in 14 countries across the Middle East, was hit by the dramatic fall in Dubai sales last year just as it was making investments in additional stores in new shopping centres, such as Dubai Mall.

For the group, whose brands of which also include Fendi and L'Oreal cosmetics, UAE turnover last year was flat at about Dh1 billion, but profitability fell by between 40 and 60 per cent. Still, Mr Chalhoub said the company would open 40 shops this year, down from a planned 50, with Riyadh and Doha being prime locations. Meanwhile, 20 underperforming stores will be closed. "This is because some locations are not working, the customer profile is not there and the brands are not suitable any more to the market conditions," he said.

Chalhoub Group is also spending $30m in a major review of its operating costs. "Our processes have to be adapted to today's world, which is much more client-centric than it is supplier or brand-centric," said Mr Chalhoub. "So the whole process which we are trying to put in place and hopefully will help our joint venture with Christian Louboutin to have processes which capture [customer] needs and requirements."

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