* L.K. Bennett plans to have total of six stores
* First shop opened in August
* Joins foreign firms returning to Russian market
By Maria Kiselyova
MOSCOW, March 17 British high-end womenswear
firm L.K. Bennett said it plans to open five stores in Russia,
shrugging off the political and economic challenges of working
in a country that's been under Western sanctions for almost
The London-based company, famous for kitten heels, smart
dresses and handbags, is owned by private equity firms Phoenix
and Sirius. It opened its first shop in a Moscow mall in August,
teaming up with Russian fashion firm Easy Fashion Group.
L.K. Bennett, a high street brand favoured by Britain's
Duchess of Cambridge, expects to open a second Russian shop
later this year and also plans to launch an online store. A
further four stores are planned over the next two to three
years, the company said.
It joins a growing list of foreign firms tiptoeing back into
the Russian market. The economy is still weak and there is no
immediate prospect of sanctions being lifted. But Russia still
offers strong returns and, three years on from the Ukraine
crisis, the fear of doing business in Russia has receded.
"It has huge potential, this market. Moscow is an
international city and we trade in most of the major
international cities around the world," L.K. Bennett's chief
executive Darren Topp told Reuters late on Thursday.
"The sales have been really encouraging over the last few
months so, yeah, we're really excited about it," Topp said on
the sidelines of the formal opening of the Moscow outlet.
He said the company, founded by Linda Bennett in London in
1990 with the vision of bringing "a bit of Bond Street luxury to
the High Street", planned further foreign expansion. It
anticipates that in three or four years time half of its sales
would be outside Britain, compared with around one quarter now.
EXPANDING MIDDLE CLASS
Russia's economy is set to return to growth this year,
driven by an expected recovery in consumer demand and investment
combined with low inflation and a steady rouble.
That follows two years of contraction prompted by low oil
prices and Western sanctions for Moscow's annexation of Crimea
and its support for separatists in eastern Ukraine.
The economy ministry expects 2 percent growth in gross
domestic product in 2017, helped by a rebound in oil prices,
while the official inflation target for the year is 4 percent,
down from 5.4 percent in 2016 and 12.9 percent in 2015.
Before the sanctions, Russian consumption was booming and
the middle class expanded and while the economic crisis hurt
spending, high-end retailers fared better, partly because
wealthier people travelled less and spent more at home.
According to property consultants CBRE, in 2015-2016 a total
of 29 new luxury goods stores were opened in Moscow – that is 42
percent more than in 2013-2014.
Russian stocks were among the best performing emerging
market indices last year and have touched fresh highs in 2017,
buoyed by stronger oil and hopes of sanctions relief.
In another sign that foreign investors are turning positive
on Russia, German automaker Daimler announced last
month it would open a plant near Moscow to make Mercedes-Benz
cars - its first to produce passenger vehicles in Russia.
Bulgari, the flagship jewellery brand of French luxury group
LVMH, said last year it planned to grow presence in
Russia after rival French luxury group Hermes tripled
the selling space of one of its two Moscow shops.
And hypermarket chain Auchan said in December it was
stepping up investment in Russia, saying the economy there has
largely adapted to sanctions.
"We see it (Russia) as a real opportunity. At the end of the
day we're selling clothes, we're not in the politics. That's all
we do, we sell clothes and shoes," said Topp.
(Additional reporting by Anastasia Teterevleva in Moscow and
James Davey in London; editing by Anna Willard)