For any fashion brand, having a member of the royal family wear your clothes might seem like the ultimate endorsement, but while the ‘Kate effect’ can boost sales, it wasn’t enough to save one of her high street favourites, LK Bennett.
The high street fashion house, a favourite of the Duchess of Cambridge, is set to file for administration, putting up to 500 jobs at risk.
And it’s not the first time one of her favourite brands has got into financial trouble.
Branding expert Claire Shiels told Femail: ‘Celebrity endorsement is the holy grail for any retailer, although it can bring with it as many problems as benefits.’
Kate is known for wearing older pieces that are no longer able to buy, meaning that brands have to then rush to manufacturer another run to satisfy demand – at a huge cost.
Also, because Kate buys staples and re-wears them over the years, it means that customers follow suit and buy just one piece from a collection, rather than becoming a loyal repeat customer.
‘Having your high street label worn in public by one of the world’s most photographed women can prove to be a nightmare if you’re not forewarned, which is usually the case with Kate Middleton,’ Claire explained.
‘Retailers must walk a fine line between supply and demand, with production based on a number of factors, including historical sales figures, market trends and buyer behaviour.
Kate Middleton, 37, pictured in Belfast, Northern Ireland on Wednesday wearing her go-to black boots from LK Bennett. The high street store is set to file for administration
Kate wore this Hobbs teal coat during a visit to Whitehorse in Yukon Territory, Canada in September 2016
‘A sudden and unexpected spike in sales and demand, which is what happens to a garment when the Duchess is spotted wearing it, often means that another immediate production run is required to satisfy demand and maximise the sales opportunity.
‘Unfortunately, this can involve huge costs for the label, which then is unable to forecast when the sales surge is likely to suddenly drop again.
‘The science behind production is therefore thrown into disarray and costs can easily spiral.’
The Duchess, 37, has been spotted wearing LK Bennett numerous times – from a printed blue and white dress to her go-to black booties.
Claire added: ‘The problem for labels with Kate in particular, is that she chooses staple wardrobe items that are typically priced at the higher end for high street retailers and wears them more than once.
Duchess Kate wearing a Orla Kiely dress in London in 2017. Fashion experts say there may be a link between Kate’s backing of a fashioner designer and financial woes further down the line
Appearing with Prince William for the first time since their engagement was announced in 2010, Kate wore a classic Issa wrap dress
At The Portrait Gala fundraising dinner in May 2017, Kate wore a lace Alice Temperley dress
‘This means that typically, her fashion followers will only purchase one item per season, rather than buying into the brand and shopping with them all year long.
‘Despite the financial woes currently experienced by some of her favourite labels however, it is the market – not Kate – that is to blame for the mass closure of many high street stores.
‘As well as LK Bennett; Hobbs, Orla Kiely, Alice Temperley and Issa have all experienced significant financial difficulties.’
Although it’s a difficult time for retail, Claire claims some lower-priced brands including Zara and Primark have got it right.
She said: ‘Zara is in the enviable position to have been able to bring its manufacturing process in-house rather than outsourcing abroad, meaning costs are reduced and the brand is able to react quickly to a sudden increase in demand.
‘At the other end of the scale, Primark is continuing to thrive due, it is said to its mass market appeal and its focus on engagement with its customers through social media.
‘It is the stores which are best able to adapt and have a supply chain flexible enough to cope with fluctuating demand and market trends which will survive. Unfortunately for the likes of LK Bennett and Orla Kiely, this realisation has come too late.’
The Duchess of Cambridge sporting an LK Bennett dress for a dinner at Kensington Palace, London, during former US President Barack Obama’s state visit to Britain in April 2016
Kate, 37, wore a white and blue floral LK Bennett dress during a visit to Luton with national charity Youthscape in August 2016
The Duchess of Cambridge debuted an LK Bennett coat during a visit to the UNICEF emergency supply centre in Copenhagen, Denmark in 2011
LK Bennett is said to be working with Ernst & Young to help decide the ‘best way through’ the upcoming ‘difficult and unstable times.’
The brand’s founder, Linda Bennett emailed staff today about the intention to file for administration.
In the email Ms Bennett said: ‘I came back to the company in 2017 to try and reinvigorate the brand.
‘It was a difficult decision, but I don’t regret it for a second.
‘I have fought as hard as I can, with all your help to turn the business into the success that I know it deserves to be, and we have had some of our best sales figures and reactions to our recent collections that we have ever had.’
The designer then added: ‘We are going to be working with Ernst & Young to help decide the best way through this.
‘I know that these are difficult and unstable times, and we are doing everything we can to identify the best way forward.
‘I want to thank you for your dedication, hard work and continued support.’
Kate, 37, is often pictured wearing her signature LK Bennett nude shoes pictured here during a visit to Adelaide, Australia in 2014
The Duchess of Cambridge wearing LK Bennett back in 2012 during the Queen’s Diamond Jubilee UK Tour. LK Bennett’s founder Lina Bennett emailed staff today about the intention to file for administration
The British affordable luxury brand was founded in 1990 with ‘the vision of bringing ‘a bit of Bond Street luxury to the High Street’.
The company is now well known for its signature kitten heels favoured by celebrities including Kate Middleton.
Linda Bennett came back to the brand in 2017 after leaving in 2008 when she sold a majority stake in the firm for between £80m and 100m.
In 2018 it was reported that LK Bennett reported losses of £5.9 million in 2016/2017, compared with a £100,000 profit in the previous 12 months.
Total sales also fell by 1.8 per cent to £77.4 million. The company blamed the figures on ‘exceptional costs’ of £28.7 million, spent on corporate restructuring.
So who else has fallen victim to the curse of Kate?
A pregnant Kate in June 2013 at the ‘Royal Princess’ cruise ship naming ceremony in Southampton. She chose to wear the ‘Dalmation mac’ dress by Hobbs
HOBBS: FINANCIAL WARNING
Sloaney staple Hobbs — founded in 1981 by London couple Yoram and Marilyn Anselm — is one of Kate’s High Street favourites. She wore the brand long before she entered The Firm.
Her most-worn Hobbs pieces are coats — most memorably this £279 emerald green Persephone trench she wore on St Patrick’s Day in 2014, and dresses, such as the £169 Animal shirt dress she chose for a charity event in London in 2015. She also turned to Hobbs for her final engagement before giving birth to Prince Louis, in March this year — the £79 polka-dot Rosie top — which promptly sold out worldwide.
FINANCIAL LOSSES: In 2015, Hobbs racked up pre-tax losses of £15.6 million, after a management shake-up left it with hefty legal fees. The previous year, it was forced to ditch its sister brand, NW3, after a £1.9 million loss.
Even though gross profits jumped 8.7 per cent in 2017, earlier this year, it was named one of the UK’s loss-making retailers, with financial analytics firm Company Watch placing it in its ‘warning area’.
OTHER WOES: In 2017, Hobbs was put up for sale by private equity firm 3i, which bought the business for £111 million in 2004. Its new owner, the South Africa-based Foschini Group, which owns Whistles and Phase Eight, thought the £80 million asking price too high, and secured it for an undisclosed sum.
WHAT THEY SAID: ‘Our sales are up, gross profit is up, our margin rates are steady and we now have a very strong platform to grow.’
The Duchess of Cambridge at the National Portrait Gallery in February last year wearing an Orla Kiely dress
ORLA KIELY: COLLAPSED OVERNIGHT
Kate has been wearing the Irish designer, known as ‘The Queen of Prints’, since 2011, when she was crafting her early royal looks.
Her first high-profile outing in Orla Kiely came in February 2012, when she wore the brown wool ‘Birdie’ dresscoat to visit a school in Oxford – and ended up with a splodge of red paint on the sleeve. Ever-thrifty, she wore the coat again in November 2013, on her return to the spotlight after Prince George’s birth.
She also owns a grey pleated dress by the designer, which she wore for a charity engagement in October 2015, and this powder pink appliqué frock which she donned at Paddington station in November 2017. Most recently, she chose the Leith Margaret smock dress, a £490 mid-length black floral design, for the opening of an exhibition at the National Portrait Gallery in February.
Mum Carole and sister Pippa are fans, too, with Carole sporting a blue polka-dot dress to hospital to meet Prince George in July 2013, and Pippa wearing a £120 white Kiely blouse on her honeymoon.
All of Kate’s outfits sold out within 24 hours, with designer Orla, 55, who set up the brand with her husband, Dermott, in 1995, delighted by the royal endorsement. ‘We don’t know in advance,’ she said in 2017, ‘so it’s a case of, ‘Holy smoke!’ ‘
FINANCIAL LOSSES: The brand went bust overnight this week, closing all five of its shops, ceasing online trading and going into voluntary liquidation. Liquidators blamed the collapse on ‘challenges’ in recent years. Profits fell from £109,000 to £74,000 last year, according to Companies House records, although turnover grew from £7.2 million to £8.3 million.
OTHER WOES: Staff were reportedly escorted out of the building in tears, with one source saying they were told they wouldn’t be paid for three weeks’ work. It was also said that Kiely and her husband paid themselves £400,000 as the fashion empire was on the brink of collapse.
WHAT THEY SAID: ‘We apologise for any inconvenience caused . . . Thank you for embracing our brand and designs throughout the years and for your ongoing support.’
Kate Middleton appeared on TV with her new fiancé Prince William on 16 November 2010 in a blue Issa wrap dress. The £400 garment sold out in five minutes
ISSA: DESIGNER QUIT BRAND
When a youthful Kate Middleton appeared on TV with her new fiancé Prince William on 16 November 2010, wearing this blue wrap dress by sleek womenswear brand Issa, it should have been the best day of founder Daniella Helayel’s life.
The Brazilian – born designer, who started making dresses when she came to Britain in 2000 and built a cult celebrity following, said her company had been in ‘serious financial trouble’ — but Kate turned its fortunes around.
The £400 garment sold out in five minutes and was reordered ‘countless’ times, with one New York department store buying 1,100. ‘We soon knew Kate was wearing Issa because the phones began ringing and didn’t stop,’ Daniella explains.
‘It was bonkers.’ Kate had worn the label previously, buying dresses directly from Daniella’s studio, but the designer had no idea the dress would feature on such a momentous occasion.
At its peak, the brand’s value boomed to £47million. But the Duchess’s endorsement also triggered its demise. ‘I didn’t have the money to finance production on that scale.
The bank refused to give me credit and the factory was screaming for me to pay its bills,’ says Daniella.
Later that year, she sold 51 per cent of the business to close friend Camilla Fayed, daughter of Egyptian magnate Mohamed Al-Fayed. But relationships soured and in 2013 Daniella quit as creative director.
Issa closed two years later. Having cut all ties, Daniella did produce special £200 versions of her iconic dress for a United Nations moneyraiser in 2016, then launched a new clothing line of her own, Dhela, in 2017.
FINANCIAL LOSSES: Issa ceased operating in December 2015, with final company accounts showing annual losses of more than £4.3 million.
OTHER WOES: In 2017, the department store House of Fraser bought what remained of the brand, taking it on as one of its in-house womenswear labels. Yet 12 months later House of Fraser, too, is in dire straits. Having announced 6,000 job losses and the closure of 31 stores, it’s been bought by Sports Direct tycoon Mike Ashley.
WHAT SHE SAID: ‘I had a great business, which I’d built up on my own over a decade. To watch it evaporate was heartbreaking.
Kate chose to wear Alice Temperley at the Action on Addiction Autumn Gala Evening in October in 2014
ALICE TEMPERLEY: £9 MILLION LOSSES
The bohemian British brand is a favourite of Kate’s — for everything from casual days out (the embroidered blouse she sported on her 2011 Canadian tour) to formal occasions (the green lace gown she wore to a London gala in March 2017).
She chose Temperley London, founded by 43-year-old Alice — dubbed the ‘English Ralph Lauren’ — for a post-engagement outing to Wimbledon in June 2011, and again in 2014, when she wore a daring black cut-out number to a London charity event.
Both times the garments, which can cost up to £5,000, sold out overnight, with fans flocking to the website.
In a 2013 interview, Alice, who said she received no prior warning when Kate was about to step out in one of her creations, described The Duchess as ‘the perfect modern-day woman’.
With Carole and Pippa both also Temperley fans — not to mention a host of celebrity devotees including Beyoncé, Emma Watson and Heidi Klum — it seemed its future was secure. But beneath the surface cracks were beginning to form.
FINANCIAL LOSSES: In 2016, reports showed losses of more than £9 million over five years. In both 2011 and 2012, Temperley Holdings lost more than £1 million, followed by pre-tax losses of over £5.8 million in 2013.
In 2014, the company posted losses of £2.8 million, with auditors warning of ‘material uncertainty’ over the brand’s future.
Well-connected Alice secured a £1.8 million bail-out from 20 wealthy friends to stop the business going under. And in January it was reported that things may be turning round with growth almost doubled to 9 per cent.
OTHER WOES: Alice’s business troubles coincided with the breakdown of her marriage to German financier Lars von Bennigsen, whom she married in 2002. The pair, who have an eight-year-old son, Fox, separated in 2011.
She put Cricket Court, her beloved listed Somerset mansion and the venue of her extravagant summer parties, on the market in 2016, slashing the price by £250,000 to £2 million after it failed to sell.
WHAT THEY SAID: ‘Temperley London’s business continues to develop strongly on the back of a newly focused strategy.’