Kingsmen Creatives

[Jon-san]

The fittings in Uniqlo shops look very plain and simple. Wonder if Kingsmen can make good margin on it?

1 thing to note is that fittings may be plain and simple, but Uniqlo's product range consists of a large number of cold wear items. Hence, good quality fittings that can last are needed, to carry the weight of all those heavy clothings. That maybe where they have that little extra edge, which in return, can translate to their higher profit margins, due to quality of work performed.

[cif5000]

Hence, good quality fittings that can last are needed, to carry the weight of all those heavy clothings. That maybe where they have that little extra edge, which in return, can translate to their higher profit margins, due to quality of work performed.

Why should good quality fittings produce higher profit margins?

[Jon-san]

Hence, good quality fittings that can last are needed, to carry the weight of all those heavy clothings. That maybe where they have that little extra edge, which in return, can translate to their higher profit margins, due to quality of work performed.

Why should good quality fittings produce higher profit margins?

I meant better quality of work, which is a result of using better quality materials.

[Musicwhiz]

I meant better quality of work, which is a result of using better quality materials.

Actually, my view is that better quality materials may also necessarily add on to costs, so it may not always result in a better gross margin and pricing terms for Kingsmen. Much of the work involved is also labour-intensive, and requires the co-ordination and co-operation of other contractors (and their sub-contractors).

From the Uniqlo article, it seems that they intend to expand their operations further; and this is where Kingsmen can assist in terms of roll-out Management services. I believe the Interiors Division is able to sustain good margins and revenue growth because of this package deal which Kingsmen can market to its clients. Not only does a client get quality fittings and timely service, but Kingsmen can co-ordinate simultaneous roll-outs and ensure all the Interiors are done according to the client's high standards.

Just my 2-cents on this.

[cif5000]

Hence, good quality fittings that can last are needed, to carry the weight of all those heavy clothings. That maybe where they have that little extra edge, which in return, can translate to their higher profit margins, due to quality of work performed.

Why should good quality fittings produce higher profit margins?

I meant better quality of work, which is a result of using better quality materials.

I still don't see how using better quality materials or work can result in better margins.

But I do know of this phrase 偷工减料 - usually used to describe a contractor who tries to boost his profits by using inferior materials and labors.

[Thriftville]

Not too sure how Kingsmen quote their customer. If the project is quoted based on lump sum, ie $20k to fit out the shop, then better quality material will lower Kingsmen's profit.

However, if the project is reimbursable, and Kingsmen will take like 20% management fee from the total project cost, then better material will boost Kingsmen's profit.

Is it correct to say that Kingsmen is in-charge of project management? They will sub-con all those small task to other small contractors to do.
In that case, then Kingsmen will need more staff in management position, thus become less labour intensive? Please share your thoughts.

[hongonn]

Just something that comes to my mind. For their retail sector customers, be it Uniqlo or Espirit or Hour Glass, i believe these customer will have the same look and feel presentation, standardize across all their global retail stores.

Just like the McDonald restaurant no matter where you see it, in any country, will have the same look. The look and feel and design is already defined in house by the customer.

Then this presents a question what is the Kingsmen's role to those customers, is Kingsmen just a renovation contractor who just provide the labour and material, and not much value added in term of interior design and consultation?

Thus it may also explains why the thin margin?

[Musicwhiz]

Coach is one of Kingsmen's clients. Note the section in BOLD which states that Coach intends to open 30 new stores in China per year. This potentially bodes very well for Kingsmen in their plan to expand their Greater China operations, and also for their roll-out Management services!

Business Times - 21 May 2011

The men start getting it again at Coach

Its store at Paragon will have a separate entrance for men - to comfortably enter a store better known for its ladies' products

By FELDA CHAY

LUXURY lifestyle handbag and accessory maker Coach Inc can hardly be considered a masculine brand. After all, when executive creative director Reed Krakoff took over in 1996, he proposed to turn the American name into one that focused on the three Fs: fun, feminine, fashionable.

But the group may now be dropping the feminine tag as it attempts to rebuild the men's business that it left in a dark corner of its display shelves some time between the late 1990s and early 2000s.

'You probably know us as more of a women's brand, and we have been a very successful women's brand. But we started off, 70 years ago, as a men's brand,' shared Andre Cohen, the label's president and chief executive of Asia.

In the last decade or so, however, the flourishing women's department overshadowed the men's, pushing the brand to align itself more closely with its feminine side.

'But consumers kept coming back and telling us, 'why aren't you doing more for men? The old briefcase I have is 10 years old and I love it, but I want something new now',' said Mr Cohen.

So in the past year, Coach has focused on building up its men's business - a segment that it says accounts for 15 per cent of the global luxury market, and 25 per cent of Asia's luxe business.

It has already built five men's stores in Japan, and is expanding its men's business in China - where males make up some 50 per cent of luxury spending in the country.

Coach's renewed interest in men will be felt in Singapore, where its store at Paragon shopping mall, which carries an assortment of its men's line, will have a separate shop entrance designed to suit the clientele; men, after all, would feel more comfortable walking into a store that doesn't have a display clearly geared towards the fairer sex.

The group - which will take over direct control of its retail businesses in Singapore and Malaysia from distributor Valiram Group through a phased transition starting in July - hopes to significantly grow its business over the next few years, but declined to provide sales targets. Currently, the two countries generate annual retail sales of about US$50 million.

According to Mr Cohen, taking direct control of its stores is something that it is moving towards over the longer term. Coach currently has direct control of its stores in the US, Japan and China.

In Asia, for instance, Coach has set up an entity called Coach Asia that's focused on the region outside of China and Japan, and it is in the process of identifying markets that the group wants to run directly.

Still, it believes that distributors have a key role to play in the business.

'We've got strong partnerships with many distributors and we still see a role for distributors,' said Mr Cohen. For example, while Coach will soon take control of its Singapore stores, Valiram will continue to run the brand's shops at the airport.

'We still see a role and we value those partnerships, but where it makes sense to Coach, we will get more involved in running markets directly.'

Working with distributors is also important in markets that Coach is not familiar with, said Mr Cohen. 'Some markets may also be too small for us to run directly.'

Earlier in May, Coach announced its intent to pursue a dual listing of its shares on the Hong Kong Stock Exchange, in addition to its current listing on the New York Stock Exchange.

The move comes as the brand seeks to further expand in China - its fastest growing market.

The brand doubled its sales in fiscal year 2010 to over US$100 million in the country, and said that it was on track to generate sales of about US$185 million for its fiscal year 2011, up from its estimate of US$175 million previously. Coach is targeting a 10 per cent market share in China - which is projected to be a US$5 billion market - over the next three years. This translates into sales of US$500 million a year by FY2014.

Its current market share is 5 per cent, said Mr Cohen.

'We are looking to add 30 new locations per year in China, and these can be flagship, standalone retail stores, shop-in-shops, and department stores and factory stores,' he said.

For the third quarter ended April 2, Coach said sales jumped 14 per cent year-on-year to US$950.7 million. Profit was US$186 million, or 62 US cents a share, up from US$157.6 million, or 50 US cents, a year earlier. Currently, North America makes up about 70 per cent of the company's sales.

[dydx]

For the customer/market segment of high-end or leading branded fashion/consumer products (e.g. Coach, Tiffany, Uniqlo, etc.), these retailers understand the merits of having well-designed, high-quality, and functional stores, in order to project/enhance the good image of their brands and products, provide/support a good shopping experience for their customers, and sometimes just to purposedly create a 'Wow' effect - e.g. the flagship stores for LV and Prada at Ion Orchard. Therefore, they are quite willing to invest whatever that is required - good design, high-quality fit-out for the stores, and the supporting marketing/promotional activities - in order to achieve marketing/retail success for their products, and their longer-term brand positioning and marketing objectives.

These retailers usually also have the necessary financial means to invest in well-designed and high-quality stores, including massive store expansion or roll-out programmes in key cities (e.g. like Shanghai, Singapore, etc.) or country markets (e.g. PRC, USA, etc.). And these retailers and principals are usually demanding customers - they want good, creative, functional designs for their stores; high-quality fit-outs (both materials used and workmanship); on-time completion; proper/controlled project management throughout the design, construction and roll-out phases; proper cost control; and competitive pricing (but not necessary the lowest price!). On top of that, these retailers and principals would have a natural preference to want to deal with experienced professionals and people with a good track record, and who are proactive, able to solve problems, and re-assuring, as they themselves are usually also employees/managers of well-established organizations which do not welcome unexpected operational problems in their businesses.

Based on the above, I guess it is not too difficult to understand why Tiffany, Uniqlo, Swarovski, FJ Benjamin, The Hour Glass, etc., have chosen to use Kingsmen's service in Singapore and in the region. It is also not difficult to understand why Kingsmen has built is organization over the years to its present form - and continue to invest in its capabilities - to better meet the needs and expectations of these retailers and principals, which are obviously good and desirable long-term customers to have.

[valuestalker]

Find something interesting from Business Times today, direct quote from Benedict Soh:
========================================
"Don't give up in the face of extreme challenges"
- that's the biggest lesson that i learned during Expo '92 in Seville when our company was constructing the Singapore pavilion.
The benefit of having survived that episode is the lesson that nothing is harder, in comparison to the multiple challenges during that period.
The best advice is, "We have to continue to improve or we are left behind, as all others are improving themselves"
- these words of wisdom come from Lee Gian Poh, a true gentleman and respectable leader in optical trade, some 30 years ago and they are still relevant today.
========================================

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Find something interesting from Business Times today, direct quote from Benedict Soh:
========================================
"Don't give up in the face of extreme challenges"
- that's the biggest lesson that i learned during Expo '92 in Seville when our company was constructing the Singapore pavilion.
The benefit of having survived that episode is the lesson that nothing is harder, in comparison to the multiple challenges during that period.
The best advice is, "We have to continue to improve or we are left behind, as all others are improving themselves"
- these words of wisdom come from Lee Gian Poh, a true gentleman and respectable leader in optical trade, some 30 years ago and they are still relevant today.
========================================