ECONOMY

Folli Follie plans to open its first stores in jewelry-mad Spain in 2002

Jewelry retailer Folli Follie is planning to open its first stores in Spain next year and penetrate the American market by 2005, its management told Reuters late on Tuesday. Our entry in Spain in 2002 will take place through a 100-percent owned subsidiary company, Folli Follie’s Vice President George Koutsolioutsos told Reuters in an interview. The company, which markets jewelry, watches, perfumes and leather accessories, is exceeding its sales targets, while other luxury goods companies are trimming forecasts in the global economic slowdown. Seeing opportunities in the German and Spanish markets, the retailer plans to first tackle Spain, where spending on jewelry is high and tourism growing, its vice president said. Koutsolioutsos said Folli’s growth is based on cheaper prices and the fact that its main target group – working women aged between 20 and 40 – keep following fashion trends, despite the slowdown. The retailer last week reported sales growth of 70 percent to 70 million euros ($62.5 million) for the nine months to September. Pretax profit after minorities rose 60 percent to 18.4 million euros. Folli Follie has a current network of 200 stores in 19 countries. Its main focus is Asia, where it realizes 60 percent of its sales. With the economic slowdown already having an impact on sales of luxury goods, and groups such as Gucci and LVMH trimming sales projections, Folli Follie expects to comfortably weather the storm. Koutsolioutsos said Folli will seek to expand its network by an annual 15 percent to number 400 stores by 2004. With 54 shops in Greece, it will be looking to expand in other European countries, including France and Italy. We are starting a pilot program to sell products at the Frankfurt airport and are very close to a deal with Lufthansa, British Airways and Air France for in-flight sales, Koutsolioutsos said. The company already has similar agreements with Japan Airlines and Singapore Airlines. It projects sales in duty-free shops will reach 10 percent of its total revenues this year. Koutsolioutsos gave an upbeat outlook for the next five years. Folli Follie expects annual sales and profit growth rates of about 40 percent. We actually benefited from the economic slowdown in Japan as cheaper rent and advertising costs contributed to a faster expansion of our network there, Koutsolioutsos said. Folli Follie operates 50 stores in Japan, which generate 25 percent of its total sales. By 2004, it targets a network of 100-120 branches. Our intention to expand into the USA was planned for 2005, but this may take place sooner due to the economic slowdown, Koutsolioutsos said.