Luxury Lingerie Maker La Perla Bets Big on Hong Kong

La Perla’s new flagship store in Hong Kong.
La Perla

La Perla, the Italian lingerie maker, is bucking the store-consolidation trend to expand in China, betting that Chinese demand for its products such as $10,000 bras made with 24K gold thread will continue to rise.

On Thursday, La Perla opened a flagship store on Russell Street across from Hong Kong’s Times Square, an area that once boasted the world’s most expensive retail space but has seen a string of store closures lately. Nestled between some largely empty watch and jewelry shops, the new flagship store has three floors, featuring women’s black lace sets, silk bodysuits and men’s lounge wear.

This is La Perla’s fourth store in Hong Kong. John Hooks, CEO of the Italian company, said it has plans to open another three to five stores in Greater China in the next year or so. The now private-equity-owned brand has plans to bring its total store network from 215 to 230 globally in a year. The company has seen 30% annual sales growth in its stores, with growth in China a little faster at 35% to 40%.

Mr. Hooks said China’s slowdown has affected demand, but the impact has not been as acute as it has been on other luxury brands. Many brands have taken a hit due to Beijing’s anti-corruption campaign and the clampdown on lavish gift-giving; some luxury goods companies had also expanded too quickly in China, becoming overexposed.

Items on display at La Perla’s flagship store in Hong Kong.
La Perla

Coach closed its flagship store in Central in August, and other brands like Prada and Burberry have seen a decline in sales, which they blame on weak China demand.

“You plan these things (store openings) years ago; I can’t say we predicted the economic situation now,” said Mr. Hooks. “But lingerie is not to be ostentatious, not to show off, so those factors aren’t really at play with us.”

Some even argue that as people become more careful about showing off luxury items in public, they are more willing to enjoy discreet luxury pleasure.

Another challenge for luxury brands in Hong Kong is the strength of the U.S. dollar-pegged local currency. Lauren Song, a VIP customer at La Perla who is from mainland China and now lives in Hong Kong, said she buys some small items in the semi-autonomous city. But when it comes to unique items and large purchases, she goes to Europe every quarter to shop, partly because of the sizable price difference. Ms. Song said she’s a fan of Le Perla’s silk and lace products because they look elegant and have good craftsmanship.

HM is another brand that bets on continued consumer interest in Hong Kong and China. It opened its new flagship in Causeway Bay, on the same day as Le Perla.

“The Chinese consumer is very savvy now. They do their research before buying and often mix high-street items with luxury items,” said Magnus Olsson, HM’s country manager for Greater China. The world’s second-largest fast-fashion retailer is betting that consumers will open their wallets, despite slowing retail sales and slowing visitor arrivals in Hong Kong.

“We’re not worried about lower tourist numbers. Hong Kong is one of the global fashion retail hubs in the world. It’s logical we will have a global flagship store here,” he added.

La Perla, which was bought two years ago by the Pacific Global Management Group owned by Italian entrepreneur Silvio Scaglia, is in the progress of revamping its products to include resort wear that can move from beaches to yachts to broaden its appeal.

“I don’t think there’s a consumer crisis in China; people will spend more money on luxury in the foreseeable future,” said Mr. Hooks. “The question is how they will spend the money. Hopefully we will have something they like; the problem is to have what they want.”

La Perla has seen a rise in Chinese travelers, even in locales such as Southern Italy and in smaller cities across the globe. The company recently opened a big new store in Seoul and will launch another in Tokyo early next year, partially to tap into demand among Chinese tourists abroad.

“Chinese shop everywhere, thank God,” said Mr. Hooks.

–Wei Gu, with contributions by Anjie Zheng. Follow Wei Gu on Twitter @weigu.

(Update: This post has been updated to include comment from HM’s country manager for Greater China.)

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