Business Model
In his first year of business, Louboutin sold 200 pairs of shoes. Today, he sells 700,000 a year, and expects revenue to grow at an annual rate 40 percent. In terms of market share, the U.S. accounts for 52 percent of Louboutin's sales; Europe, the Middle East and Russia, 30 percent, and Asia & Japan, 18 percent. 95% of the firm’s $300 million in annual revenue comes from shoes, with the remainder derived from purses and handbags. They expect the volume of handbags to eventually represent 20% of their annual sales.
Wholesale purchases represent 88% of the business, but that figure is expected to change as more boutiques - both company owned and through partnerships are opened. Overseas, the company has partnered with Pedder Group of Hong Kong for distribution in their Asian markets, and the Chalhoub Group of the United Arab Emirates for their representation in the Middle East.
The firm currently has a strength of 420 staff members (referred to as Loubi's Angels) around the world. Most of the footwear is manufactured and produced at his factory in Milan, but he also maintains a small atelier on Rue Jean-Jacques Rousseau, for private clients and one of a kind creations.
Louboutins can sell from $495 and up, with crystal-encrusted pair costing $6,000. The base price for a custom-made pair of Louboutin is $4,000. If the style already exists it’s standard price tag plus 30%.
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