Karen Millen shifts to affordable luxury market as it plans growth Karen Millen is poised to step up its international expansion as it shifts its focus to the affordable luxury market. Mike Shearwood, chief executive, said Karen Millen planned to reach 400 stores in 2014, through a combination of wholly owned and franchised outlets. The group will open a directly operated flagship store on New York's Fifth Avenue next year, but it will also open stores in South East Asia, Central America and even Outer Mongolia. The fashion chain has 360 stores in 58 countries, with 65 per cent of sales coming from outside the UK. Mr Shearwood, who has strengthened the group's management team with a series of appointments, said the retailer had the ability to become a global affordable luxury brand within women's clothing. There are actually very few global apparel [retailers] between high street and luxury. The majority of the competition that fill that sector are accessories players," he said. Everything we do should be luxury except the price. That gives you a true point of differentiation. Karen Millen is changing the look of stores, with a smaller number of sizes on display at any one time, allowing the product "to breathe, so people can see the quality," Mr Shearwood said. Exclusivity is being enhanced by small quantities of each design. Mr Shearwood said the aim of the changes was to highlight the quality of the product, and to move away from a perception that it was focused on dresses. Karen Millen's clothes are designed at its head office in Shoreditch, London. A team of pattern cutters and machinists makes samples in house, while designs are adapted for different sizes, giving the brand its unique fit. Product developers work with factories to manufacture the garments. The retailer uses primarily Italian fabrics, while its lace comes from a mill in Calais that also supplies Stella McCartney. The retailer, which was spun out of the Aurora group, is directly owned by Kaupthing, the Icelandic bank, which holds 90 per cent, with management holding the remainder. Karen Millen's global sales were broadly flat in the year to March at £260m, while earnings before interest, tax, depreciation and amortisation fell from £15m to £13.5m, reflecting investment in new stores, and costs associated with separating from Aurora. Mr Shearwood did not comment on speculation that Kaupthing could look to sell Karen Millen, given a rush of sales and initial public offerings in the retail sector. He said: "Our fundamental responsibility is to drive value for our shareholders no matter who they are. We are concentrating on putting the business in a position whereby it is absolutely primed for growth.