Briefs encounter: Where next for lingerie after Terry Leahy invests in Gilda & Pearl?

Former Tesco boss Terry Leahy has invested in lingerie. And others are eyeing opportunities in the sector

This week the former Tesco boss Sir Terry Leahy emerged as a financial backer for a small but growing business. It does not sell groceries or meal deals. Instead it is a boutique luxury firm that sells fancy knickers or kimonos costing around £1,000 each.

Sir Terry is joined by a host of retail veterans in backing the London lingerie company Gilda & Pearl, which counts the model Suki Waterhouse among its fans.

However, they are not the only backers wanting a peek into the world of undergarments, with domestic and international investors believing there is serious money to be made in the UK as greater disposable income leads to women splurging on bespoke and designer lingerie.

So what are the plans for Gilda & Pearl and why is the market more lucrative than ever? And can we expect new brands to spring up in Britain with a physical high-street presence?

What is Gilda & Pearl?

Founded by Diane Houston in 2008, the brand notched up revenues of £150,000 last year and wants to double that figure in 2015. It aims to grow in the UK through shops and online, as well as in the United Arab Emirates, China and the US. Previously it has sold through concessions but it will open its first atelier next month.

The expansion is being funded by a consortium comprising Sir Terry – who left Tesco in 2011 after 14 years at the grocer’s helm – Iain McDonald, a partner at the investment firm William Currie Group, the former Asos finance chief Jon Kamaluddin and ex-Best Buy chief Bob Willett. The investors have ploughed around £300,000 into the business.

Sir Terry told The Independent: “The luxury sector continues to set the pace for the retail industry and lingerie is relatively undeveloped within it. Gilda & Pearl, with its focus on bespoke services, has enormous potential not only here but globally, as luxury consumers search for top-quality products that feel unique and exude quality.

He added: “As a business and brand, Gilda & Pearl’s opportunity also straddles the premium gifting market, adding to its successful growth record.”

Meanwhile, Mr McDonald praised the company for selling products both designed and made in the UK.

Why is lingerie so hot?

A look at the balance sheets of established companies such as Agent Provocateur would show investors that British buyers do not seem to be put off by hefty price tags, with some of the brand’s bras costing more than £500 each. Agent Provocateur’s pre-tax profits rose from £3.8m to £6.2m on sales of £53m in the year to March 2014.

Sarah Blackman, editor of the trade magazine Lingerie Insight, said: “The luxury lingerie market is a particularly attractive market for investors at the moment as consumers increasingly demand quality garments. Women are turning to underwear as their treat purchase.”

She added: “There is also a trend for luxury lingerie and nightwear crossing over into outerwear – meaning garments are multi-use. For example, a silk camisole could be worn for sleeping or to the office under a smart suit jacket.”

The prospering market has prompted companies such as Myla, a brand that counts the model Kate Moss among its customers, to commit to expansion in 2015. Spurred by the backing of the Hong Kong-based Jynwel Capital, which bought the business in August 2013, Myla is understood to have agreed a deal to open its first UK shop in Mayfair. It said it is planning international expansion, as well as store openings.

Which will be the next lingerie firms to expand?

The property agent CBRE is often an early port of call for brands wanting to make their British debut or to expand. Its retail team advises on securing shops across the UK, and Hugh Radford, executive director at CBRE, predicts a wave of new luxury lingerie groups on the high street.

He said that in London there are at least seven lingerie retailers looking to secure shops in the West End by the end of 2015. “Consumer interest and spending is soaring for bedroom wear and accessories, most probably in the wake of the Fifty Shades of Grey movement.”

The e-tailer Damaris is exploring moving on to the high street. A spokeswoman said: “We do have exciting expansion plans under way. There is a lot of feedback to suggest that [the lingerie firm] Mimi Holliday and Damaris fans would love to see a retail presence in the UK.”

Meanwhile Asceno reports 50 per cent growth in lingerie sales over the past year.

Other companies looking to expand in Britain include Adina Reay, La Perla and Rigby & Peller. With many willing to pay big rent and take a gamble on what is still a shaky UK high street, it is likely their backers are convinced the potential returns outweigh any risk.