Charlotte Semler: Too sexy for the money men, too hot for the media, but now it's boom and bust

Five years ago, Charlotte Semler and Nina Hampson, a former advertising executive and retail consultant respectively, noticed the burgeoning growth of the sex-accessory industry across Western capital cities. Quick to spot a trend that would give Ann Summers almost as much presence on British high streets as Woolworths, and persuade the respected women's magazine Good Housekeeping to road-test sex toys, they set up a business. They called it Myla, an upmarket boutique and mail-order operation selling racy lingerie and designer adult toys. "We believed, and our research confirmed it at the time, that there was an opportunity to create a high-fashion and luxury brand which was also a sex brand," says Semler.

Despite such optimism, their idea was not to be embraced at first, as the pair discovered when they set out to raise funding to launch the firm. As Semler explains: "Because we were dealing with sex-related merchandise, a lot of potential backers felt uncomfortable and were reluctant to take our idea to their investment boards. Also, venture capitalists prefer businesses-to-business plans and I think they viewed us as very high risk at this stage."

Long after they'd started approaching investment houses, Semler and Hampson came across a funding partner in the stockbroking firm Daniel Stewart. Semler recalls: "It was pot luck. I think they originally saw us because they thought it would be entertaining. There's no signposting around the venture capital world and in this sense it's an inefficient market. It took us six months to find Daniel Stewart."

Peter Shea, group chief executive of the stockbroker, says: "We decided to help Myla raise funding because we liked the plan and believed Charlotte and Nina would be able to deliver the goods. Also, as we had a small venture fund at the time, we took a small stake." Along with Semler and Hampson, other shareholders now include the venture capitalist Singer & Friedlander.

Five years on, with Semler at the helm as creative director and with Hampson as joint chief executive, the company generates revenues of around £3m to £4m and employs some 50 staff worldwide. Customers, whom Semler describes as a combination of "independent, high-earning females and well-married women", can buy lingerie and exclusively designed sex toys from five Myla shops in London as well as its store in Madison Avenue, New York. Products are also available on the web, through catalogues and from concessions in Selfridges and Liberty. Another concession is to be unveiled in Paris in Galeries Lafayette, while wholesale agreements are under discussion with quality retailers in Canada and Italy.

Sex toys account for around 20 per cent of the brand's sales and, in line with its upmarket positioning, they are the work of internationally renowned designers such as Tom Dixon, Marc Newson and the sculptor Mari-Ruth Oda. Made for play, they are also seen as individual works of art. "Bone", a handcrafted vibrating toy which retails for £199, is frequently listed as a best-seller.

Semler says one of Myla's differentiating features is its design. "We are aiming at women who are 25-plus and who are style and fashion conscious. They also have a certain level of affluence, given that Myla is a luxury brand. While we have an awful lot of male customers, the person we consider the most from a design point of view is always the woman."

Semler admits that the move into concessions and the development of standalone stores were not priorities in the early days of the business. "Our original concept was based on a web and mail-order model, with retail as a secondary tier," she says. "We were very lucky to get a concession in Selfridges, and it was largely because of Vittorio Radice, who was running things at the time.

"We were surprised because we never thought a department store would get involved with us until we had proved that our retail concept could work on a standalone basis. It's ironic looking back that, a week after our launch, we had a concession open in Selfridges."

Spurred on by their success in the store, the pair focused on developing retail outlets. The first to be launched was in Notting Hill, west London, the site of their head office. "We opened that because of location and on the basis there was office space in the back, and that overall it was cheaper than staying in our old offices. So in effect we got the shop for nothing."

Semler adds: "Our shops have been very successful - they've grown much faster than mail order." Four more have since appeared in smart London locations and, last year, Myla expanded overseas, opening its first non-UK store in Madison Avenue.

The move was driven by demand. "We had a substantial number of American customers online," says Semler. "In addition, we had a lot of New York customers buying in our London stores."

The pair have found conducting business in the US "hassle-free - they don't burden you with stupid regulations", so it is conceivable that there will be further expansion in America. Nor does Semler dismiss the possibility of joint ventures as a route to new markets, provided "they are with the right partner".

Press her about the challenges of the job and, in common with other retailers, she will concede that sourcing and manufacturing can be vexatious, and fundraising demanding. Ask her about the competition and she will immediately cite the Italian luxury lingerie brand La Perla.

Reflecting on the future of the industry, Semler is confident - despite what she describes as the traditional reluctance of British magazine editors to cover this space - that sex retailing will become more mainstream.

As she says: "Five years ago when we started out, no one wanted to write about us. And it's extraordinary to think that, in four years, we've moved from a situation where no department store would contemplate selling sex toys to it being commonplace."

Which might all suggest that the stereotypical image of the British as sex-shy could have had its day.

BIOGRAPHY

Charlotte Semler

Born: 1971, Denmark.

Education: BA in politics, philosophy and economics, Oxford University.

Career (1992): corporate finance analyst with investment bank Wasserstein Perella.

1994: strategic planner, Saatchi & Saatchi.

1997: board planning director, Lowe Howard-Spink.

2000: founds Myla with Nina Hampson.