The tide has turned, the worst is over, there are glimmers of hope.
Whatever cliché one wants to use, it seems as if the industry is staging a comeback after the debacle that was late 2008 and all of 2009. Consumers are sallying forth again like nervous rabbits coming out of the bushes, beginning to snap up not only handbags, shoes and jewelry, but also apparel. Comparable-store sales are on the rebound from their depths of 12 months ago, and executives express optimism that the upswing will continue through the year. According to the U.S. Commerce Department, consumers increased their spending 3.6 percent in the first quarter, the strongest showing since early 2007.
This story first appeared in the May 5, 2010 issue of WWD. Subscribe Today.
“Right now, I feel a sense of optimism…but it is fragile,” Stephen I. Sadove, chairman and chief executive officer of Saks Inc., said last week.
Fabrizio Freda, president and ceo of the Estée Lauder Cos., told analysts last week, “We believe consumers are beginning to reconsider luxury products.”
Yet even as companies step up advertising, marketing, store openings and hiring, uncertainties remain. “From day to day, no one knows whether it will be issues with financial markets, fabric prices, labor shortages or even volcanic eruptions that will impact our business that day, week or in coming months,” said Seth Morris, president of The Carole Hochman Design Group. “I think consumers have money they are willing to spend, but they definitely remain value driven.”
So how do companies figure out the lessons of the Great Recession to ensure the “green shoots” of growth don’t wither in the summer sun?
The first major lesson, executives agree, is not to get drunk on the rebound à la the prerecession euphoria. “Make sure you don’t forget the lessons of the recession and get into an overexuberance too quickly,” Sadove said.
“We anticipate that consumers traumatized by the severity of the economic downturn will continue to watch their wallets in the short term,” said Don Montuori, publisher of Packaged Facts, which recently issued a report called “The Post-Recession Consumer in the U.S.” “In response, retailers and marketers are coming to grips with the need to reposition their brands.”
Companies now can turn their attention to investing in their brands and seizing overseas and domestic opportunities. Executives said they are trying to be innovative and proactive. The challenging times last year allowed them to strengthen their firms by lowering costs, better controlling inventories and getting out of underperforming areas.
Among the key steps firms must take to reenergize their businesses and reengage with customers are:
• Expanding their retail presences worldwide.
• Upgrading their Internet operations, including e-commerce and social media.
• Broadening price points.
• Going one-on-one with customers via trunk shows and personal appearances at stores.
• Pumping up marketing, visual merchandising and in-store presentations.
• Hiring again and, in some cases, unfreezing salaries.
• Making key acquisitions and/or expanding licensed categories, such as handbags and footwear.
Below, WWD takes a look at key players in the designer, bridge, better and contemporary arenas in the U.S. and Europe and examines their strategies on how they’ve survived the Great Recession. None of the steps being implemented are easy or quick. But if firms are to prosper — and be prepared for the next economic shock, whether it be from the Greek debt crisis or some yet-unforeseen trauma — all of these and more are vital.
Giorgio Armani is moving ahead with freestanding stores and remodeling many of its in-store shops.
“We didn’t cut back much in the downturn, but we’re pushing ahead now and plan to open 70 new stores this year between the various lines, including A|X Exchange, in various parts of the world such as Brazil, China, India and Eastern Europe,” said John Hooks, deputy chairman of Giorgio Armani SpA.
He said Armani also has an aggressive plan to expand or renovate many of its shop-in-shops.
“We signed an exclusive deal with Macy’s to promote the Armani Jeans line in the U.S., where it’s not so strong, with the goal to start in the fall and reach 200 doors in the next two years,” said Hooks.
But core retail isn’t the only area the company is expanding. Last week, Armani unveiled a striking 160-room hotel in Dubai, in which no expense was spared, the first in a planned collection of hotels, resorts and residences in key cities around the world to be created in partnership with Emaar Properties.
Hooks also noted Emporio Armani is doing a special collection with Reebok that targets Emporio stores and select Reebok and specialty outposts. The two have developed an activewear collection called EA7/Reebok for women and men that will arrive in stores and gyms starting in July. It features apparel and footwear designed for fitness activities.
“We’re also figuring out a new way to do quick-turnaround replenishments of the season’s bestsellers in our franchisees and specialty stores to improve sellout,” he said. “We try to second guess what will sell well, and we’ve invested in IT to keep better track because the idea is to have extra fabric in-house to be able to manufacture and ship as quickly as possible.”
For Bruno Pavlovsky, the proof is in the pudding, so to speak.
Chanel’s president of fashion said the luxury brand turned the corner in the second half of last year and is growing steadily, thanks to a continued emphasis on flawless quality and innovative materials and designs.
“I think there is a good balance between customers’ perception of Chanel and the kind of product they find at Chanel,” he said. “They want to feel comfortable with what they buy and that’s the reason probably why we are quite successful at the moment.”
Chanel is keeping up a steady clip of store openings, with 10 new units planned this year, including two in China, one in Singapore, one in Vietnam, one in Lebanon and one in Turkey. In New York, the brand is revamping its store in SoHo, where Karl Lagerfeld was recently spotted shooting the fall advertising campaign.
The recovery in the U.S. is lagging behind other regions, Pavlovsky noted. “I’m very confident for the future, but today they are not back at the same levels as we had before. It will take some time,” he predicted.
Nonetheless, Chanel continues to develop high-end products using rare raw materials, a strategy designed in part to thwart counterfeiters producing cheap copies of its iconic quilted handbags.
“The product is even more than before the center of our activity,” said Pavlovsky. “I think the strength of the brand is to be able to have everything mixed together, a classic shape in a very special material or a classic material in something more fashionable.”
Several years ago, Chanel started buying up many of its suppliers — including embroiderer Lesage, milliner Maison Michel and feather maker Lemarié — in order to preserve the centuries-old craftsmanship intrinsic to French haute couture.
Recently, the brand began staging in-store events for customers to showcase the techniques that go into making a Chanel bag or jacket.
“There is no end for these kinds of things because we have new customers all the time — China is a good example,” said Pavlovsky. “It’s a permanent process for us to talk, to illustrate, to keep this heritage alive.”
“We don’t feel as if we’re coming out of a recession because we had a very good year last year with retail sales up 15 percent, profitability up as well, and like-for-like sales holding, though wholesale sales were a bit softer,” said Sebastian Suhl, chief operating officer of Prada SpA. “We were already cost conscious and try to control inventory and the flexibility of replenishments, especially in leather goods.”
Suhl said the top priority now is opening stores supported by significant public relations programs and in-store events such as cocktail parties during the openings.
“This year we plan 43 new Prada stores and 25 Miu Miu ones all over — in the U.S., Europe, Asia-Pacific and Japan,” said Suhl. “Speaking of special projects with great editorial return, the Prada Transformer event [in Seoul] was the de facto single largest project for the brand and a great platform, with 100,000 visitors on a limited reservations program.”
Chloé chairman and ceo Ralph Toledano is reaching out to customers in increasingly creative ways.
The Paris-based brand is staging exclusive store events such as trunk shows and cocktails for a handpicked crowd, but also launching more democratic online efforts such as a peek backstage at its fall fashion show with model Raquel Zimmermann.
“We have improved our systems in order to really better know the customer,” said Toledano.
Luxury consumers are seeking creativity, value and relevance, he said. With cautious retailers still keeping inventories to a minimum, the brand has lowered the average prices of its spring collection, in stores now, by 15 percent versus last year.
“We have seen that the customer responds very well, but delivering affordable prices for the sake of affordable prices doesn’t mean anything,” Toledano said. “If it’s not special, forget it.”
Resort collections account for 60 to 65 percent of Chloé’s ready-to-wear business, so delivering the right product at the right time is key. Iconic products remain especially popular.
“At the end of the day, strong pieces still sell even if they are very high priced,” he explained. “You should never compromise on quality, because that is what we are: Chloé is not a high street brand, it’s a luxury brand.”
Traffic started to pick up in the brand’s own stores in September, and April should see a strong rebound, he predicted. Growth is particularly strong in China, where Chloé hopes to open several units this year, though elsewhere it will focus on maximizing its existing store network.
The brand also is gearing up for the launch of a second fragrance in June.
“We have big expectations. The first one was a fantastic success and hopefully we’ll do it again,” Toledano said.
Burberry rocketed through the recession, and has no plans to pause and refuel. The brand, which reported a seven percent spike in second-half sales to 707 million pounds, or $1.1 billion, has a battery of fresh initiatives to spur consumers to shop.
In July, Burberry and its beauty licensee, Inter Parfums, will introduce the Burberry Beauty 96-unit makeup line, which draws inspiration from the brand’s signature trench. Initial distribution will be limited to 30 doors worldwide, and 30 to 40 more doors will be added next year. Industry sources estimate each counter will generate from 500,000 euros to 1 million euros, or $670,000 to $1.3 million at current exchange, at retail in their first year.
Last month, the brand introduced a 30-piece capsule collection known as April Showers, aimed at keeping clients shopping until the first fall deliveries arrive in June. Items include clothing and accessories built around Burberry’s iconic products: Umbrellas, wallets, iPod holders and rubber boots with the classic Burberry check have been given shots of green, yellow, blue or red borders and details.
Angela Ahrendts, ceo, said the company never let the hard economic times interfere with its core business plans.
“Burberry stayed the course during the recession, with no dramatic change of direction. We were clear that we wouldn’t cut back on anything consumer facing, and we put even greater energy behind the operational improvements that are paying dividends right across the business. As a result, we’ve been able to continue to strengthen the brand and to deliver growth over the past two years, and we’re in great shape going forward,” she said.
Ahrendts said she expects Burberry to deliver pretax profits for the fiscal year ended March 31 above current market consensus when the company reports its full-year results May 26.
In the new fiscal year, more growth is expected. The brand is set to increase retail space by about 10 percent, weighted toward the second half. Between 20 to 30 mainline store openings are planned, mostly in the Americas and Asia-Pacific region. The brand, which has been among the leaders of the luxury charge in social media and digital marketing, is showing no sign of slowing down. Burberry recently struck up a collaboration with Magnum Photos for its artofthetrench.com Web site, and is mulling plans to broadcast its spring show in 3-D to a global audience for the second time.
Valentino is feeling positive momentum again. “Thanking the Lord, even though last year we restructured some financial aspects and cut costs, we still managed to give a strategic continuity to our growth project. We may have slowed down slightly last year, but we are now pressing on the accelerator again and we’re much more optimistic,” said Stefano Sassi, ceo of Valentino.
He said while the company froze all hirings last year, it is ready to hire 10 people. “We will also continue to invest significantly in the Web, which, besides a tool for e-commerce, we also view as a micro-marketing possibility that helps us communicate with our customers and bring them closer to the brand,” said Sassi.
Valentino plans store openings in China and Hong Kong, plus the renovation of existing outposts to match the house’s new image. “Also, the crisis has in many cases challenged the relationship with our licensing partners and we’re still working on consolidating existing good ones and changing formulas that aren’t working.”
“As a major fashion and luxury goods house, we have concentrated on the development/growth of the company alongside a restructuring plan which will have an important impact in 2011,” said Gian Giacomo Ferraris, ceo of Versace. “We opened 22 stores in China last year and expect a single-digit growth as a result, and we plan on opening two flagships in Europe and two in China this year. We’re also bettering our distribution in key markets such as the U.S., Russia and Europe, especially for the signature line. We’re also working to regain the lost ground in Japan. All in all, there are comfortable and optimistic results from our stores and from the consumers, and our sales campaigns confirm that business is on the way up again.”
DOLCE & GABBANA
Dolce & Gabbana continues to put the emphasis firmly on product. “We work constantly to up the quality of our products (craftsmanship, materials and structure of the collections) and on a better expression of the DNA because they are the two driving forces behind further growth,” said Cristiana Ruella, general manager and board member. “We took this approach also during the recession and we’re starting to see the benefits.”
She said the fall collection registered a 10 percent increase versus a year ago. “We’ve also had positive feedback from our customers and already this year, sales are up and more in line with the ones registered in 2008,” she said.
Dolce & Gabbana plans to open 14 stores this year, primarily concentrated in Asia, and China specifically. The firm also continues to invest in advertising and its Web site, as well as its blogzine Swide and dandgstore.com to better reach its two million monthly users.
OSCAR DE LA RENTA
“It does feel like there’s a recovery going on in our business, but at this point, it’s very uneven,” said ceo Alex Bolen. “A market like New York has come roaring back, but California is still challenged. For the international markets, the recovery is uneven. In London, things are going great again, but in more emerging markets, such as the Commonwealth of Independent States, the recovery is nascent. We have to pick our spots where we’re focused on growing.”
For the Oscar de la Renta business, the emphasis is more on products than increasing channels of distribution. The company is close to signing a beauty deal, although Bolen declined to comment on specifics. In addition, it seeks to build up the footwear business. The firm recently hired shoe designer Edmundo Castillo, who is working on the footwear line, beginning with resort. “Edmundo used to intern for me several years ago,” said Oscar de la Renta. “I am pleased to be working together again.”
Bolen noted the fashion jewelry business “has expanded dramatically,” both in the U.S. and overseas.
For the first time in a year and a half, the company is increasing its ad budget and has been talking to publishers. “We’re taking cautious steps here. It’s a focused but increased media buy. It’s moving in a positive direction,” said Bolen.
Sensing a rebound in confidence among consumers — and its wholesale clients — Givenchy plans to bolster its business on both fronts, especially in points East.
“Since we are a wholesale-driven company, we are concentrating on opening franchises, and focusing on their development plans, especially in Asia,” said Fabrizio Malverdi, ceo of the French fashion house, part of luxury conglomerate LVMH Moët Hennessy Louis Vuitton. “We are opening stores in Singapore, Taiwan and Hanoi [Vietnam].”
Givenchy also plans to renovate stores in Hong Kong and South Korea, bringing them in line with the “black box” architectural concept it first unveiled at its flagship on the Rue du Faubourg Saint-Honoré in Paris in 2008.
While Givenchy has been on a strong growth track in recent years under creative director Riccardo Tisci, Malverdi said January ushered in a palpable sense of an economic recovery. In its own stores, sales in the three months ended March 31 rose 35 percent compared with a year ago, and the average basket also increased.
Givenchy already reported a 30 percent bump in wholesale orders for Tisci’s sport-inflected fall collection, and Malverdi reiterated that sentiment on the wholesale side continues to improve, reflected in higher inventories and purchases.
He noted Russia and Eastern Europe, slammed by the financial crisis, remain trouble spots.
To keep business humming in company-owned boutiques and franchises, Givenchy plans to step up its p.r. activity and organize more special events, especially in-store and particularly in Asia, Malverdi said.
Givenchy also plans to further develop its “capsule” collections, first introduced for the spring season. “It’s a fashion-driven collection, geared towards our loyal customer base, but 20 to 30 percent less expensive than our main ready-to-wear collection,” Malverdi said.
For next season, capsules include tight trousers, which anchor many of Tisci’s silhouettes, and romantic blouses, a signature of the house since its inception in 1952.
Pringle is positioning itself for better times, and is focused on what ceo Mary-Adair Macaire calls “prudent” growth.
“I think there is an optimism, people are feeling they want to move on and that maybe the worst is over,” she said. “We are planning and strategizing for better times and want to be there when our customer wants to spend again.”
To wit, Pringle will launch its first e-commerce site next month. The site will feature a magazine that will be guest edited by Tricia Jones of i-D, who was on location during Pringle’s fall ad shoot in the Scottish Highlands north of Glasgow. Her film footage from the shoot will appear on the new site. Pringle plans to bring in a new guest editor each quarter.
That same month, the brand also will open its first shop-in-shop at Harvey Nichols, in a space designed by Jamie Fobert Architects. The London-based firm, which revamped the Givenchy store in Paris, also is refurbishing Pringle’s Bond Street store, which is set to open in September.
Macaire said the company would not be focusing on new categories, but on its core men’s and women’s wear. In September, the brand plans to hold the launch party of the new designer men’s wear space at Le Bon Marché in Paris.
Pringle will be collaborating with the Scottish artist David Shrigley, who earlier this year created a short cartoon for the company and designed a twinset for the brand as part of a larger project with London’s Serpentine Gallery.
Macaire said she is hoping to open more stand-alone stores for the brand, but there is no timetable set.
She also cautioned that Pringle, and other brands, still had to wade out of the postrecessionary swamp. “We are still living with the effects of very conservative orders that were made eight to 12 months ago, and that is still an issue for us. Cutbacks were 25 to 40 percent and they were significant for everyone,” she said.
Expansion is in the air at Matthew Williamson. The British brand will unveil a capsule men’s wear collection, bulk up its e-commerce site and launch a coffee-table book later this year.
On the heels of a successful men’s knitwear collection that was exclusive to Harrods earlier this year, the designer is launching his first men’s wear line. The 30-piece collection will be shown and sold during Paris men’s wear week in June, and will include tailored pieces, knitwear, shirts and T-shirts.
Joseph Velosa, ceo of the company, said he believes the collection has the potential to make up 30 percent of overall sales. “It’s still a test collection, and it’ll take us a few years to get there, but we see the launch as a positive initial step,” he said, adding that, overall, the company has seen a 25 percent increase in wholesale orders so far this year.
Velosa added the company would be investing in its e-commerce site, which launched last year. “We’re investing more in the engagement side of the site. We’ll be providing more updates and linking to other sites, encouraging cross-trafficking,” said Velosa, who declined to specify how much money was earmarked for the site.
Williamson will design a capsule collection of handbags for Bulgari that will bow for spring during Milan Fashion Week in September. It is Bulgari’s first collaboration with a fashion designer, and Velosa said it will be a “great help” for Williamson’s own accessories business.
In October, the company will launch a coffee-table book marking Williamson’s 12 years in the fashion business. The book, to be published by Rizzoli, features contributions from Vogue editors Anna Wintour and Alexandra Shulman, and designers Paul Smith and Diane von Furstenberg. The company plans to have launch events in London and New York, something that Velosa said would not have taken place last year.
Swiss sportswear firm Akris, founded in 1922 and prized for its deluxe double-face garments, finally entered the handbag business last year amidst a worldwide financial crisis.
Still, the foray was met with an encouraging reception, giving the firm a new growth vector as the economic recovery gains traction and a product category it can leverage in Asia, where it is underdeveloped and where accessories and gift items are especially prized.
Peter Kriemler, president of the family-owned firm, said expanding the assortments in accessories, as well as apparel, is its chief tactic as consumers begin loosening their purse strings. “Creativity on the assortment is much more important than ever before,” Kriemler said.
Asia accounts for about 20 percent of the Akris business, which it aims to grow to at least 30 to 35 percent, he added. “Japan, for the moment, is the most difficult market,” he noted.
That said, Kriemler stressed the importance of a balanced business between Europe, Asia and the U.S., given that he expects continued volatility in currency exchange.
Akris plans to take a “conservative” approach to retail expansion this year, given that consumers are still cautious and that real estate prices have not diminished in tandem with the downturn. “Return on investment is key, so you must be more careful than before,” Kriemler said.
Absent of new openings, he said Akris would intensify the service levels in its stores, which, combined with an enlarged range of products, should boost business. Engaging with the customer, from giving advice on fashion trends to keeping close tabs on her lifestyle and wardrobe, is considered key.
He noted the firm would maintain a disciplined approach to expenses this year, after substantial cost-cutting last year. “We are well prepared for the ups and downs,” Kriemler said. “I’m not so negative.”
To meet today’s market challenges, Munich-based Rena Lange is increasing its sales force by about 30 percent in its main markets of Germany and central Europe, boosting its fashion content, enlarging the entry-level price offer and expanding the network of company-owned stores.
President Daniel Günthert said last season’s runway show during Berlin Fashion Week reflected efforts to increase “the amount of fashion” in its collection and to meet demand for “more elaborate” pieces. Initially intended for its own stores, the runway collection generated 5 percent of the fall 2010 wholesale business. Günthert said price sensitivity on the part of consumers is “up across the board” and Lange’s answer to new, price-driven European subbrands coming on the market is to “enlarge our entry-level offer.” In the U.S., Lange pants start at $595 retail; skirts, $495; jersey dresses, $695; more constructed dresses, $995, and jackets, $1,695.
He noted Lange consumers also are looking for “buy-now, wear-now merchandise” and sales to tourists are waning. “We had to do more business with our core customers, which meant increasing our marketing efforts,” he explained. These include sending out more catalogues and hosting in-store events ranging from trunk shows and book signings to full fashion shows featuring the Berlin runway collection.
Advertising is taking a back seat, at least in markets where the brand is well known. “We’re spending more on marketing, visual merchandising and window dressing because we feel what we’re doing on a store and consumer level is more helpful,” he said.
“In markets where we feel more confident, we’re opening more stores,” Günthert added. There are 21 Rena Lange shops, including four franchises. Recent openings include three new doors in Japan, one in Taipei, Taiwan, with Vienna slated for the summer.
Lange also will relocate its Munich flagship in July from Maximilianstrasse to Maffeistrasse. “It’s a time when interesting [real estate] opportunities are on the table, and you have to be open-minded when presented with such a chance,” he said. Geographically, Günthert said he spies big potential in the U.S., where Lange lost ground during the crisis. The same holds for Eastern Europe, and even in Lange’s saturated home market of Germany and central Europe. China is the new market focus. “We have a small representation there at present, but it’s where we want to be in the future,” Günthert said.
For fall, Proenza Schouler has expanded the company’s price points by adding more casual pieces that complete the Proenza Schouler lifestyle, said Shirley Cook, president. Beginning with pre-fall, these new pieces, which are also less expensive, accounted for an additional 30 percent in revenue. While the company is focused on expanding its business with the current roster of specialty store accounts such as Saks Fifth Avenue and Barneys New York, Cook said it has broadened its reach by adding more international accounts.
In February, Proenza Schouler launched an e-commerce site, which sells the PS1 bags, as well as exclusive items in limited quantities. The bags, which come in four sizes and four fabrics, have been selling very well, she said. They range from an $895 leather bag to a $4,250 large python number.
Last year, the company didn’t have to reduce head count and “we were able to keep ourselves moving along.”
“We didn’t see a decrease in 2009. We’re quite happy,” said Cook. “Business is great. We’re doing really well. We’re having a very strong 2010.”
BRIDGE, CONTEMPORARY AND BETTER
“It’s onwards and upwards,” said Elie Tahari, designer and owner of the firm bearing his name.
“The first thing will be to invest in our people. The most important asset is the people, and the next thing is the product. We want to diversify the product more,” continued Tahari, citing a sports capsule he developed for fall.
The firm has been opening three to four stores a year, and this year, it will open boutiques in Newport Beach, Calif.; Dallas’ NorthPark, and Tysons Corner, Va. It also plans to roll out four stores in Mexico, two in Greece, a flagship in Istanbul and four shop-in-shops in Spain, all with local partners. “We definitely are investing internationally. International sales are small compared to domestic sales, but the rate has been doubling almost every year,” said Tahari.
“We just launched accessories at Bergdorf Goodman, and it’s been great,” he continued. The footwear and handbags are done in-house. Categories he’d like to license are sunglasses and perfume. Tahari’s business is running at least 25 percent ahead of last year, and Saks Fifth Avenue plans to open a new shop-in-shop for Elie Tahari this fall.
Tom Murry, ceo of Calvin Klein Inc., said the company’s strategy didn’t change in 2009, despite the recession. In spring 2009, the firm picked up 2,000 new points of sale for Calvin Klein, the better line and licensed categories, and added another 2,000 points of sale in fall 2009. For spring 2010, it added an additional 2,400 points of sale. These points of sale include all the Calvin Klein better businesses, which range from women’s sportswear and women’s and men’s jeans to dresses, outerwear, tailored clothing and fragrance.
In the fall, Lord & Taylor will open a 5,500-square-foot shop for all the G-III Calvin Klein categories, such as dresses, women’s suits, sportswear and outerwear, on the fourth floor. Currently, there are about 500 to 600 shop-in-shops throughout the U.S. for these categories. “Dresses is the biggest, but over time, it will be sportswear,” said Murry. “The rate of sale in sportswear is very good. It has the potential to become a multihundred-million-dollar business.”
Murry said retailers were chasing inventory during the second half of 2009 and are so far this year, as well. “In my opinion, we’re underinventoried in every category. We overreacted and the stores we sell to overreacted.” He believes it will level out by the fall “and we’ll start to reach equilibrium.”
Murry said CKI increased advertising expenditures by 10 percent in 2009 and plans another 10 percent increase this year. He said increases are mostly in print and outdoor advertising, especially in Europe and Asia. The company is expanding stockkeeping units on its Web site, where it does e-commerce for the Calvin Klein lines. “It’s a good solid ‘B’ store,” said Murry, noting the company is considering offering the Collection via e-commerce.
Murry said there are no plans to expand the Calvin Klein better label, which is sold in the U.S., Canada and Mexico, to Europe and Asia. He sees his business growing by 20 percent this year. He predicts robust growth in all existing categories for CKI over the next five to seven years, through shop-in-shops and freestanding stores.
DIANE VON FURSTENBERG
Diane von Furstenberg’s top three priorities are improving its online business, remodeling in-store shops at department stores and launching new product categories, said Paula Sutter, president. “During the financial crisis, we used the time to strategize and incubate ideas. We’re really realizing Diane’s vision,” she said.
She said von Furstenberg “is at the forefront of social media. She’s Twittering every second of the day.” The company is redesigning its Web site and will relaunch the site in early fall.
Sutter said the firm also is looking to do some facelifts in its departments at the stores. “Anybody who’s interested in doing more business has to keep reinventing themselves. We’re updating the departments. Stores are coming back for reorders. For spring, we are exceeding sales plans over last year,” she said. Von Furstenberg will open a store on Wooster Street in New York’s SoHo in June, and Sutter expects some of the new design elements will trickle into its shop-in-shops. Currently, there are 34 stores worldwide. A new store just opened in São Paulo, Brazil, and did $550,000 in sales in the first two weeks. She said the company is “up against plan” in fall orders.
Sutter said that among potential new categories, “home is of tremendous interest to Diane.” DVF just hired a new creative director, Yvan Mispelaere. “Anytime you change creative direction, you get a fresh eye,” she said.
Tory Burch is expanding its footprint around the globe.
“We continue our global expansion in Asia, Europe and the Middle East,” said Brigitte Kleine, president. The company, which had 23 stores by the end of last year, plans to open 14 stores this year in the U.S., in cities such as Scottsdale, Ariz.; King of Prussia, Pa., and Manhasset, N.Y. Overseas, Burch plans a new store in London in the Mayfair neighborhood, and a store in Rome on Via del Babuino. The company plans to open a store in South Korea and two more in Japan. In addition, the brand will roll out more shop-in-shops in Japan and Asia. For example, it is opening 19 shop-in-shops in Japan, 14 in South Korea and one in Taiwan. The Tokyo flagship, which opened in December, “is exceeding plan,” she said.
Burch will introduce jewelry in the fourth quarter, designed by Justin Giunta. The collection of fashion jewelry encompasses rings, earrings, necklaces and cuffs. While prices are still being determined, the line will be sold in Burch’s own stores and via e-commerce, but won’t be wholesaled to department and specialty stores at this point. One of the biggest initiatives is investing in upgrading the e-commerce site, which launched in 2004, two weeks after the first store opened on Elizabeth Street in New York. Presently, the site is the biggest retailer of Tory Burch merchandise.
Kleine said there is “definitely more optimism from all channels of our business. We were able to hold our own [last year].”
As for potential categories, Klein said the company is considering doing swimwear as well as home and little girls’ footwear. Right now it is having conversations with companies regarding fragrance and ancillary beauty products. “The feeling is it’s certainly in the not-so-distant future. Once you sign a deal, it takes two years to launch a fragrance.”
Last year, Tresalia Capital, a Mexican investment firm, invested in Burch. “They are helping us evaluate and strategically look at expansion opportunities in Latin and South America,” said Kleine. The brand also is looking into Greater China and Southeast Asia, both with partners and on their own. Its long-term distribution goal is to be one-third Europe and the Middle East, one-third Asia and one-third the U.S.
Burch has grown to this point without any advertising. “Social networking is a big focus for us. Advertising is being redefined for online media,” said Kleine.
She added Burch is seeking a New York flagship to join the two stores it already has on Elizabeth Street and Little West 12th in the Meatpacking District. She said hiring has loosened up and, in the past six months, the company has added about half a dozen senior-level employees in different areas. “Last year, there was a hiring freeze. I would say we’re still cautious,” she said.
Lafayette 148 finds in-store personal appearances are the best way to build sales and relationships with customers. Deirdre Quinn, ceo of Lafayette 148, said, “Edward [Wilkerson, the company’s design director] is a key component for us. We’re increasing the amount of personal appearances he does.” Recent appearances have been at Saks Fifth Avenue and Lord & Taylor in New York.
Business is up 63 percent at stores where he’s done personal appearances this spring, said Quinn. Overall, this spring, the company has been averaging a 16 percent increase in sales. The company continues to do trunk shows at specialty store accounts. Fall bookings were up 20 percent.
Lafayette 148, which does e-commerce through its Web site, has a Facebook page and has started a blog. While the bridge firm is considering expansion to China, Quinn said: “We still have opportunities with the people we’re doing business with. We’re not changing our distribution channels.”
Despite a plethora of changes over the last few months — including the departure of its founders — Juicy Couture hopes to keep up the momentum. “The good thing for us is, although the last 18 months have been difficult for everyone, we have a very solid [profit and loss]. We didn’t have to strip down. We could maintain support in all areas, including store expansion and marketing. We didn’t cut advertising and marketing, and the last 18 months we hired people and we continued our expansion,” said Edgar Huber, ceo of the brand, which is owned by Liz Claiborne Inc. Now, he said, “we’re increasing the speed of everything we do.”
Last month, Juicy named Erin Fetherston as guest designer and creative consultant, taking the reins from founders Pamela Skaist-Levy and Gela Nash-Taylor. While she officially begins with the fall 2011 collection, the plan is for her to design a few exclusive, limited edition pieces for holiday 2010. Her contract runs through the end of next year.
While some department stores have cut back on the brand in some categories, Lord & Taylor will begin carrying Juicy Couture for the first time in its Manhattan and Westchester, N.Y., units in the fall.
Also this fall, Juicy Couture will take its e-commerce business in-house and make it an independent distribution channel. Previously, the site was operated through Neiman Marcus. “The strategy is to make it the biggest Juicy store in the world,” said Huber.
As for brick and mortar, Juicy is opening 20 stores in North America this year, and stores in Canada and Puerto Rico will open in May. Juicy, which is available in 60 countries, is expanding in the U.K. It will open a store in Kent, outside of London, and is negotiating for a shop on London’s Regent Street. The company opened its first accessories-only store in March in Dubai, which is doing very well, said Huber. In addition, Juicy will roll out six shop-in-shops in Spain, mostly for accessories.
In September, Juicy Couture will launch a fragrance with Elizabeth Arden, which hasn’t been named yet. Huber said the company’s higher-price Bird collection, a key wholesale driver, is selling well in stores such as Neiman Marcus, Saks Fifth Avenue and Bergdorf Goodman.
KENNETH COLE PRODUCTIONS
“We continue to believe that people make it happen. With the economy turning around, the first thing we did was acknowledge the efforts and dedication of our team,” said Jill Granoff, ceo of Kenneth Cole Productions. “We reinstated merit increases and a portion of the 401(k) match.
“In terms of brand building, we never stopped investing in the brand. We kept our media spend stable and continued to open new stores in the U.S. and internationally, which should drive improved profitability this year. Finally, we are intensifying our focus on the customer with increased attention to social media,” said Granoff.
In its effort to become a global multichannel lifestyle brand, Kate Spade has added new categories: namely fragrance, which will launch in the fall, and bedding, which will have a soft launch in the fall and a broader launch in the spring, said Craig Leavitt, co-president and chief operating officer. The company’s jewelry, which is done in-house, has been a success. Other categories Kate Spade would eventually like to enter are swimwear, outerwear and watches.
The company recently launched a joint venture in Japan with partner Sanei and started doing business in South Korea. “We’re looking into Brazil in the third quarter and opening our first flagship in São Paulo, Brazil,” he said. The company plans to enter Canada in the fall, selling to Holt Renfrew. “Our focus is continuing to build penetration within existing doors and expand our own retail stores,” he said. Kate Spade will broaden its 35-unit operation with two new stores this year, one of which will open at the end of the third quarter in Palm Springs, Calif.
The brand also is focusing on social networking activities. “We do live Tweeting at store events, we invite bloggers behind the scenes and we ask fans for product feedback. E-commerce, social media and mobile applications all have huge potential for us to build sales and as a retail driver,” said Leavitt.
The company has been slowly building personnel. “We are hiring more people in terms of supporting growth in international and licensing. We’re growing head count in a cautious way,” said Leavitt.
Eileen Fisher is expanding on several fronts. “The Web is going crazy. It’s our biggest store. It’s three to four stores in one,” said Eileen Fisher. She said she’s hired people to visually revamp the Web, which has been in operation for five years. Fisher said the brand also is doing more print advertising, as well as outdoor ads on phone shelters and posters in Manhattan’s SoHo.
Fisher, which has 51 stores, added eight units last year. It recently opened a store in St. Louis and plans to open another one in Pasadena later this month. While the company doesn’t have stores overseas (“one of my next priorities,” said Fisher), it wholesales in areas such as the Middle East, Canada, Israel and South Africa.
The designer said the goal is to “intergenerationalize” the company. “I have a 17-year-old daughter and she’s started to wear the clothes. It’s because the clothes are different this year. We’re getting mother-daughter teams,” she said. Fisher said handbags, scarves and belts are selling extremely well, and she’d like to expand the footwear category.
Another new concept at the firm is the EF Lab Store, which is a section of the store dedicated to recycled clothing. “We take slightly used and worn [Eileen Fisher] clothing from our employees and clean them and resell them, and all the money goes to charity,” she said. The company also takes back worn Eileen Fisher clothing from customers and gives them a $5 reward card for each item they bring in. Since the Lab store opened in September in Irvington, N.Y., across from company headquarters, some $72,825 has been generated from the sale of 1,773 Eileen Fisher recycled garments. Proceeds benefit girls’ and women’s initiatives.
Overall, the company’s sales are running 27 percent ahead for the season compared with last year and are 16 percent ahead of plan. Wholesale accounts are up 20 percent on comp doors in both specialty and department stores. Fall bookings are up 14 percent over last year. “We had our biggest month this past March at Bloomingdale’s. We were up 49 percent,” said Fisher.
“The year is going very well,” she continued. “Last year was a tougher year. Our numbers are even up from the previous year.” In 2009, Eileen Fisher generated $270 million in sales versus $273 million in 2008. “We are hiring again carefully and strategically,” added Fisher.
Fisher also is making more store appearances. “It’s the transformative time we’re in. I wanted to find out personally what’s going on with the customer.” She plans to do a handful of personal appearances this year in cities such as Chevy Chase, Md.; San Francisco; Denver, and Chicago.
Michael Kramer, president and ceo of Kellwood Co., said the company has come through 18 months of reorganization and “continues to invest in retail expansion.”
Kellwood opened 10 stores for Vince last year, unveiled a store in Atlanta on April 16 and plans four to five more units this year. In addition, he said, “we are starting to put more money into advertising.” For instance, he’s looking to do more advertising for Vince in high-end magazines, as well as local and regional ones. Vince has 13 stores in total, all of which are presently in the U.S., but the company has been scouting a location in London.
Meantime, Kellwood is on the hunt for acquisitions. Kramer said Kellwood would like to acquire companies with between $30 million and $1 billion in sales. He said he’s looking for “brands that have the potential to be $100 million-plus.” Among the targets are firms in the juniors’, women’s and teen-plus categories. “We have three letters of intent right now. One brand is primarily in leather and accessories [handbags]. They do branded and private label. I could grow the brand and Vince could do its handbags in-house with them.”
Sun Capital Partners Inc. acquired Kellwood for $762 million in February 2008. “Because we were going through a lot of restructuring, we had right-sized the organization. We had a couple of rounds of layoffs. In certain areas, we are hiring again,” said Kramer.
“They bought us as an investment and they believe in our strategy,” he continued. “Normally, the hold time is five years. They have an enormous amount of capital. We will reach a certain point where we will go public” or sell to a financial or strategic investor.
Monica Belag Forman, president of Magaschoni, said the focus for the brand has been to find more specialty stores in which to sell, opening its own freestanding stores, e-commerce and doing trunk shows. The company recently opened a more than 2,000-square-foot store in East Hampton, N.Y. It also has been doing more trunk shows around the country. She also is investing in Magaschoni’s e-commerce site.
Right now, 80 percent of the business is done with specialty stores and 20 percent with department stores. Besides East Hampton, the company has stores in London; Greenwich, Conn., and Southampton, N.Y. “We’re looking in Manhattan,” she said. She also has four in-store shops at Searle.
“We picked up a lot of new business. Last year, we were one of the resources that didn’t get edited out. We performed during the crash. I didn’t lose accounts, just those who didn’t have credit. It forced me to find new stores to sell.”