TORONTO — The team at Holt Renfrew has a tough mission — fixing a company that isn't broken.
Nevertheless, Canada's luxury chain is "rebranding," with new corporate colors and packaging, some category launches to fill merchandise voids and deeper designer commitments, as its executives hone the business for sales growth.
To further refine its image, the retailer, after being partial to glitzy blowout parties, is toning down with smaller, more frequent special events targeting specific audiences and designer appearances.
Holt Renfrew is a retailer without a lot of low-hanging fruit, virtually no competition in its markets except for a few freestanding designer shops and, overall, is performing well. It's been tracking 10 percent gains for at least the past two years, bringing volume, in U.S. dollars, to around $375 million for 2004. Revenues are expected to crack $400 million this year.
Executives said last year was the chain's most profitable, although they won't disclose figures because the business is privately held. Sources said profitability has been in the 8 percent to 9 percent EBIT range in recent years, comparable to Neiman Marcus.
"This isn't a turnaround. Holt Renfrew requires a hand with a little more finesse," said Caryn Lerner, president of the chain for the past year, during an interview at the flagship here. "It's very healthy fiscally. But we have big opportunities that can dramatically grow the top line.
"Our goal is to continue to increase sales between 10 and 15 percent for the next two to three years, and to see our EBIT increase proportionally to our top-line expectations. It's fairly aggressive."
Considering the nine-unit Holt Renfrew has already tapped all the affluent markets in Canada, opening additional stores is not on the agenda. But a number of initiatives to generate higher productivity at existing units are being taken, among them:
Bringing children's wear back after a 20-year absence, but in an upscale way showcasing designer labels.
Phasing out the Brown Shoe leased operation to give Holt Renfrew ownership of its shoe business and potential to expand it. Lerner said a wide range of prices and styles will be maintained.
Tightening relations and building assortments with designer and contemporary brands. Among those on the roster are Burberry, Canali, Chanel, Donna Karan, Giorgio Armani and Gucci.
Cultivating customers by increasing personal shoppers to 26 by the end of next year across the chain, from 17, and adding new personal shopping suites at the Toronto flagship next year.
The rebranding entails updating the look of the logo, packaging, shopping bags, signs and employee pins and shifting the company color to magenta, which is balanced by gray stripes on the packaging, stationery and other marketing materials. It has been cream and black for the last 30 years.The rebranding was led by Alannah Weston, the daughter of W. Galen Weston, who is the chairman of Holt Renfrew. His private company, Wittington Investments, owns Holt Renfrew, Brown Thomas in Ireland and Selfridges in England.
W. Galen Weston's goal is to give Holt Renfrew more of an international reputation and appeal, so it attracts a wider consumer audience, lassoes more world-class brands and designers, and possibly one day expands outside Canada.
Weston is believed to be interested in operating in the U.S.; however, no Holt Renfrew stores are planned for America. A U.S. entry seems more likely via an acquisition, considering Weston bid for Saks Fifth Avenue in the Nineties, which was sold to Proffitt's, now called Saks Inc. Barneys New York was also on his radar at one point, but is now owned by Jones Apparel Group. There is wide speculation that Weston could make another run at Saks Fifth Avenue.
"Our vision is to be recognized on a multinational basis," Lerner said. "Our customers are very sophisticated and travel extensively and have a lot of [shopping] choices, so we need to be on that global radar screen. We need to be more of a headquarters, with depth and breadth of designer offerings."
She also wants more designers to partner with Holt Renfrew. "It's a fairly methodical approach on our part, across all divisions of the company," Lerner said. That includes targeting certain doors for "breadth and depth" of assortments in certain designers, including Dolce & Gabbana women's wear in designer, Etro, Nanette Lepore and Theory in contemporary and Giorgio Armani in men's designer.
"We are buying more, editing selectively and going deeper in key styles ... It's about developing stronger designated sales associates, ensuring good product knowledge seminars from our vendors, making sure they have great exposure in our catalogues, planning special events and designer appearances and creating stronger communications to customers," said Lerner.
Coming to the designer floor of the Toronto flagship next spring are Gucci and Christian Dior ready-to-wear. Dior accessories will be added to the store's handbag hall later this year.
Another avenue for building designer relationships is via the children's business being planned. It will range from newborn and infants to size 6X, offer plenty of denim from such labels as Juicy, Diesel and Seven, and shirts from Etro and Paul Smith, among other products. The children's program will be in seven of the chain's locations and housed in shops ranging from 750 square feet to 1,800 square feet.Lerner thinks a designer-oriented children's wear area is a winning formula. "Infants and luxury have outperformed all retail sectors for the last couple of years," she said.
Discussing the shoe strategy, Lerner explained, "Brown Shoe did a great job, but at this point in our business, we want to control the assortments and add brands. We feel we know our customers. They want more choices. We will still have a breadth of merchandise in terms of price points."
Holt Renfrew already carries shoes from such brands as Prada, Gucci, Dior, Manolo Blahnik and Walter Steiger. "We see rolling out many of these brands and we see adding a lot of designers, from Donald Pliner at a more accessible price point to Jimmy Choo."
Holt Renfrew shoe areas range from 700 square feet to 2,000 square feet, with shoes currently accounting for 5 percent of sales. Lerner hopes shoes increase to 9 to 12 percent within three years.
"We have similar objectives in contemporary sportswear and men's designer," she added. Contemporary in 2004 was 17 percent of Holt Renfrew's total women's business and for 2005 it will be 22 percent. Men's designer represented 44 percent of total men's wear volume in 2004 and is planned at 48 percent at the end of 2005.
One of the biggest changes will occur in Vancouver, where there is a 68,000-square-foot Holt Renfrew store in the Pacific Center. It will be replaced by a 120,000-square-foot store, which is scheduled for a spring 2006 opening. The existing store is the chain's second-biggest volume generator, estimated at around $60 million to $65 million in annual sales, with the Toronto flagship on Bloor Street the largest in the chain, with an estimated $120 million in annual sales.
In addition, renovations will occur at the Montreal store next year, touching cosmetics, jewelry and accessories.
Holt Renfrew operates two other stores in Toronto, and branches in Ottawa, Quebec City, Calgary and Edmonton. There are also two outlets.
Under the previous president, Andrew Jennings, who is currently president of Saks Fifth Avenue, Holt Renfrew was reinvigorated and developed a reputation for storewide extravaganzas. Whereas 1,000 or more customers might have come to a fall season launch party in Toronto, nowadays the company leans to weekly events, each targeting 100 or so top customers for a designer appearance. "We are trying to be a little more focused, rather than doing the big blowouts," Lerner said.Lerner, aside from serving as president, acts as the head women's merchant and attends the designer collections in Europe and New York. She has been searching for someone to fill the merchant's post since last January, when Evelyn Reynolds left the company. Reynolds was senior vice president and general merchandise manager of women's wear.
Lerner's background has been in the women's arena. She spent 11 years at Bloomingdale's, starting as a Christmas trainee in the stockroom and rising to divisional merchandise manager of women's rtw, kids and intimate apparel. She was also at one time a manager of the moderate sportswear department in the Short Hills, N.J., branch of Bloomingdale's, and was general manager of a former Barneys store in Westport, Conn.
Asked what her biggest challenges are, Lerner replied, "My biggest challenge is how do we stay relevant to a very loyal and small customer base and at the same time attract new customers. And the second challenge is to attract and retain talent. I'm talking about merchants, marketing executives, IT and store management.
"I'm still in a learning process about this country and this business."
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