By  on March 27, 2006

Liz Claiborne’s acquisition of Ellen Tracy in 2002 for $180 million was a trophy for Claiborne chief Paul Charron.

The purchase of Tracy, the leading bridge brand in the market, established Claiborne as a major player in the lucrative field and gave it significant real estate in upscale specialty and department store chains like Saks Fifth Avenue, Neiman Marcus and Bloomingdale’s. And, as Charron famously says, “It’s a good thing to buy your competition.”

According to Tracy executives, Charron followed a simple mantra: If it ain’t broke, don’t fix it.

“Liz wanted to let Ellen Tracy be Ellen Tracy, and that was Paul’s constant comment to all of us,” Howard Rosenberger, president of the brand, recalled. “The biggest change was in a lot of the strategies and reporting methods, financial issues and the systems of how we worked. Ellen Tracy had run as a small private company that did a lot of business, whereas Liz is very much a more corporate environment. A lot of changes were back-room, including financial strategies and reporting methods.”

Founded as a blouse resource by Herbert Gallen in 1949, Ellen Tracy evolved into a bridge label. In 1962, Linda Allard joined the label as a designer, and together Allard and Gallen built it into the leading department store bridge vendor.

Allard wasn’t just a designer behind the scenes. She became the spokeswoman and face for the brand, traveling around the country to meet customers, who typically responded to her woman-to-woman approach, and her name was added to the label. Gallen and Allard, who married in 2001 after working together for 40 years, sold the company to Liz Claiborne in September 2002.

The transition from a privately owned Seventh Avenue firm to a division of a public company was far from smooth, and sources said the business took a nosedive after the acquisition. Ellen Tracy alienated core customers at a time when stores channeled attention away from bridge in favor of the contemporary category. Sources said Ellen Tracy’s volume at its peak in the late Nineties was about $300 million. Today, however, they estimate it’s more like $200 million. The company declined to comment on figures.After the acquisition, Claiborne tapped Glenn McMahon to run the division as president, while company founder Gallen remained chairman and Allard, design director. McMahon left for Dolce & Gabbana last September, and the brand named 12-year Ellen Tracy veteran Rosenberger president.

“Once Linda had retired [with Gallen in 2003] and a new design group was put in place, I think we got off brand,” Rosenberger said. “We thought about addressing a different customer; not staying with the traditional, classic customer whose core wardrobe has always been Ellen Tracy.

“We got off brand, but so did most of our retail partners,” Rosenberger conceded. “They walked away from what one would call that core customer, the woman who needs apparel in her wardrobe that is suitable for work and going out for dinner, for instance. They all went very contemporary or tried to chase that contemporary model. In many cases, the losses that they absorbed as part of this change were not made up by what they gained in contemporary. Now, they realize that core customer is who they have to lure back.”

In April 2005, Ellen Tracy sought to correct that problem and tapped George Collins Sharp as vice president of design. The Scottish native joined the bridge label from Escada, where he had been head designer. Since his arrival, Sharp has worked to bring the label back to its roots of classic American sportswear, addressing the contemporary influence by modernizing the collection, adding new shapes of jackets and skirts, and different lengths in pants, without going after the heavy embroidery and bare midriffs that have dominated the contemporary field.

Sharp said that when he arrived at Ellen Tracy, he traveled with Rosenberger to see the stores and meet the customers. On the road, he kept hearing the same thing — that the brand had lost its way a little. “I just wanted to get it back on track,” Sharp said. “We focused on fit, fabric quality and the colors…taking the heritage of the brand and updating it.”

Sharp studied the archives and found Allard’s designs to be “very clean and American, but had a sense of luxury. We are giving the customer fashion-appropriate lifestyle pieces.”The renewed energy at Ellen Tracy coincides with the changing mood of retailers in bridge departments, which, after a few seasons of trying to make bridge into a contemporary spin-off, are largely returning to the category’s roots. Rosenberger said Sharp’s first full collection hit stores in February, and sales have jumped in “large double digits.”

“When I went [to the stores], I was blown away by the loyalty,” Sharp said. “But this customer doesn’t have anywhere else to go for her needs. The timing was right, too. After seasons of embellishment, fashion is cleaning up. The pendulum has swung back in our direction.”

Retailers agreed the business has much improved since February. “George has done a good job,” said Frank Doroff, senior executive vice president and general merchandise manager of women’s ready-to-wear at Bloomingdale’s. “He has brought Ellen Tracy back to a more luxe product that fits well and is designed with their customer in mind. He is stretching the customer base a bit, getting in some aspirational product. Business is much better. I think he addresses a customer we have in our stores and the line has great potential.”

Ron Frasch, vice chairman and chief merchant at Saks Fifth Avenue, concurred that business is up since February. “The spring performance has been very encouraging,” Frasch said. “We think George is doing a terrific job. He is very talented and has brought a lot of positives to the line, both in terms of design and in merchandising. He is a savvy merchant and understands the customer and the regional needs of the product. He understands that Ellen Tracy is a big line and that retailers like Saks buy it for larger stores as well as smaller stores, so the product offering has to be adapted for each market.”

Ellen Tracy, which had volume of $250 million when it was bought, continues to be a key player in bridge departments. (Rosenberger declined to disclose current sales figures.) The brand currently has five licensed collections for eyewear, belts, shoes, hosiery and outerwear. Its handbags, jewelry and fragrance are produced by Claiborne’s accessory division. Ellen Tracy is sold in 350 doors nationwide and, until February, it operated a freestanding unit at the Americana Manhasset. That unit closed when the lease expired, and alternative space made available to the brand turned out to be less desirable. “We hope we will get back into it in a more desirable location. It is something we are looking at for 2007,” Rosenberger said.As for growth vehicles, Rosenberger pointed to the Ellen Tracy White Label, which bowed at Neiman Marcus last fall and recently expanded to Saks and Bloomingdale’s. White Label has a more relaxed, casual feel than its signature counterpart, featuring soft knit separates and drawstring pants.

“White Label is currently sold within the Ellen Tracy departments, but as it grows and performs, we would look to generate additional or separate space for it,” Rosenberger said. “I hope to branch it off as a separate business for growth.”

The company also hopes to continue to grow its ancillary products, including handbags, jewelry, hosiery and outerwear. Next month, Ellen Tracy is launching the new Tracy fragrance.

“We are also looking at international,” Rosenberger said. “We are in business with El Corte Inglés in Spain, and we are looking at that as a stepping stone to [the rest of] Europe. We also distribute in Japan through Mitsui in some specialty stores there.

“There is still room for growth in bridge,” Rosenberger maintained. “There is that customer who wants to buy a designer product at a more affordable price. It’s a business model that works.”

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