Jeff Rudes seems to prefer being an entrepreneur rather than a manager.
This story first appeared in the May 28, 2014 issue of WWD. Subscribe Today.
Rudes on Tuesday stepped down as chief executive officer of J Brand, the premium denim leader he founded nearly a decade ago. Numerous sources said his departure had more to do with his entrepreneurial nature than with the difficulties confronting the premium sector in recent seasons.
On an interim basis, he will be succeeded by Andrew Rosen, ceo of Theory and Helmut Lang and a group officer of Fast Retailing Co. Ltd., which acquired an 80.1 percent in stake in J Brand in November 2012. Lynne Koplin, the former president of True Religion Apparel Inc., remains president of J Brand and will work with Rosen through the transition.
Fast Retailing acquired its stake in the company for $290 million and $10 million in advisory fees. The selling parties were Star Avenue Capital, comprised of Irving Place Capital and management powerhouse CAA, and members of J Brand management.
Although officials at Fast Retailing declined to comment on the brand’s ownership or sales, Rudes is understood to have retained an unspecified amount of equity in the firm following the acquisition, but to have since sold his stake.
Koplin joined the company in March and was expected to focus on the firm’s retail rollout, already under way in Asia but still in the planning stages in the U.S., as well as on areas such as merchandising, planning and allocation.
“I don’t think it’s coincidental that Lynne arrived just as the company was preparing to take a few steps out of its comfort zone,” said an executive from a competing jeanswear firm who requested anonymity. “This is beyond expanding into sportswear, which hasn’t been a roaring success, but about reshaping the company and doing so under a new owner with very exacting standards.”
It could not be learned whether Rudes’ exit following the sale of his remaining stake in the company was part of a plan established at the time of Fast Retailing’s acquisition or a more recent development.
In comments released with the news of his departure, Rudes thanked Fast Retailing and Tadashi Yanai, its chairman, president and ceo, for what he termed “a rewarding partnership over the past 18 months.”
“After nine extraordinary years building J Brand, it’s time for me to move on and create what’s next,” he said.
“It’s quite possible that, with his money out and a new and demanding owner in place, he just felt like it was time for him to get on to something new,” another observer of the Los Angeles premium denim sector commented. “If you look at his background, he’s always been most engaged in launching brands and bringing them to maturity than in the less exhilarating task of taking a brand to the next level.”
Rudes started Paris 2000 jeans not long after graduating from high school and built it into a $30 million business that sold to a mix of better department stores and fashion specialty chains. But 30 years ago, he sold it to a licensing partner and relocated to Los Angeles from New York to start Area Code, a junior knit line that would dominate his time for the next nine years.
He returned to the denim business in 1993 with the birth of A Gold E, where his partners were Ron Herman and Adriano Goldschmied. That venture lasted three years and led to a private-label jeans enterprise that occupied him until the founding of J Brand, which would get its first orders from Herman.
“He created an enormous jeans brand and brought jeans back to the center of what was happening in fashion,” said John Eshaya, founder and owner of Jet and a former buyer for Ron Herman. “He really resuscitated the denim market, not just for his brand, but for a lot of other people, too. I really do think of him as a brand creator, and maybe the creative period was sort of over for him.”
A J Brand competitor told WWD, “He gave birth to J Brand and brought it to adulthood. Perhaps now — with the premium sector struggling and the market not as excited about the company’s ready-to-wear as they were at one point about the jeans — he feels like it’s time for his next chapter — to, like he said himself, ‘create what’s next.’”
Rosen said, “J Brand has a long runway ahead and we are deeply invested in exploring opportunities for its growth and expansion, building upon the great work Jeff began a decade ago. I am looking forward to collaborating with Lynne and all at the company in realizing the unique and significant potential of this brand.”
The navigation of J Brand’s “long runway” has been a source of confusion. Although Rudes had spoken of entries into men’s and accessories even before the Fast Retailing acquisition, it has yet to make definitive moves in those directions. Its expansion into retail, an area of strength for Koplin, has yet to take root in the U.S., although it has established retail footprints in Fast Retailing’s home market of Japan and in China.
And while sources said it wasn’t the main reason for Rudes’ exit, the troubled state of the premium sector also might have played a role in his departure. Since the acquisition, J Brand has been part of Fast Retailing’s global brands unit, which includes Theory, Helmut Lang and Comptoir des Cotonniers as well as G.U. and Princesse Tam Tam. In the first six months of Fast Retailing’s fiscal year, ended Feb. 28, revenue of the group expanded 31 percent to 125.37 billion yen, or $1.24 billion at average exchange. But J Brand disappointed.
“Our J Brand premium denim label was also adversely affected by poor conditions in the U.S. economy and reported a lower-than-expected performance over the six months,” Fast Retailing said in its report for the six months ended in February. Sales, estimated at $124 million in 2011, are now reported to be about $150 million.
“Everyone knows business has been challenging,” another competitor in the premium denim space commented, “but Jeff’s not someone who’d let that slow him down.”