NEW YORK — Coldwater Creek on Thursday tapped Jerome Jessup as executive vice president and creative director as it continues to seek a product formula that will return it to the growth path.
Jessup, an industry veteran who worked at Ann Taylor and Gap, will be responsible for brand management, creative services and visual merchandising. The retailer also said it is maintaining its second-quarter loss forecast of 5 cents to 7 cents a share; its prior guidance was a quarterly loss of less than 8 cents a share.
Coldwater Creek’s comp-store sales have been depressed since the fourth quarter of 2006, the decline blamed in part on the economy and its own assortment. After 18 months of retooling and refining, the Sand Point, Idaho-based company believes its fall collection in stores represents a “significant transformation of the brand,” said Daniel Griesemer, president and chief executive officer.
Intensive focus groups and consumer surveying helped Coldwater make the changes.
Coldwater’s customers aren’t trendy, but they want to feel relevant. They like casual clothes, but insist the clothes be sophisticated. But the retailer has had some difficulty walking the fine line between providing styles that look current without making their Baby Boomer shoppers feel like they’re masquerading in their daughters’ clothes.
“The fashion relevance has changed,” said Georgia Shonk-Simmons, president and chief merchandising officer. “Consumers told us our shapes were too boxy. We built a business on boxy cuts. I’m this customer. I’m aging, but fighting it all the way.”
The results of the research “caused us to shift our thinking in everything we were doing,” Griesemer said. “Every woman from three to 70 [years of age] wants jeans that fit. We expanded our jeans assortment to give her seven different styles, including classic, lower riding and slim leg in different washes and colors.
“This is an important turning point in the business,” he said, adding Coldwater Creek is stepping up its advertising and marketing spending. “We did a lot of work in 2008 to cut costs. Now, this [product initiative] is beginning. We’re not going to cost-cut our way to greatness or market our way to greatness.”
Wall Street isn’t ready to make such pronouncements. “A nice representation of novelty, new silhouettes and new pricing could go a long way to helping them,” said Roxanne Meyer, a retail analyst at UBS. “They have to be well received by the customer. At the end of the day, they need to figure out how to fix the product and make it resonate with customers. At the end of the day, the product has got to work.”
Meyer said Jessup’s appointment will free up Shonk-Simmons “to really focus on the merchandising, and that’s a positive.”
“There’s a lot to be encouraged by the May comp being flat, which is a standout in retail,” Meyer said. “Still, there’s pressure on gross margins. They did sell out, which is a great sign and a sign that they’re managing inventory conservatively, but they’re still promoting to lure [the customer] into the stores.”
Griesemer said the specialty store sector has been the hardest hit of any sector. Coldwater’s customer, who is closer to retirement, has a different mind-set than younger consumers. “She’s closer to retirement, and her sense of wealth comes from the value of her home and her investments. She told us she was trading down a bit.”
Coldwater is lowering price points. For example, pants last fall were priced at $69 to $79, while this fall they’re $49 to $69. More than half of the pants assortment is below $50, Georgia said. She added 45 percent of jackets are less than $50. The most expensive item in the store is a suede lambskin duster coat for $199.
The company believes it has a big opportunity to expand accessories and dresses.
Coldwater Creek, The Spa, a business that was once seen as growing to 200 units, is on the back burner, perhaps permanently. Griesemer said the spa business “has been improving. It’s not a problem and it’s not a distraction. We’re focussed on restoring the Coldwater core business.” Griesemer said the chain still has an opportunity to reach 500 to 550 units from its current 353, but gave no timetable.
Coldwater in 2005 decided to open stores in downtown locations, but that position has changed. “At the time, that seemed appropriate,” Griesemer said. “We aren’t going to pursue downtown locations now. There are enough opportunities elsewhere. The economic environment and our own performance has caused us to rethink everything.”
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