By and  on July 11, 2005

NEW YORK — Aéropostale Inc. wants to bring star quality to the masses.

The specialty retailer is jumping into celebrity-driven fashion with a new concept called Jimmy'Z, which will offer its own versions of the apparel and accessory styles that permeate today's celebrity circuit. The company will unveil the first of 14 Jimmy'Z stores expected to open this year in Wellington, Fla., on Tuesday, with an eventual goal of 500 to 700 stores nationwide.

"There's a new shine to Hollywood," said Julian Geiger, chairman and chief executive officer of Aéropostale, during an exclusive preview of Jimmy'Z at Aéropostale's offices here. "The age of the Hollywood star is back."

Added chief merchant Chris Finazzo: "People are just enamored with celebrity status."

Jimmy'Z will cater to young adults who want to look like their television and movie star counterparts, but who can't regularly afford $200 T-shirts and $900 purses.

While the company's existing Aéropostale chain caters to East Coast, preppy and athletic 11- to 18-year-old girls and guys, the dual-gender Jimmy'Z brand — despite its surf-based roots — hopes to speak to 18- to 25-year-olds who want to stay on top of the apparel and accessories trends coming out of New York, West Hollywood and the Sunset Strip, Finazzo said.

With the celebrity fascination of late being driven at least partially by the entertainment media — via detailed coverage in magazines such as People, Us Weekly and Star of, for instance, Angelina Jolie and Brad Pitt, Tom Cruise and Katie Holmes and Lindsay Lohan's diet — the celebrity lifestyle, including what they wear, has become quite alluring to young people, said Geiger and Finazzo.

That said, though, the average young person can't often shop higher-end stores such as Fred Segal or Scoop. That's where Aéropostale's new brand comes in: Jimmy'Z is seeking to profit from the public's love of all things celebrity by offering an affordable alternative.

For example, "our jeans are modeled after some of the more famous jean makers in the market right now," but will sell for roughly one-third the cost, said Finazzo. Though Jimmy'Z will be a fashion brand, "it is not our goal to be one of the fashionistas here," he admitted.Aside from the Wellington, Fla., location in the The Mall at Wellington Green, which is just outside West Palm Beach, and where the company already has one Aéropostale store, five other Jimmy'Z locations will open in a combination of A-, B- and C-level malls on July 14. The locations are: Exton, Pa., outside Philadelphia; the Mall of America in Bloomington, Minn.; Woodside in Chicago; the Woodlands in Houston, and the Galleria at Tyler in Riverside, Calif. The company will preview the Wellington Green Jimmy'Z store on Tuesday for analysts, vendors and press.

Fourteen Jimmy'Z stores are expected to be open by yearend, including outlet stores in Grove City, Pa., and San Marcos, Tex. The last six stores will be opened around the Christmas holiday and also will have a national geographic scope.

Aéropostale's launch, however, won't be the first iteration for the recently dormant Jimmy'Z brand. The company actually purchased the Jimmy'Z name in 2004 for $1.4 million from the Miami-based company Trends Clothing Corp., which had owned the label after buying it from Ocean Pacific in 1999. The Jimmy'Z concept was started in 1984 by Jim Ganzer, a Malibu surfer. The brand was composed of a wholesale line of mainly men's and juniors' California surf-inspired merchandise; annual revenues peaked at $50 million to $60 million.

Through the purchase of the name, Aéropostale also inherited the Jimmy'Z intellectual trademark logo consisting of a woody station wagon, the vehicle popular among California surfers in the Sixties. The woody logo, which has a surfboard on top, will be found on various types of Jimmy'Z-branded merchandise.

Aéropostale, in fact, originally began designing Jimmy'Z as a West Coast, surf-inspired concept as well as a promotional brand, akin to sibling Aéropostale. But the company soon realized the Jimmy'Z strategy had to be "slightly different" and "marginally more risky" than Aéropostale, though still fundamentally a mall-based chain.

As a result, Jimmy'Z will be 100 percent private label, and have a merchandise mix of 70 percent women's and 30 percent men's. About 15 percent of the overall assortment will be denim at prices from $49.50 to $59.50.

"They have all the design of the $175 jeans, but at a great price," said Finazzo of Jimmy'Z jeans.Some of the jeans will feature a signature "Z" on the back pocket in an attempt to further capitalize on the brand name, the executives said.

Comparatively, jeans at Aéropostale range from $39.50 to $44.50 and are usually on sale. That's not to say that Jimmy'Z goods won't go on sale, said Geiger, but the company plans to be more selective than it is with its Aéropostale brand.

Another core product will be graphic T-shirts for $16.50 to $19.50. And along with blazers for $49.50, tracksuits, wovens, polos and a basic T-shirt line, accessories such as belts, jewelry, sunglasses and handbags will be for sale. Underwear and sleepwear will be available for women. For now, the company does not plan to offer footwear.

"We picked and chose where we wanted to start," Jill Kronenberg, general merchandise manager of Jimmy'Z, said of the initial offerings. "We're big believers in layering in product before adding secondary and tertiary classifications."

The amount of merchandise in Jimmy'Z locations will be less than that at Aéropostale, where customers are "inundated by product," Geiger said. Jimmy'Z will offer mainly flat-folded displays, as opposed to the "hanging and heavy" merchandising at Aéropostale. But the store will be quick to highlight trends by putting hot sellers front and center. New merchandise deliveries are expected to be shipped every four to six weeks.

In spring 2006, Finazzo said the company will test limited-edition, higher-priced items to see how the market reacts. In addition, the company is considering eventually offering a premium line of jeans at Jimmy'Z. A Jimmy'Z e-commerce Web site is planned to launch next year.

The executives do not expect the Jimmy'Z brand will cannibalize Aéropostale stores. They also don't expect the current Aéropostale customer to graduate to the Jimmy'Z brand, though they concede there should be some overlap in shoppers.

"The beauty of the way we approach Jimmy'Z is we're still extracting from Aéropostale [strategies]….We still want to listen to the customer," said Geiger. "We are realistic enough to know that we can learn."

In terms of store design, "the inspiration came from West Hollywood homes," Finazzo said, with bright colors, a sleek, classy and "retro feel — like a California beach house. It's funky and a little bit irreverent."A 12-foot denim bar and a two-level T-shirt bar featuring graphic and embellished Ts will be featured in each store. Music from popular bands such as The Stills, The Killers and Franz Ferdinand will be played.

"We're going to establish this as a brand you want to shop at. When you come into that store, you're not going to want to leave," Finazzo said. "When you walk into Fred Segal, you feel special and you have to buy something. That's what we're trying to make you feel at Jimmy'Z."

The Jimmy'Z sites will be laid out in one of two architectural models. One approach will have a bar running down the middle of the store and the other will be an open layout. In the bar design, the bar "runs front to back of the store creating a series of rooms perpendicular to the bar," explained Lance Boge, design director at Gensler, the architectural firm that helped Aéropostale design the Jimmy'Z stores.

The room scheme "creates rooms using a metal-louvered panel system that defines areas but allows visibility, flow and interconnection," Boge said.

Store sizes will range from 3,500 to 4,000 square feet, with the first six stores averaging 3,800 square feet. In comparison, Aéropostale stores average 3,500 square feet.

Meanwhile, Jimmy'Z is the first concept to be released among the flood of new concepts recently announced by specialty retailers, many of which are expected to focus on an older demographic than Aéropostale. But Geiger said he's not concerned about the potential competition.

"It's the right time to launch Jimmy'Z. No one is focused on this customer and we like to find underdeveloped niches," he said.

"Retailing is Darwinian," Geiger added. "It's survival of the fittest."

Said Finazzo: "We know there's a void, we know the product is good and we know how to run specialty stores."

Analysts, however, expect that the new concepts coming out of Aéropostale's close competitors, Pacific Sunwear of California Inc. and American Eagle Outfitters Inc., also could cater to shoppers in their mid-20s. It's not clear yet what type of merchandise each will deliver, but Abercrombie & Fitch Co.'s nearly year-old Ruehl concept, for one, already caters toward men and women aged 22 to 30 at price points roughly 30 percent higher than Jimmy'Z; the company hopes to have 10 test Ruehl stores by yearend.Aéropostale, itself originally a men's private label at Macy's, opened its first mall-based store in 1987. In 1998, the 119-unit chain was sold by Federated Department Stores Inc. to a management group headed by Geiger — who was by then chief executive of Federated's specialty store division — and Bear Stearns Merchant Banking. Aéropostale went public in May 2002.

In its latest first quarter, Aéropostale had a 37.6 percent rise in first-quarter profits to $8.6 million on a net sales increase of 26.3 percent to $211.7 million. According to Geiger, Aéropostale passed $1 billion in revenues in the trailing four quarters.

While Finazzo and Geiger are currently straddling the upper management of both Aéropostale and Jimmy'Z, they stressed the management teams will eventually be "very" separate. For her part, Kronenberg went to the new brand from Aéropostale in July 2004.

Currently, the company has 618 Aéropostale stores in 47 states with roughly 1,000 eventually planned.

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