By  on January 19, 1994

NEW YORK -- Jay Margolis is ready to get out the old and get in the new.

Touring the split-level showroom of Pepe Group, the London-based denim company whose fortunes he is guiding in the U.S., Margolis waved his hand, dismissing the product that was created before he arrived.

"This is how we'll merchandise it," he said, pointing to the natural wood and dark metal fixtures. "But don't look at the clothes."

There is a lot that's new at Pepe, from the 30,000-square-foot showroom at 485 Fifth Ave., decorated with red velvet drapes, a large aquarium and chandeliers made from bits of glass, to an ad campaign, a design direction and the merchandising.

Margolis left his post as vice chairman of Liz Claiborne Inc. in July to become chairman and chief executive officer of Pepe Jeans U.S.A. It happened following a shift in control of Pepe Group, which was taken over a year ago by apparel company investors Silas Chou and Lawrence Stroll, after the firm posted significant losses.

Margolis said he's not concerned that Pepe is out to strengthen its identity at a time when the denim market is depressed. He feels that this is the perfect time to make a strong impact on the consumer.

"We believe strongly that the denim business here and in Europe has gotten stale," said Margolis. "But I see it as an opportunity. We think a lot can be done from the fashion side, with different packaging and detailing. I think fabric and wash is where we'll make denim different. There's also a sportswear element, a fashion element, that's going to drive the business."

But consumers waiting to see the new Pepe look will have to wait until the summer line, in the showroom now, hits the stores. That's the first collection that will reflect the overall approach of LeAnn Nealz, recently appointed director of design and merchandise for Pepe worldwide.

"Back-to-school is where we're really putting the majority of our energy," Margolis said. "There will be all new labeling, packaging and fits, new denim in different weights and treatments."

"Basically, all we had here before were some jeans and shirts," said Nealz, who travels to Europe and England frequently to keep ahead of trends. Now, she said, she's using different fabrics.

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