By  on June 22, 1994

NEW YORK -- Tse Cashmere opened in 1989 with a five-year plan. It wanted to build an account base that included top stores in the country and it wanted to open several of its own freestanding retail operations. The company has achieved those goals, and now it's moving on to its growth plan for the next half-decade.

Its thinking is not timid. Plans call for doubling its combined U.S. retail and wholesale volume within five years to reach the $100 million mark. While Tse currently has four company-owned freestanding stores that comprise about 30 percent of the firm's annual volume, a New York flagship is slated to open in September. There are plans for another seven stores within next five years.

The firm's current stores are in San Francisco, Palo Alto and Costa Mesa, Calif., and in Lake Forest, Ill., a Chicago suburb.

Tse Cashmere was an outgrowth of a private label cashmere business, Cashmere House, headed by Augustine Tse, an industrialist who has a factory in Hong Kong and a joint venture facility in China. It is a vertical operation, even raising goats on its own farms in China for the cashmere fiber.

Tse -- as chief executive officer of Tse Cashmere -- is based in Santa Ana, Calif., where the company has its corporate headquarters. Also based in Santa Ana is Lisa Cervantes, president of the U.S. operation of Tse.

With the mainstay women's collection business on solid ground, the existing men's, children's and home collections are getting an added push, as are international developments.

Last year was a pivotal one for the firm, said Cervantes in a telephone interview from her Santa Ana office. It doubled its U.S. volume, jumping from $25 million to $50 million. Through the rollout of its fully fixtured in-store shop program, Tse doubled its distribution through new accounts and increased business with existing wholesale accounts, which now number 350 and include Bergdorf Goodman, Neiman Marcus, Saks Fifth Avenue, Nordstrom and I. Magnin.

Cervantes would like to see the number of in-store shops -- there are now 70 -- double in five years. The company also has a staff of six merchandisers who are responsible for going into the stores to check on display and merchandising. Bergdorf Goodman -- Tse's largest volume account, with annual sales of close to $3 million in a 400-square-foot area, according to sources -- will feature a Tse shop on its third floor once the floor's renovation is completed. Saks Fifth Avenue has Tse shops in 11 doors, said Sally Pearson, senior vice president and general merchandise manager, and is planning its business "up aggressively" for fall."It is the ultimate status brand because it is so understated and elegant," said Pearson. "It is the upper end of the luxury market, and it has a very loyal repeat customer who shops it year-round. It's so modern."

"With the mix of fabrics and yarns we offer, it has become a year-round collection," concurred Cervantes. "In terms of the shops, it's essential to develop a space where customer needs are answered with a full presentation. The shops also allow us to control the visual merchandising to some degree."

Wholesale prices on the current fall collection range from $65 for a short-sleeve cashmere sweater to $850 for a wrap coat in woven cashmere. Indeed, while Tse's concentration is still on cashmere, it offers much more than that. About 80 percent of the collection is knitwear in cashmere, silk, wool or cotton or a blend, such as the new cashmere and Lycra spandex fabric featured in the fall line. A cashmere and cotton blend fabric is being developed for spring 1995. About 20 percent of the line is wovens -- whether linen or silk for spring or cashmere and wool for fall.

"The idea behind the company to begin with was to break away from stodgy cashmere as we know it," said Cervantes of the company's fashion direction. "We wanted to appeal to all ages, and we saw a strong demand for luxury knitwear in the designer market that no one was addressing."

Part of the way Tse has cut loose from the image of traditional cashmere is through advertising campaigns, which it has run since its inception.

Photographed by fashion photographers such as Dick Nystrom, David Sims and, most recently, Patrick Demarchelier, they have featured one-model images in black and white that are striking in their simplicity. Print ads have run in Vogue, Harper's Bazaar, W, Elle, Mirabella, Vanity Fair, The New York Times Magazine and The New Yorker. Tse has run outdoor advertising on bus shelters in New York, San Francisco and the Los Angeles area; on billboards in Santa Monica, and on buses in New York.

The women's collection accounts for 80 percent of the business, but Cervantes sees that moving to 65 percent over the next five years because the company is developing its men's wear business. While men's wear accounts for 15 percent of the volume, she sees it ultimately comprising 25 percent. The home collection will be expanded to include personal products such as fragrance and a body and bath line, and Cervantes sees an opportunity to further develop children's wear. Combined, those divisions now account for 5 percent of volume. With increased attention, said, Cervantes, they should move up to 10 percent.At the same time, the company is expanding its production sourcing for fabrics other than cashmere. Ultimately, Cervantes said, 30 percent of total production will be out of Italy in yarns other than cashmere. "We've just started working on manufacturing in Italy," she said. "We want to develop more sourcing partnerships."

The company's increased sourcing abilities will be put to good use when Tse opens its New York flagship store this fall and fills the store with an expanded array of merchandise. The shop, at 827 Madison Ave. at East 69th Street, is 3,000 square feet on two floors. It is being designed by 1100 Architect, the New York firm that also created Esprit de Corp.'s corporate showroom in New York. Cervantes said the first-year volume is projected at $4 million. "It will give us the opportunity to fully present everything in an ideal environment," said Cervantes. "Men's will have its own entrance and home will have the second floor. This will set the stage for our international expansion both at the retail and wholesale level."

Internationally, there are plans for growth as well. Tse has an office in London to oversee European expansion and one in Hong Kong for the Pacific Rim.

In Europe right now, Tse has in-store shops for its men's and women's collections at Harvey Nichols, and in-store shops for the women's line in Harrods, Liberty and Selfridges. There is a freestanding store in Geneva.

But, Cervantes pointed out, Tse is not distributed in countries such as Germany, France and Italy, so there is room for expansion there.

In the Far East, there are two freestanding shops in Hong Kong. Cervantes said Tse is working with Isetan Corp. in Japan, to begin focusing on in-store shop programs that will open in spring 1995. Also slated for spring 1995 is expansion into mainland China. "We have the U.S. business well on its way," Cervantes concluded. "But we can accomplish a lot more to build the business to its potential worldwide."

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