NEW YORK — If Alexander L. Bolen has his way, the Oscar de la Renta product mix will include more footwear and handbags.
Bolen, who is chief executive officer of the luxury brand, was a keynote speaker Wednesday night at an ACG New York conference here on “Buy, Build, Exit: Dealmaking in Consumer Products.”
In 2002, the designer asked Bolen, who was then an investment banker in leverage finance, what he should do after being approached by someone to buy his firm. According to Bolen, he advised de la Renta to reject the deal. Bolen, who is married to the late de la Renta’s stepdaughter Eliza, joined the company in 2003 and became ceo in 2004. At the time he joined the company, the business was primarily wholesale, with 98 percent of its business in the U.S. The company didn’t have freestanding stores because de la Renta said he “heard it was difficult” to do. And the runway shows were basically a promotional vehicle for various “lucrative” licenses, Bolen said.
According to Bolen, his advice then was to focus more on the high-end, looking at leather goods such as shoes and handbags, and developing a “more meaningful trade” in areas outside of North America. “For the first time this year, wholesale outside of the U.S. is better than in the U.S.,” he told attendees.
While Bolen spoke about managing a family business, he broadened that definition to include even employees of the company, some of whom have been on staff for 30 or 40 years. Tuesday was the one-year anniversary of de la Renta’s death, a period that Bolen described as emotionally challenging for the family.
The company has outside capital invested in the firm from GF Capital, which Bolen says is a “meaningful stake.” The company isn’t looking for new investment, he told WWD after his presentation. Still, there’s an open question on what is the exit strategy, or endgame. Bolen deflected any possibility of any specific strategy in place, noting, “I don’t know that we think that way. Over the longer term, my job is managing the family’s business within the context of what we do.”
For now, that means looking at the business holistically and figuring out how to prioritize wholesale, retail opportunities and the digital channel.
“The fastest way our company can get screwed up is inventory mismanagement,” Bolen said.
He also touched upon the need to capture a customer’s emotion, because the business is about “making stuff people don’t need, but hope they love.” He said he doesn’t like the idea of exclusivity, noting, “We don’t want to exclude anyone. The business is about finding new customers,” as well as how to appeal to a broader audience.
As for where the business should be in five years, Bolen said: “We need to continue to expand our product offerings, do shoes and handbags better.”
Better for Bolen means a more robust business in the two categories, a strategy that would mean opportunities for stores that focus on footwear and handbags, and less on apparel. “Currently the product mix does well in dense urban, affluent environments where women dress up for the workplace. If our handbag and shoe business develops more fully, there are [maybe] 30 to 40 locations we can pursue, but not with the current 80 percent ready-to-wear mix,” the ceo said.
In general, the hoped-for plan for the overall business is for sales to be evenly divided in three geographic locations: Asia, the U.S. and in Europe and the Middle East.
Bolen said the company doesn’t need a diffusion label, and that it has since “pushed” the opening price points to make them “more sensible.” Five years ago, a cotton-print dress would cost $1,290, but now the brand offers jersey knit dresses at $690. “We’ve opened up a whole new audience of international customers,” Bolen said.
He also said the company could bring price points down to $490, but won’t because that would bring it to the same level of accessible luxury such as a Michael Kors or Tory Burch. “That’s not a business we want to get into,” Bolen said. He recounted a conversation with de la Renta about not wanting to do that, to which the designer said, “I think he’s [Kors] a billionaire. I’m not. Why don’t we want to do that?”
Bolen explained that the Kors and Burch brands are based on a different business model. He noted that when Lawrence Stroll and Silas Chou invested in Kors, they needed about 10 years to set up the model. Although he emphasized that Oscar de la Renta is a different business model from the accessible luxury one, Bolen didn’t rule out the possibility of doing that “later on,” just “not now.”