By  on February 10, 2006

NEW YORK — In the Eighties and Nineties, Caché Inc. was more about glitz than glamour, known for body-clinging dresses with keyhole openings and halter gowns designed for slinking into a room full of people and getting noticed.

Now that such flashy looks are mainly reserved for awards shows, Caché is toning down its act, developing its sportswear collection and adding classifications such as denim, T-shirts and wovens. And the company has reduced its eveningwear inventory.

"Caché built a brand niche known for special-occasion dressing," said Brian Woolf, chief executive officer. "For many years, we've been more than that. Our point of view has evolved to appeal to a modern, sophisticated customer. We drastically repositioned the company and our results have dramatically improved."

In the third quarter ended Oct. 1, Caché's sales rose 15.8 percent to $57.3 million and same-store sales increased 8 percent. Sales for the 39 weeks ending Oct. 1 jumped 10.9 percent to $187 million. For fiscal 2005, the company estimates sales of $270 million to $275 million. The company is overhauling retail stores, opening new units and has launched an ad campaign.

The change in direction was required because of the shift to a more casual lifestyle in most of the U.S., Woolf said. While "Desperate Housewives" types living in flashier zip codes may still pull out all the stops, most women want easy wardrobes built around jeans, skirts and tops.

"Our customers were starved for a fashion change," Woolf said.

But that doesn't mean the clothes should be boring. "There has to be detail on the garments," he said. "Lurex is important and so is embroidery and beading on jeans."

Shades such as chartreuse, saffron and turquoise are not unusual at Caché.

"Our girls aren't afraid of color," said Lisa A. Decker, vice president of marketing and visual merchandising. "Our customers take care of themselves. Overall, the clothing is designed to fit a woman. It's a generous cut. We go to size 14. Our sales associates are there to tell them the good, the bad and the ugly."

So far, Wall Street likes what it sees."The strategy is a great idea and I think it's been working," said Howard Tubin, a retail analyst at Cathay Financial. "They're doing casual fashion apparel for the misses' customer, who wants younger-looking, trendier merchandise but can't go to Bebe because it won't fit her."

Caché's business has shifted dramatically. Eveningwear accounts for just 18 to 20 percent of sales, while casual sportswear is 70 percent and accessories, 10 percent.

If Caché's customer wants to relax her dress code a bit, she hasn't lost sight of fashion. "The teen business has been driving fashion over the last few years," Woolf said. "Our consumer wants what the teens are wearing, but interpreted differently. Our customer base reads fashion magazines."

The offering for spring — peasant blouses, wrap sweaters, boleros, lace tops, Lurex turtlenecks, crocheted halters and multitiered skirts — touches on all the trends. Some of the more refined garments include black silk pants with cargo pockets and sculptured knit sweaters in solid colors. Dresses run the gamut from tie-neck halters to long satin gowns with ruched bodices. A short bubble dress is the new silhouette, while a long black halter dress with a rhinestone buckle and a drop-dead blue slinky gown are perennial favorites.

Like the apparel, Caché stores have a new look. "The old stores had dressing rooms in the center of the store, heavy wood molding, dress departments with ornate chandeliers and thick carpeting," Woolf said. "Now they're very modern and flexible."

By the end of the year, 60 percent of the stores will be renovated, he said.

Caché is using a new ad campaign to get the word out about its repositioning. "We're trying to change brand perception and grow brand awareness," said Deirdre McMennamin, a partner at G2, part of the Grey Global Group. "There were a lot of things about the brand that were not broken. We wanted to make sure we didn't alienate the existing customer."

The ad agency decided not to tamper with the logo, which has a distinctive lowercase typeface with an accent over the e. "There's a lot of equity in it," McMennamin said. "We took the accent mark and made it a graphic." Now a model is seen through an enlarged shaded accent. The tag line is "Accent on you."The campaign features a mix of merchandise that shows the range and scope of the brand. In addition to ads in national and regional publications, there's a direct mail component. Caché also plans to launch a loyalty effort. Woolf said about 3 percent of sales have been earmarked for advertising.

Neely Tamminga, a retail analyst at Piper Jaffrey, said Caché, which operates 263 stores, could ultimately grow to 500 units.

The company plans to open 30 to 35 stores this year. Woolf said he's looking for a flagship here near Bloomingdale's on Lexington Avenue and 59th Street.

"A key part to this whole story," said Jeff Van Sinderen, a retail analyst at B. Riley, "is that they've been sourcing domestically primarily. You'll start to see them sourcing more overseas, especially in Asia. There's an opportunity for them to directly pick up incremental margin dollars."

Other growth areas include Caché accessories, which until now has revolved around eveningwear. There's also Lilly Rubin, an eveningwear business Caché bought out of bankruptcy in 1988. It is being repositioned. Woolf said Rubin, which has 38 stores, could grow to 100 units.

"There's always room for more acquisitions," he added.

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