By  on August 13, 2007

NEW YORK — Coldwater Creek has opened its first Manhattan store, a 15,000-square-foot flagship, on Third Avenue and 68th Street in the heart of some of the wealthiest zip codes in the city.

The store has a natural Pacific Northwest vibe with wooden grids on the ceilings, a water wall and wrought iron lighting fixtures. Throws with Southwestern motifs, patchwork quilts and decorative plates are merchandised with apparel — in natural colors such as olives, browns and rust — to emphasize the lifestyle aspect Coldwater is trying to develop. A display of lemongrass candles fills the air with the scent.

The Sandpoint, Idaho-based retailer has 13 stores ringing Manhattan, in New Jersey, Long Island, Staten Island and Connecticut.

"We know exactly where preexisting customers reside," said Dennis Pence, founder, chairman and chief executive officer. "There are two more locations [we are scouting] in Manhattan. If something pops up in one of these locations, we'll move very quickly."

Pence declined to project sales volumes for the new store, but said Coldwater units generally do more than $500 a square foot. "This customer base [near the flagship] would likely be more productive," he said.

Coldwater Creek, which has shunned downtown locations in major cities, is now looking to move into more urban areas. "It's just a matter of the real estate," said a spokeswoman. "Our footprint is rather large, which makes it a little more difficult. We're very close to the metro areas of downtown cities, but just haven't found the right places. We absolutely want to be there." Two cities the retailer is eyeing are Los Angeles and Chicago.

The company reached $1 billion in sales with 244 Coldwater Creek units and, Pence said, "there's the potential for 500 stores."

By the end of the year, 65 Coldwater Creek stores will be added and Coldwater Creek, The Spa units will be unveiled. "I had concerns about the spas, that the service wouldn't mirror the service in stores," said Pence. "Repeat business is awesome." There's a market for 200 spas in the U.S., he said, but how rapidly the chain rolls out depends on how long it takes the spa business to achieve profitability.Mark Montagna, an analyst at CL King & Assoc., said in a research note that fall merchandise bodes well for the chain's prospects in the near future. "The company has had a laser focus with the reinvigoration of its sales and profit momentum," he said, adding that he anticipates Coldwater growing margins to 15 percent from 8 percent, doubling its store count and realizing strong comp-store sales increases.

The Manhattan store has shops for dresses, spa apparel and Spirit, Coldwater's more expensive collection, which uses better fabrics and has more detailing. Priced 40 percent above the core line, Spirit launched in February and is offered in 38 stores. Complete outfits are displayed throughout the store. A sand-colored Spirit linen sweater for $149 was paired with $98 jeans and a tapestry jacket, $98.

Coldwater's customer is not trendy by any means. "She's never going to be a fashion leader," Georgia Shonk-Simmons, president and chief merchandising officer, admitted. "But she wants to look modern. We give her fashion touches. The prints are ours exclusively. With everything I do, it's important that it's pretty."

The retailer squarely targets Baby Boomers, the same group claimed by retailers such as Chico's and Talbots. "Coldwater Creek has a distinct look and offers a great value," said Montagna, "and the product looks reasonably sophisticated."

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