By  on May 24, 2007

NEW YORK — Michael Egeck is looking to put Seven For All Mankind back on an even keel and he knows he has his work cut out for him.

Egeck took the reins as the premium denim label's chief executive officer last August, bringing with him an impressive track record of transforming new and struggling brands into powerful sales generators. He spent eight years with Columbia Sportswear before joining VF Corp. to become president of the recently acquired The North Face brand.

"It was pretty messed up," said Egeck of The North Face during an interview in Seven's showroom here. "They were either going to be acquired or go bankrupt. On maybe $220 million in sales they had lost about $120 million."

The North Face business quickly turned around and went on a tear of double-digit revenue gains that has continued to this day. The brand has come to embody all the elements of VF's growth strategy — acquiring lifestyle brands with an existing and devoted consumer base and their own retail component.

Egeck became president of VF's outdoor segment in 2004, where he helped oversee the acquisition of the Vans and Reef brands. At his departure, the outdoor segment had grown revenues from about $300 million to $1.5 billion and has continued to consistently deliver supercharged results. Egeck's ability to bring stability and reenergize brands seems to come at the right time for Seven.

Turmoil and explosive growth have been constant threads running through Seven's short history. Peter Koral, the company's chairman, founded the label with Jerome Dahan and Michael Glasser in 2000. That partnership ended in 2002 when Dahan and Glasser left and initiated a bitter legal battle over their stakes in the business and share of profits. The legal wrangling lasted two years and ended in a settlement. After leaving the company, Dahan and Glasser also became a chief competitor when they founded rival denim label Citizens of Humanity.

Despite the problems, Seven established itself as a dominant force in the women's premium denim market, if not the dominant force. In only three years, sales had climbed to $90 million and by 2005 management said sales had soared to $240 million. It attracted the attention of investment firm Bear Stearns, which picked up a 50 percent stake in the business through its Bear Stearns Merchant Banking division in March 2005.Days later, highly regarded denim industry veteran Andreas Kurz was brought in as the new ceo and was charged with leading Seven into the next stage of its development — becoming a global lifestyle brand. Kurz had a pedigree to match the task. He had previously served as president of international licensing at Polo Ralph Lauren and before that had stints as ceo of Diesel USA and Hugo Boss USA.

At Seven, Kurz moved quickly to expand the company's nondenim product offerings and formed partnerships with the likes of Great China Wall, Ron Herman and Zac Posen to create co-branded merchandise.

Kurz, however, lasted less than a year, leaving the company in January 2006 amid speculation of a contentious relationship with Koral. While all this was happening, a flood of premium denim brands popped up and began chipping away at Seven's market share. By the time Egeck entered the picture six months later, Seven's bid to become a global lifestyle brand had understandably stalled.

Egeck said 2006 "was a catch-up year in a lot of ways" because "the company was put under a lot of organizational stress."

Not only was there the headline-grabbing nature of the Bear Stearns investment and the company having three ceo's in under a year, there were considerable operational issues to wrestle with as well. Seven had been operating as a division of Koral's other venture, Koral Industries, sharing operations such as accounting, financing and distribution. Separating Seven from Koral Industries required moving to a new corporate headquarters and building systems from the ground up.

"It was pretty typical of other situations that I've seen where companies had grown that quickly to that size," said Egeck. "The brand and the business had really started to outgrow the infrastructure and the processes behind the business."

Egeck's days at VF had ingrained the importance of establishing systems that would allow the brand to achieve its expansion goals.

"Another thing I think I really brought from the VF experience is how to grow a company's supply chain capabilities and operating strengths," he said. "VF's ability to leverage the backend functions of a business can be quite extraordinary."

The strategy appears to be paying off. The business was up 35 percent during the first quarter, according to Egeck, and the company has already exceeded the $300 million sales mark. A portion of that uptick can be attributed to the cooling off of the premium denim market. Consumers and retailers had a wealth of brands from which to choose two years ago. Now, retailers have cut back on the number of brands they carry in favor of tried-and-true performers. Plus, consumers are no longer feeling the need to find the brand of the week and are returning to the names they trust."We're making the cut," said Egeck. "As we do, we're capturing a lot of shelf space."

Egeck has also focused the company on five key initiatives, which include growing the core business, product extension, retail expansion, development of the licensing business and international growth. It's the filter through which all efforts must be analyzed and one that Egeck admits is common among its competitors.

"We're all saying the same thing….It's absolutely going to come down to who executes it the best," he said.

Developing a substantial retail business and expanding its international presence are likely to be the areas that offer the company the greatest potential for growth. About 30 percent of its business is done outside the U.S. and Egeck believes the company has yet to start performing well on an international level.

"We've done what we need to do structurally in Western Europe," he said. "Eastern Europe and Asia are the priority."

The retail plank of Seven's growth strategy will kick off in November with the opening of the company's first store on the corner of Robertson Boulevard and Alden Street in Los Angeles. Another store, likely in SoHo in New York, should open by year's end. Things will ramp up from there. Egeck targets opening 50 stores over the next five years.

Seven's retail strategy will hinge on conveying its modern and contemporary take on denim. Denim brands tend to fall in clear categories when it comes to their retailing, said Egeck. Brands such as Levi's and Wrangler play on their heritage, True Religion espouses what Egeck described as a "hippie vibe" and Rock & Republic plays up its hybrid Hollywood and rock 'n' roll qualities. Egeck plans to steer clear of any such associations.

"It's not going to look Western, it's not going to look hippie, it's not going to look rock 'n' roll, it's going to look very contemporary," he said. "Our benchmark for our store design is not other denim companies — it's Gucci, it's Louis Vuitton, it's luxury companies."

Providing merchandise for 50 stores will require an equally significant investment in product development. The company launched its men's business in 2002 and has since moved into footwear, accessories and sportswear. A new children's line will launch this fall. The design staff has been more than doubled and infusing the company with talent will be a priority going forward."We're investing about $11 million this year in infrastructure and it's going to take that kind of investment or more each year to keep us on track," he said.

Egeck believes Seven is now positioned to grow its business 15 percent a year and can ultimately become a $1 billion company.

"At Seven, we have the opportunity to become a significantly sized company," he said. "We're just getting started."

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