By  on October 24, 2005

NEW YORK — “On Jan. 31, they fire me,” Wolfgang Ley, Escada’s founder and chief executive officer of Escada AG, joked, sitting in the company’s Fifth Avenue flagship.

Ley, of course, was referring to the day next year when he officially steps down from his post and passes the baton to Frank Rheinboldt, who is the ceo of Escada Group’s Primera AG.

Ley, who founded Escada in 1976 with his late wife, Margaretha, isn’t saying auf Wiedersehen to the company, though. On Feb. 1, he will assume the role of creative chairman for the group, an ambassadorial role that will still require his involvement in the brand’s overall development and public image.

“I am in charge of building new collections, influencing the store layout and store design, scouting the world for new design talents, especially in Russia, India and China, and making sure that the message of the brand is consistent,” Ley said of his new responsibilities.

The change, he said, was voluntary. “I was 67 years old, and at the beginning of January, I was sitting in my office, thinking, ‘I have a contract until 2008 as ceo.’ I wanted to initiate the recruitment process.’”

Instead of going to headhunters, Ley created his own matrix of potential candidates and their characteristics, from ready-to-wear experience, entrepreneurial skills, experience of branded goods and international retail experience. Rheinboldt, who had successfully turned around Escada’s Primera business, which includes the Laurèl, Apriori and Cavita collections as well as the Biba retail chain, came out with most of the checks against his name.

“From an operating point, the company is profitable. We are growing,” Ley said, when asked why he didn’t wait out his term as ceo. And anyway, he feels his new role will serve the company just as well.

“I thought, ‘What is the biggest gap in the company?’” he said. “I know the DNA of the brand and I have built most of the markets. I can support the brand with my know-how of different cultures.”

He added that he will also work more closely on developing the advertising campaigns, pointing to the spring ads, which were photographed by Steven Meisel with 12 images featuring Linda Evangelista.“I can contribute much more to the success of Escada if I stayed on like this,” he said. “No other company can free its ceo and founder of his daily obligations just like that. Today, with corporate governance in Germany, 80 percent of your time is spent in conference rooms. But in rtw, you have to be in the market every day. You have to see what is going on, to listen to the stores. You have to travel, and understand where the future is.”

Escada, once one of the most profitable European fashion houses, faced its challenges in the Nineties, and Ley conceded that one of the biggest mistakes the company made was to go public, forcing it to diversify. Many of the investments turned out to be unsuccessful.

But lately, the business appears to have turned around. In the U.S., Escada operates 17 stores, and wholesales to Neiman Marcus, Saks Fifth Avenue and about 35 specialty doors. There are currently no plans to add stores in the U.S. Instead, Ley said the plan is to utilize the existing stores better. The Fifth Avenue flagship, for instance, has recently been refurbished to give it a softer, more inviting feel, and a better layout with a prominent accessories display on the main floor.

The American market accounts for 20 percent of Escada’s total sales. The company’s fiscal year ends Oct. 31. In fiscal 2004, the group’s core Escada business had sales of 413 million euros, or $493.5 million at current exchange rates.

“The business in America has been very good,” Ley said, adding that Escada’s own stores are up by 20 percent.  “Wholesale is good, too.”

Ley was in New York last week to launch an ADR (American Depository Receipts) program with the Bank of New York. ADRs enable U.S. investors to buy a small fraction of shares in companies not listed here. Escada’s shares are sold through the Frankfurt and Munich stock exchanges.

“There are many American retail stores who can’t buy European shares in the U.S. because they are under SEC laws,” Ley said. “We are a global brand. Lots of consumers want to buy shares. It’s a good marketing tool, and it gives the company good exposure domestically.”Ley, who would typically come to New York twice a year for market, plans to spend more time here in the future for personal appearances and fashion shows and to meet with the staff. He also plans to devote more time to growing the company in Russia, China and Southeast Asia, and there are plans to open more stores in places such as Bangkok, Malaysia and Vietnam.

Ley said helping build Escada’s accessories business is one of his personal challenges. Currently, it accounts for about 5 percent of the company’s total business. “We want to make accessories as important as fashion,” he said.

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