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Olsens All Business in Move From Show Biz to Global Brand

Mary-Kate and Ashley Olsen are trading their past as child actors for a future as businesswomen, building a global lifestyle and entertainment firm.

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LOS ANGELES — Mary-Kate and Ashley Olsen are trading their past as beloved child actors for a future as global businesswomen.

The 19-year-old twins are taking control of their company, Dualstar Entertainment Group, and finessing their focus on fashion, home, beauty, brand management and entertainment. In addition to emerging celebrity rivals, they face the challenge of trying to entice an older, more sophisticated consumer who has outgrown tween sizes and lost interest in entertainment starring the sisters.

“We’re getting older,” Mary-Kate told WWD in an exclusive interview. “We have more things to say. We want more things to accomplish in our company.”

With apparel representing about 80 percent of the business, Dualstar rang up an estimated $1 billion in retail sales in almost a dozen countries in 2004. The line is sold at Asda in the U.K., El Campo in Spain, Auchan in France and The Warehouse in New Zealand, among other overseas retailers. Dualstar is preparing to launch sales in Australia. The Olsens’ fragrances are in broad distribution at Kohl’s, Claire’s, CVS and Walgreens in the U.S.

Last January, the Olsens acquired full ownership of Dualstar and became co-presidents. Even as they take art and French classes in their second year at New York University, the Olsens are more hands-on than ever at the Culver City, Calif.-based company.

The twins have come a long way. They made their television debut on the long-running sitcom “Full House” when they were nine-months old. Dualstar was founded in 1993 with the Olsens’ then-manager and lawyer, Robert Thorne. After “Full House” ended in 1995, their popularity kept growing because of the show’s global syndication and their home videos. The mary-kateandashley line launched at Wal-Mart stores in the U.S. in 2001, and the Olsens soon expanded into 14 different categories, ranging from 89-cent pens to $1,615 beds.

In separate interviews with WWD, the Olsens discussed their vision for Dualstar. Among their goals are:

  • Developing a high-end fashion brand by investing in a different company or bringing in an outside designer.

  • Transforming their 30-person enterprise with offices in Culver City, New York and London into a boutique brand management firm supervising emerging labels and talent in both the fashion and entertainment worlds.

  • Generating ideas for a so-called incubator, a separate division that was formed in Dualstar about four months ago to research and test new brands in fashion, home and beauty.

  • Taking a more active role in the film production division by producing and purchasing properties, meeting with directors and making movies for brands managed by Dualstar.
The Olsens also must contend with equally young and ambitious competitors, particularly Hilary Duff, the 18-year-old singer and actress who last week unveiled plans to head her own fashion and lifestyle company. And, in a twist worthy of a show business saga, Duff is teaming with Thorne, who will manage her brands targeting both the tween and junior markets.

The twins already enjoy a comfortable lead. In this year’s “The Celebrity 100″ compiled by Forbes magazine, which ranks stars according to earnings and buzz, the Olsens were at number 35 and Duff was listed at 54. In the previous year, the Olsens ranked 48 and Duff was 72.

Still, Duff is off to a fast start. She has signed a fragrance deal with Elizabeth Arden for a junior brand called Hilary Duff. Wal-Mart and Kohl’s expressed interest in being part of Duff’s tween label, Stuff by Hilary Duff, said Cory Silverstein, executive vice president of New York’s Kids Headquarters, which will manufacture Duff’s swimwear, sportswear and sleepwear for tweens starting next year. Spokeswomen for both Wal-Mart Stores Inc. and Kohl’s Corp. declined to comment.

“We wish both Mr. Thorne and Hilary Duff great success,” said Diane Reichenberger, chief executive officer of Dualstar. “There is plenty of room for all of us in the marketplace.”

Duff’s new brand exposes the lack of junior apparel and swimwear in the Olsens’ business. In 2003, Dualstar scrapped a junior line marketed under the mary-kateandashley label after two seasons because of lackluster sales at 500 Wal-Mart stores.

“It wasn’t something we were able to grab,” Mary-Kate said. “Wal-Mart doesn’t know that [teen] customer yet.”

Swimwear, also marketed under mary-kateandashley, was sold at Wal-Mart from 2001 through 2004, until the retailer remerchandised all swim brands to hang together on one rack.

“We do best when our brand can stand alone and showcase our direction as is,” said Michael Stone, co-chairman of New York’s Beanstalk Group, the licensing agency hired by Dualstar in 1999.

Wal-Mart has begun initiatives to spruce up its image and offer more fashionable products. Jacqui Young, a spokeswoman for Wal-Mart in Bentonville, Ark., declined to comment on the Olsens’ teen clothing and swimwear. But she said the mary-kateandashley brand, available in more than 3,000 stores, is one of the most popular for Wal-Mart.

“The kids love it and the adults love it,” she said.

Reichenberger said Dualstar has held “internal strategic conversations” about targeting an older demographic under a new label. The company may return with a swimwear collection as soon as next summer, she said.

Still, what sets the Olsens apart from Duff and other competitors is the entertainment library amassed from the twins’ past TV shows, videos, books and DVDs that continue to attract tweens. They are exploring opportunities to lure older shoppers, and they introduced new fragrances from Coty and cosmetics from Nu World in the last three years. But their movie released last year, a comedy called “New York Minute” about college-age sisters in the Big Apple, fizzled at the box office.

So the Olsens are taking charge. In late August, as other college students prepared to start the new semester, the sisters sat at a conference table in Bentonville poring over spreadsheets that detailed sell-throughs, markdowns, gross margins and sales by color grouping for their mary-kateandashley brand. Along with representatives of their company and licensing agency, the Olsens faced planners, buyers and merchandising managers for accessories, sleepwear and other divisions at Wal-Mart, which sells the Olsens’ clothing line exclusively in the U.S. and Canada.

The 35-person meeting was the culmination of a two-day visit to Wal-Mart’s headquarters. Wal-Mart executives were initially unsure why the twins wanted to attend the annual business review, Reichenberger recalled. Ashley said the sisters’ last trip to Bentonville had been in 2002 for Wal-Mart’s annual shareholders meeting. The goal this time was to assess the state of the business.

“It’s obviously important for them to know we’re 100 percent behind it,” Ashley said. “It was really nice to hear their concerns and also for me to be able to come back and say, ‘You should trust us sometimes.'”

More business review meetings between Wal-Mart executives and the Olsens are in the works. “We are serious,” Mary-Kate said.

The Olsens are refining their new strategy with Reichenberger, 44, who joined Dualstar as Thorne’s successor in March. Reichenberger’s résumé includes the relaunch of L.A. Gear Inc. and stints at Joe Boxer Corp., Gap Inc. and other apparel companies.

Dualstar has eliminated projects that didn’t align with its renewed focus on fashion and style. It stopped making new videos, DVDs and books centering on the Olsens. Since January, the company has hired four new employees, including a brand manager, and plans to recruit more designers. Designer Sam Ciardi, 35, was promoted to executive design director, replacing Judy Swartz, the former chief designer who left in June to pursue her own fashion line. Swartz couldn’t be reached for comment.

“We’ve really been narrowing down the company and doing things we want to do,” Ashley said.

Mary-Kate added: “At the end of the day, it’s our face and name on it.”

Dualstar is increasing the fashion quotient in the tween label. Ciardi’s first collection as lead designer will appear next summer. He said he will replace ramie cotton with 100 percent cotton or cotton stretch fabric in all denim, twill and cotton-based apparel.

Double hangtags featuring a miniature primer on how to put an outfit together appeared for this year’s back-to-school season. The aim was “just to help the customer see the vision for the brand, to let her know that it is cool to mix-and-match pieces,” Ciardi said.

Dualstar also hired a new coordinator for research and testing for the incubator.

“Mary-Kate and Ashley personally have ideas that they would like to explore in fashion, home and beauty,” Reichenberger said. While Reichenberger reviews the incubator’s progress with the Olsens weekly, Mary-Kate and Ashley work on it daily.

“It was really great to start getting something done that we always wanted to do,” Ashley said.

Dualstar has begun adding new brands. It will move into the boys’ market by developing the D.C. Sprouse brand for Dylan and Cole Sprouse, 13-year-old twin brothers who star in “The Suite Life of Zack & Cody” on the Disney Channel. Reichenberger said a D.C. Sprouse clothing line targeting young men and men could bow next fall or holiday. She said Dualstar hopes to unveil plans for a high-end women’s brand by the end of October.

The key to successful brand management is a network of agents, brokers and contacts with sponsors, media and corporations. Rick Barrera, president of branding consultancy Overpromise Inc. in San Diego, said the Olsens have a powerful network.

“They’ve nurtured those through their career and would be able to leverage them,” Barrera said. “Most of those people they know are not easily accessible to the average up-and-comer.”

Gwen Stefani, Sean “Diddy” Combs and others followed the Olsens’ lead into the celebrity fashion business. So far none has a lifestyle empire matching the Olsens’ Dualstar.

And the Olsens are definitely interested in fashion. The mishmash outfits they wear to class and about town have generated a new fashion trend among college-age women. Mary-Kate sat in the front row last month at the Calvin Klein fashion show in New York, while Ashley interned at Zac Posen last year.

In addition to tracing patterns and pinning dresses, Ashley sat in on fittings and learned why Posen picked certain pieces for the catwalk. “It’s so different because we’re dealing with, you know, mass merchandise and they’re dealing with more couture pieces,” Ashley said of working at Posen.

The Olsens’ background in targeting the mass market and their personal style of dressing in layers could be an obstacle to jumping into the junior market, said Fraser Ross, the owner of the influential Kitson boutique in Los Angeles.

“The translation from Wal-Mart to junior-contemporary is hard,” he said, adding that sexy and form-fitting clothes photograph and sell better than baggy. “Maybe they should go into accessories because they did make [popular] those big bohemian beads,” he said. (The Accessories Council will bestow the Accessories Council Excellence Award to the Olsens in November for having an impact on the business.)

That may be the case. But Mary-Kate said she and her sister have already found a following as other young women mimic their style and the press chronicles their latest looks.

“Ashley and I have really taken fashion icon roles,” Mary-Kate said.

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