By  on December 27, 2000

NEW YORK -- Even after a decade of mammoth losses, misguided merchandising and over 550 site closings, Casual Corner is the chain that refuses to die.

Over the last two years, the retailer -- once nicknamed by some as Casualty Corner -- has been engaged in its biggest and costliest salvaging effort. And it's citing healthier comp-store gains -- up in the double-digits through the fall, according to company executives.

Apparently, there's life in a niche most other stores can't seem to grasp. Secretaries, administrative assistants and young professionals on limited budgets -- working women -- are returning to shop at the once-powerful Casual Corner. They're buying the chain's core "Collectibles" group of coordinated jackets, skirts, dresses and blouses, revamped in navy and black easy to wear-to-work styles for misses' and special sizes. Jackets are priced from $99 to $128; skirts and pants, $49 to $59; sheath dresses, $79; blouses $34 to $59. Another key component for those with not-so-perfect figures: items in misses' sizes can be coordinated with apparel in petite or large sizes.

"Casual Corner is a healthy player. I believe it can be a major, major player in this country," said Claudio Del Vecchio, president and chief executive of Casual Corner Group. "We are not as aggressive as we'll get."

In an exclusive interview with WWD, Del Vecchio disclosed results from the turnaround effort. "We had a three-year plan and we made it in two years," he said, rattling off statistics that most private chains tend not to disclose, Del Vecchio said Casual Corner's volume will hit $808 million this year, up from $564 million in 1998. In that period, gross margins increased from 40 to 50 percent. Income last year was $24 million. And average sales per square foot has risen to $274 from $145. That figure is expected to hit $300 soon, though the comp-store gains can be attributed partly to weaker stores shutting down and improved business at existing stores. In addition, more than one million items from the Collectible collection have been sold in the past two years, according to the company.

"Over 20 percent of our sales are on our own credit card," added Mark Shulman, chief operating officer. "That's a good sign that we have a lot of good customers."While not exactly ablaze with hot fashion, Casual Corner does have an extra edge. It provides basic and slightly updated merchandise in regular sizes through the Casual Corner units, and special sizes through the Petite Sophisticates and August Max units. These, especially, are categories that the female workforce typically has trouble finding at affordable prices and with reasonable quality.

The chain is showcasing its new focus by updating stores with brighter, more directed lighting; shinier floors; larger display windows; and increased space in many locations that allows special-size shops to sit alongside misses' sizes. Since the fall, the chain has opened 40 to 50 units, either renovated or new, with the updated look, at sites such as FlatIron Crossing in Denver; Roseville in Sacramento; Stonebriar in Dallas; and on Third Avenue between 41st and 42nd Streets here. The latter store is considered the flagship, since its the largest in the chain with 21,450 square feet and all three retail formats housed under the same roof.

The prototypes are marked by stainless steel and cherry wood fixtures, industrial grade Pergo floors and custom-made, high-powered Italian lighting that is similar to the lighting used on tennis courts. If all three store brands aren't under one roof, the company tries to find adjacent mall locations.

"We have made the Casual Corner Group easier to shop and we are selling outfits," Del Vecchio said. "Before, it was very uncoordinated. Now, we're training sales associates and store managers how to sell blouses and then how to tell customers that we've got a great jacket for them to go with it.

"We try to examine the experience of walking into a store -- what really makes them work. If a customer comes in for an animal print, a shoe or a belt, what other pieces are going to work for them? You don't need a lot of [stockkeeping units] to do this. We make it very clear and easy to shop."

Shulman acknowledged that it's been a tough year for selling apparel and noted that things could get tougher, though he added that Casual Corner has bucked the trend. "Consumers are still shopping. They're just a little more careful about what they need," he said. "What you should give them is a clean presentation, a focused presentation. The majority of the population is very comfortable wearing updated traditional clothing. It's much less prone to fashion flings and built-in obsolescence. It satisfies a person's comfort level when they're appropriately dressed. And it's not just the middle class. There are people in Greenwich, Conn., who think Talbots is just the most terrific stuff."With a surer sense of self, next year, Casual Corner hopes to open between 75 and 100 units, mostly regular-price stores, with a smaller percentage of outlets. The chain operates roughly 1,000 stores, with three-quarters of that number selling regular-priced fare, and the rest selling discounted goods.

Over the longer haul, another 10 stores could open in Manhattan. No lease signings are imminent, but talks are under way. It's likely that the chain will pick heavily trafficked, less expensive streets, and it will avoid high rent districts like Fifth Avenue or Madison Avenue.

"Third Avenue is our Fifth Avenue. It's where our customers work and live," said Shulman.

Outlets, called Casual Corner Annex, offer all private label in special and regular sizes, primarily in outlet malls. The annexes carry a higher percentage of casual goods. "We see 600 or more potential Annex shops," Del Vecchio said.

Like the regular-priced stores, the outlets have been cleaned up and clarified. For a long time, the outlet stores didn't sell Casual Corner-developed goods. They sold market goods, bearing all different levels of quality. "The division was making money, but it was confusing the hell out of our customers and it tarnished the image. It was our last priority," Del Vecchio said.

It remains to be seen whether Casual Corner becomes the powerhouse it once was. "Their comp sales are getting our attention, but we're still concerned that they're coming off bad numbers from before," said Lori Pawley, senior leasing representative for General Growth Properties, the nation's second largest mall developer.

"But the fact that they want to expand is a good sign," she added. "They've poured a ton of money into the business and the merchandise is getting more salable. But who are they? They've been a me-too operation for so long, so frankly, we're a little gun-shy."

Shulman thinks they shouldn't be. "If you would have asked me a year ago about the numbers, when we had 30 and 40 percent increases, they didn't really mean anything. But this year, it's different. We're up against real increases."

Casual Corner is also up against some strengthening specialty-store competitors, though the head-to-head specialty competition is thin. There's Talbots Petites, which caters to a higher income, more classics-oriented audience, and Ann Taylor, which is also more expensive and more updated middle-upper-executive oriented. Both are less career-oriented than Casual Corner. There's also Lane Bryant, which is lower priced.Aside from those chains, there's little serious specialty competition in special sizes, and as far as moderate apparel goes, it's a sector that department stores seem to have forsaken, and mass chains, such as J.C. Penney Co. and Sears, Roebuck & Co. can't seem to master, although Casual Corner still considers department stores as the primary competition for business.

In the Nineties, no one would have expected Casual Corner to master anything. Casual Corner wasn't just dormant, it was deteriorating at a rate rivaling Woolworth's, losing $50 million to $100 million nearly every year. It was profitable until 1991, but when the recession hit, the store got clobbered. Intensified competition from the Limited and the Gap didn't help matters, and the chain started to lose its focus, sacrificing quality and going after price. Thereafter, the business kept changing strategies and merchandise orientations.

Del Vecchio's family, owners of the Luxxotica eyewear empire, got stuck with Casual Corner when it bought its parent, U.S. Shoe Corp., in 1995. The real reason the Del Vecchios wanted U.S. Shoe was for its Lenscrafters division, which fit well with Luxxotica, a company based in Italy. U.S. Shoe's shoe segment was sold to Nine West, and Casual Corner was put on the block as well, but no company that could afford it wanted it.

"Casual Corner was not a friendly acquisition. We bought a company without really knowing the numbers," Del Vecchio said.

"Casual Corner was in big trouble. It's a miracle it's still here," said Shulman. "It should have been liquidated. That was a serious consideration."

Instead, Del Vecchio kept working on it.

"Turning this thing around became personal," he said. "A lot of people wouldn't have stuck with it. They would have thrown in the towel." Instead, he says the Enfield, Conn.-based chain has been revived by its clearer, simpler identity and by its acceptance of a concept that seems to work for many specialty chains, such as Talbots and Chico's, as well as American Eagle Outfitters, Abercrombie & Fitch and Express, which is to stay focused.

"We avoid the edge of fashion," Del Vecchio said. "Every time we tried to be on the edge of fashion, we made a mistake. Our customer does not want that. We think they really want price [and] value."Although his family took it over five years ago, Del Vecchio was only put in command two years ago, after much of the dirty work was done. The Casual Corner Group had already been whittled down to 750 stores from 1,300. Two divisions, Capezio and Ups n Downs, had been discontinued.

Subsequently, Del Vecchio has revamped the sourcing and rebuilt the merchant team, adding on some key executives, including Kathy Self, senior vice president of stores, a former Laura Ashley and Ann Taylor executive; Eraldo Poletto, chief merchandising officer; and Shulman, formerly with Talbots and Proffitts.

Another major change is the way products are now being developed and sourced. It's largely done through a production team in Enfield, which works with a team in Milan that helps develop product, and an office in Hong Kong that sources, researches fabrics and works with factories. In the past, third parties, domestic market sources and importers were utilized. Sometimes goods were made for Casual Corner, rather than developed in-house.

According to Shulman, "98 percent of the time we cut that third party out, and go directly to factories, rather than manufacturers, saving 10 to 20 percent on the price."

As a private company, Casual Corner still maintains a low profile, but it is beginning to get more vocal using tactics such as mailings of 700,000 catalogs eight times a year. Also, in October it launched an e-commerce site, which showcases all the items from Casual Corner, Petite Sophisticates and August Max. To stimulate multiple sales and help customers build outfits, when an item is clicked to be viewed, the Web site automatically shows other items that coordinate with the initial selection. Also, the chain started selling women's shoes, priced mostly from $59 to $79, for the first time last spring.

With the prognosis much improved, and the company operating in expansion mode, it could be an ideal time to put the operation back on the block. But Del Vecchio said that he wants to hang onto the business that he's worked so hard to revive.

"Casual Corner is not for sale at all," he said. "I like retailing. It's a very tough business, but it's fun too."

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