Test for Todd: Picking a Target

NEW YORK — A brand can’t be high end and mass at the same time.<br><br>That’s the first lesson industry observers drew from Jones Apparel Group Inc.’s decision last week to pull back from the Todd Oldham Jeans business. As...

The Todd Oldham Jeans line went through several redesigns during the past four years. In 2000, Jones dropped the TO2 moniker and relaunched a denim-heavy collection.

The Todd Oldham Jeans line went through several redesigns during the past four years. In 2000, Jones dropped the TO2 moniker and relaunched a denim-heavy collection.

WWD Staff

NEW YORK — A brand can’t be high end and mass at the same time.

This story first appeared in the October 17, 2002 issue of WWD.  Subscribe Today.

That’s the first lesson industry observers drew from Jones Apparel Group Inc.’s decision last week to pull back from the Todd Oldham Jeans business. As reported, Jones officials told WWD it was “evaluating various options” for the four-year-old brand.

The decision followed Target Stores’ launch of Todd Oldham branded home furnishings aimed at college students for back-to-school retailing. According to sources close to Jones, Target’s launch of the Todd Oldham home and dorm line, which was accompanied by heavy television advertising, turned off the specialty-store chains that were the jeans brand’s key customers.

Anita Britt, executive vice president of finance at Jones, said the company decided to pull back the brand because of its limited distribution. In the spring of 2001, the junior line was sold at 3,000 U.S. retail doors, but distribution has declined since then.

“There wasn’t any critical mass there,” she said. “That was our issue.”

The Todd Oldham Jeans line was redesigned several times during its life span. The company tweaked pricing and distribution, and also tried and then dropped the TO2 spin-off name during its effort to turn the line into a lifestyle brand. But only in its early months did the brand enjoy the attention that surrounded Oldham’s career as a Seventh Avenue designer — he retired from the runway in October 1998, a few months after the initial Todd Oldham Jeans line bowed at retail.

Jones is continuing to sell existing Todd Oldham Jeans inventory to some customers. The teen chain The Buckle continued to offer the line for sale on its Web site, buckle.com, as of Wednesday. A spokeswoman for Saks Inc. said the company’s Proffitt’s and Parisian divisions still carried the line, though they are liquidating the inventory as a result of Jones’ decision to pull the plug.

But Jones’ pullback doesn’t signal the end of its association with the Todd Oldham name. The company bought the rights to the moniker in apparel, footwear, cosmetics and accessories in February 1999.

While Oldham remained involved in the jeans business, he also pursued other projects, including photography and television. His decision to go into business with Target marked a prominent return to the world of soft goods, and according to observers, leaves Jones with two primary choices: Join forces with Target or wait them out.

“Todd Oldham re-emerges into the marketplace in a mass-oriented business like Target, and it puts him back in the face of the American public,” said one close observer of the jeans business. “His creativity is too great to overlook. Whether or not he’s been on hiatus from the fashion industry personally, when the right opportunity comes for him to emerge he knows his customer base. He knows the college kid.”

This source suggested that Jones could use the opportunity to begin selling into the mass-market channel.

“The Target business is a huge business…it’s a great business,” the observer said, adding that a launch of Todd Oldham Jeans at that retailer, following its launch of the home products line, could be “a slam dunk.”

Carmine Porcelli, managing director of New York-based Bonjour Group, said it’s not surprising that the appearance of the Todd Oldham name in Target caused Jones to pull the name back from the department-store channel. Bonjour, which is relaunching its signature line as a department store brand, is owned by the Dayan family, which also produces the Faded Glory and Route 66 jeans lines, sold exclusively at Wal-Mart and Kmart, respectively.

“It’s always difficult when you are trying to distribute to those two different channels,” he said. “That’s why your major names, like your Ralph Laurens, Tommys, don’t. It’s almost impossible to distribute to two different channels.”

Jones officials have expressed interest in selling to the mass channel. The Bristol, Pa.-based company, which last year recorded $4.21 billion in sales, has been aggressively diversifying its brand portfolio in recent years — most recently adding the LEI and Gloria Vanderbilt lines to its jeans roster, which also includes Polo Jeans Co. Jones has also expanded its presence into the moderate market, as part of a strategy to reduce its dependence on high-end department stores.

At an investors’ conference in New York last month, president and chief executive officer Peter Boneparth said the company also had an eye to expand into the $40 billion budget apparel arena, which he said represented the biggest piece of the apparel market.

“It’s a challenge for us to figure out how to reach that consumer,” he said at the conference.

A source close to Jones said following the appearance of the Todd Oldham line at Target, Jones officials approached Target merchandisers with a version of the Todd Oldham Jeans line to sell at the retailer. Target officials turned down the pitch, the source said.

“It was totally wrong,” said the source, referring to the proposed line. “It’s important for it to be saleable, but it also has to represent a fashion point of view.”

Jones’ Britt declined to say whether company officials offered the line to Target.

“We really do have a regular dialogue with all of our retail customers,” she said. “We don’t really get into commenting on any specific brands or meetings that we have.”

However, she acknowledged that the discount channel is “an area that we do keep our eyes on.” A Target spokesman declined to comment for this story.

While selling the Todd Oldham jeans into Target seems like a logical next step for the brand, it’s not the only one, observers said.

“If the assumption is that Target and Todd have had a relatively good beginning, I can’t see the reason why Jones wouldn’t want to produce jeans for Target,” said consultant Andrew Jassin, of the Jassin-O’Rourke Group, based in New York.

If Target is going to become the primary distribution channel for the Oldham brand, he said, “There are simple solutions to this: Either sell the brand to Target or rent it to Target so they can produce it on their own, which is not unusual for them, or enter into a sourcing relationship. The brand, if handled well at Target, would be great. Target suffers some fools on their apparel lines. Motivations [a Target house brand] is not great. Their apparel is not as great as it ought to be.”

However, Jassin said, it’s not clear that the Todd Oldham home line’s initial results have met Target’s expectations. In that event, observers said, Jones might be better off keeping the brand in limbo, rather than trying to sell it into a channel where the brand might lose some of its cachet.

“It could be that brand is not as meaningful to the person shopping at Target as it is for people looking for designer duds,” said Kathy Collins, vice president of marketing at Lee Co.

Until it’s clear that the Oldham line is a success at Target, she said the best approach might be “Just hold onto it.” That’s something Jones would likely be in a position to do if it wished, suggested the close observer of the jeans business.

“Jones is so powerful right now that if they decided they wanted to let the name sit and do nothing with it, they can afford to do that,” the source said. “They didn’t pay a huge amount and I’m sure they’ve more than made the money back.”

A source close to Target said of the Oldham home line, “It did not do as well as expected. They are not saying the brand is dead, but the product assortment did not do as well as they expected.”

A spokeswoman for Oldham declined comment on his behalf.

Target has beefed up its brand lineup in recent years, adding apparel from Mossimo, Cherokee, Stephen Sprouse and Liz Lange, as well as home fashions from Philippe Starck and Michael Graves. Cynthia Rowley has also agreed to produce a home line for the chain under the Swell label.

“They’ve acquired a lot of brands recently, and now they’re stepping back and evaluating their options,” the source close to Target said.

Other sources pointed out that much of Target’s success has come from the discounter’s ability to promote its own brand as hip and its stores as attractive places for higher-income consumers to shop. Given the importance of the Target brand itself, it’s unclear how much value other apparel names would have there, sources contended.

“The important thing that people need to realize is that Target is the brand,” said the source close to Jones. “If you walk down the street in a Mossimo shirt, everybody knows you bought it at Target. If you walk down the street in a pique polo, no one knows you bought it at Wal-Mart.”

Sources also suggested that, if he’s looking to stick with Target, Oldham himself could try to buy his name back from Jones and start designing apparel for Target.

“There’s a lot of people who would be interested in that,” said the close observer of the jeans business.

Should Jones decide to keep the line dormant for a long time, the source continued, “I would hope that Todd would be smart enough to find someone to partner with and buy the name back from Jones.”