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Elder siblings are often the first to open new doors for the younger ones, but not in the case of Paul & Joe. Its less-expensive contemporary offshoot, Paul & Joe Sister, is breaking new ground in the American market for the 15-year-old French brand designed by Sophie Albou.
After doubling U.S. sales and signing Neiman Marcus’ Cusp and Nordstrom to be its first American department store accounts starting with the spring season, Paul & Joe Sister is setting the foundation for Paul & Joe to revive its U.S. wholesale business, which closed three years ago.
“We completely drew back everything to better understand the U.S. market,” said Julien Haggiag, Paul & Joe Sister’s vice president of retail accounts, who is Albou’s brother. “The opportunity is huge.”
Last year, Paul & Joe posted worldwide wholesale sales of 70 million euros, or $98.7 million at current exchange. In May 2010, it opened its first U.S. flagship on Los Angeles’ Robertson Boulevard, where the 1,500-square-foot space is tucked between shops run by contemporary brands Tory Burch and Alice + Olivia.
The company is scouting locations to open a second U.S. store in New York’s SoHo neighborhood. The goal is to expand to five stores in the U.S. by 2013, with each store selling all the brands under the Paul & Joe umbrella, from the namesake women’s clothing line and accessories to Paul & Joe Sister, Little Paul & Joe for children, men’s and swimwear.
The road to a bigger American business starts with Paul & Joe Sister, which launched in 2005 with a flirty, feminine vibe similar to the main line. Wholesaling from $85 to $160, Paul & Joe Sister posted wholesale revenue of $2 million last year in the U.S. This year, it expects to increase sales to $5 million through 45 specialty stores and online merchants, including Net-a-porter.com, 25 Park in New York and the Beehive in Manhattan Beach, Calif. Haggiag aims to grow the U.S. business another 20 to 30 percent in 2012, when the company plans to extend its marketing reach beyond ads in Vogue to include Style.com and other media outlets that appeal to its 18- to 30-year-old target customer.
Paul & Joe has learned important lessons through Paul & Joe Sister’s efforts in the U.S. Since taking its sales operations in-house last year, Paul & Joe Sister, which is produced primarily in Asia, lowered its prices by 30 percent. Going against European firms’ tendency to ship what they can over a four-month period, it divided each season into four deliveries to accommodate U.S. retailers who need to rely on a steady flow to replenish stock. It also tweaked designs for the U.S. customer, such as widening armholes. It even excluded denim from its lineup, although it sells peach-colored skinny styles and cropped jeans in France.
“We don’t bring denim because we’re in the country of denim and we don’t want to compete with the kings of denim [here],” Haggiag said.
Paul & Joe will do what it takes to compete on price. When it revives its U.S. wholesale business for spring 2013, it’ll lower prices by 30 to 40 percent, Haggiag said. The majority of Paul & Joe apparel is made in France, and wholesale prices range between $300 and $2,000. To make the prices more palatable for American consumers, Haggiag said the company has no choice but to cut prices and, as a consequence, profit margins.
“You cannot be too expensive, even if it’s made in France,” he said. “You have to be competitive with the price.”
— Khanh T.L. Tran
A CUT ABOVE
When Cut25 makes its Fashion Coterie premiere this month, it will do so with “a lot of fun — fun and forward fashion at accessible prices,” according to Donata Minelli, chief executive officer of Yigal Azrouël Inc., which is launching the line.
It will also include that certain downtown cool that has become a trademark for Yigal Azrouël, the New York-based designer behind the contemporary brand. He launched the offshoot last year, and the label, which is manufactured in New York with most items retailing under $500, has seen much growth since landing exclusively last fall at Saks Fifth Avenue, Bergdorf Goodman and Intermix. In its first year, Cut25 was picked up by 150 points of distribution worldwide.
No wonder, then, that executives are expecting a “very strong” showing at Coterie.
“Coterie has become the premiere contemporary trade show globally, and we are looking forward to that exposure with existing clients, as well as a new roster of retailers from around the world,” Minelli said.
The spring collection being offered “experiments with voluminous forms, athletic silhouettes, techno-washed fabrics and multidimensional layering,” she added.
It’s been a busy time for Azrouël and his team. Besides showing at New York Fashion Week for the first time, the designer will also be opening his first Cut25 store next spring at 129 Grand Street between Broadway and Crosby Street. The 1,400-square-foot boutique, designed by Dror Benshetrit, will offer the full apparel collection as well as recent accessories additions like scarves, belts and handbags.
— Marc Karimzadeh