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BCBG Milestone: The Max Attitude

Founder Max Azria reflects on the evolution of BCBG as he prepares for the future.

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Can anyone blame Max Azria if he needs a nap?

This story first appeared in the April 30, 2014 issue of WWD.  Subscribe Today.

“I wake up at 5 or 6 a.m. every day. I am a morning guy,” said the chairman and chief executive officer of BCBG Max Azria Group.

Moreover, daughter Joyce insisted, “He doesn’t sleep more than three hours a night.”

Azria arrives at his Vernon, Calif., headquarters by 7 a.m. each day, where he oversees an international empire comprising brands BCBG, BCBG Generation, Max Azria Atelier and Hervé Léger, with 500 stores in 47 countries and $1 billion a year in retail volume with 7 percent compounded growth annually over the past decade.

The company is at a turning point as it reaches the quarter-century mark. Azria may finally cede financial control of his privately held company to the investors who own part of its debt and transition into a creative leadership role.

“The difference is that today I am chairman and ceo, and tomorrow I could be chairman and we put in a new ceo. That is it, simple. I am totally cool, relaxed, because I don’t have anything to prove anymore. I’ve done everything I’ve wanted to do.”

Well, not exactly — Azria says he has many more dreams for his company, not the least of which is global domination.

RELATED STORY: BCBG Milestone — Building the Flagship Brand >>

Sipping a glass of orange juice and chain-smoking America Spirit cigarettes at his desk, which is made of a stainless steel airplane wing, Azria bounces from topic to topic and project to project. He has already been strategizing with his executive vice president and chief financial officer, been wheeling and dealing via cell phone and has recounted his life story by midmorning. For a quick recharge, he grabs 20 winks on his beige linen sofa while awaiting a photo shoot.

Born in Sfax, Tunisia, the youngest of Clement and Rachel Azria’s six children, Azria recalled, “I had a beautiful childhood in Tunisia until we moved to France when I was 13 years old.” The Jewish family left the country to avoid religious persecution. “Of course, it was a huge culture shock. First of all, I was in my teen immortality stage where everything is possible, anything can be done, ba-ba-bi, ba-ba-ba…”

(He peppers his speech with that favorite expression, equivalent to Jerry Seinfeld’s “yadda yadda yadda.”)
If Azria, 65, has a flair for the dramatic, enhanced by his heavy French accent, it’s not surprising that as a youth, he wanted to be an actor.

“I stopped school early [at age 15] to go for three years to acting school, and I was very passionate about it. To pay for my studies, I had to work. And God willed that I make money very fast and very big.”

At 16, Azria gained legal emancipation to control his own finances.

“At 17, I had my own bank account, and everything I touched became gold,” he noted, adding that one of his first jobs was “to sell candy to the whores and these types of people in Pigalle [a Paris neighborhood known for sex shops, adult theater and home to the Moulin Rouge]. After that, I sold watches, pens, accessories. And after that, I came to my apparel business.”

At 23 he lived between Monte Carlo and Portugal, where he oversaw his family’s garment manufacturing business, AZ3. His father’s death at age 75, when Azria was 30, prompted him to return to France to settle the family’s affairs.

“For two years I cleaned up all the business and I was determined to go live in America.”

Like Salvatore Ferragamo and the Marciano brothers before him, Azria decided to seek his fortune in California.

“California was a dream of mine because of the weather, the size of the region, the beach, the lifestyle,” he said.

After arriving in L.A. in 1983, his first business venture was a women’s multibrand retail concept called Jess, which numbered six stores in Los Angeles and lasted until 1988.

He fulfilled one of his dreams of creating a women’s fashion line when he founded BCBG in 1989.

“Ever since I was really young, 22 years old, I felt that we had to redo everything in women’s fashion,” he said, explaining that he thought the American market needed a brand with the panache of a European house. “The challenge and the opportunity was enormous. The U.S. market was missing the flavor of Europe in 1989, so that’s what we brought.”

Toward the end of the Eighties, which saw women donning suits — particularly pantsuits — as they rose the corporate ladder en masse, Azria also thought women should look like women, so his first collection featured four dress styles, including the baby doll, that quickly became bestsellers.

The name BCBG stands for “bon chic, bon genre” or “good style, good attitude.”

“It was about developing women’s fashions, attitude, independence and beauty,” he said. “It’s a business, but it’s also a feeling. I love women’s fashion, no question about it.”

“Max’s input is very directional,” said Lubov Azria, his wife, who is chief creative officer for the group. “He is very hands-on with fabric and key styles in collections.”

BCBG has been a family affair — besides his wife, one of his daughters, Joyce, is creative director of BCBGeneration, a younger line. Max’s brother Serge also previously worked at BCBG, and currently owns the brands Joie, Current/Elliott and Equipment.

RELATED STORY: BCBG Milestone — Lubov Azria’s Story >>

Azria also loves the glamour of Hollywood, evidenced by the attention placed on red-carpet dressing, whether it’s in BCBG’s contemporary main line, the custom Atelier line or sexy Hervé Léger. The hallways in Vernon are lined with framed red-carpet photos of stars from Halle Berry to Beyoncé to Julia Roberts.

“We cannot forget that the movie capital of the world is Los Angeles, nor the influence of movies on what you wear.”

At one point, Azria dabbled in showbiz himself, backing a $12 million musical version of “The Ten Commandments” starring Val Kilmer in 2004. The show had modest success, but Azria said at the time, “I think it’s good to take on new challenges, because repetition doesn’t help you grow. People make fun of me for doing this, but I think it will only inspire me to do new things with my apparel business. It’s all about moving, not sleeping. Plus, it makes me feel young.”

Although he calls California “more creative, more crazy, more adventurous than other parts of the world,” Azria considers himself “a man of the world.”

L.A. Mayor Eric Garcetti said Ariza’s contributions over the past 25 years “have made Los Angeles the fashion capital it is today.”

“By origin, I come from Europe. By my company, I am totally American. By my work, I flirt with Japan, China, ba-ba-bi, ba-ba-ba. I am educated in global culture. Sometimes when I hear my competition in France, it’s like hearing kids in the schoolyard. They speak as if they own the territory, but they do not see beyond it.”

Some would argue that Azria’s aggressive global retail strategy landed him in trouble. Deals such as the acquisition of the juniors chain Max Rave in 2006 didn’t end up paying off, and rapid store expansion was costly. “All that is a lot of plus-and-minus and intense situations. I can keep calm in a tough situation,” he said.

Midway through the interview, Max took a call from someone whom he told, “Yes, I can get $100 million. No, it won’t take six months, it will take a week. Trust me, it will be the best deal of your life.”

The guy clearly can’t resist an opportunity to make a deal, but it seems that is precisely what his creditors want to stop him from doing. Borrowing huge amounts of capital unchecked will most likely no longer be an option.

But, said Azria,“I like to take risks. For me the creativity is not enough. I like the complexity.”

When Azria acquired French brand Hervé Léger in 1998 for an undisclosed sum, the brand had enormous cachet but losses of $3 million to $4 million annually on sales of $10 million. Founding designer Hervé Leroux was forced out, followed by short tenures of Eric Sartori and Jerome Dreyfuss. Production ceased for several years until Azria relaunched it in 2007 under Lubov’s design direction at New York Fashion Week in February 2008. It has since regained its luster and now has 14 stores in 12 cities.

While the Léger deal turned out to be profitable, others, such as a collaboration with Carrefour on Tex by Max Azria, may have contributed to the company’s financial straits. So did a 2009 venture with Wal-Mart for a Miley Cyrus line. At the time, WWD said, “At this point, celebrities throw their names on affordable fashion lines so often, it seems a licensing deal is practically written into Disney contracts for Miley Cyrus (Wal-Mart), Selena Gomez (Kmart) and even Britney Spears (Candies).” But the Miley & Max Azria line failed to perform and ended after less than a year.

Looking back on these deals, Azria says, “Every deal is a new venture. And when you are a ceo or designer, you need to be prepared for winning and losing. You lose and you learn, but you have to be a good loser. It’s the only way to get back on your feet.”

RELATED STORY: Moving Hervé Léger Ahead >>

In response to the bankruptcy rumors that have dogged the company for years, he pointed to labels that are very successful now, like Prada and Michael Kors, that were once facing financial difficulties.

“Definitely when you have growth the way I do or they did, you have to go through reorganizations and expansions and make your life a little bit more difficult.”

Lubov added that economics — not having the capital to grow the brand the way they have wanted — as well as the challenging economy have stymied the company.

“You have a dream and an idea, and it just kind of stops,” she said. “More than not having enough time, mostly it’s not having the resources to do the things you want to do.”

When asked about the company’s debt, Max admitted, “It is the only place where I did a bit of a boo-boo. I made a mistake. I borrowed too expensively, and when you borrow for 10 years expensively, at the end of that 10 years, it is a lot of money.”

At press time, negotiations were being hammered out with Guggenheim Partners LLC, which owns $475 million of the company’s $685 million debt. BCBG has been on the block before; there was speculation in 2010 that a private equity firm or fashion conglomerate could buy it for as much as $1 billion, but so far no takers have come forward.

Azria spins the latest chapter not as a takeover but as a partnership. “It’s not somebody coming to my office saying, ‘I want to buy you out.’ It’s a completely different thing.”

He also seems to accept the idea that one day, he will no longer be at the helm. “I believe, as my wife does, that if we want this company to be alive in 25 years, we need to take this step. When you go to church and marry, you start out good, but afterward you don’t know where you’ll go. So hopefully my new partnership will be a dream.”

Many believe Guggenheim will wind up in financial control. Azria noted, “Control is simply mathematical. The people that I am going to partner with are more sensitive than me about profitability and results. Their goal is identical to my goal, but the way they do it is sometimes different. But I have to respect the new generation, and respect those who can do better than me. I am good — very good — but probably there are people better than me.”

Of the impending transition, he said, “There are 100 things we are going to do differently. I will have more people around me to advise. I can come up with an idea in one day and they can take five years to work out the details.

RELATED STORY: BCBG Max Azria Group — The Financial Picture >>

“I would prefer to have three or four years instead of two months to transfer my position. I want to take my time and be sure that [a successor] is even better than me.”

He could be teaming up with thousands more if an initial public offering, which has been hinted at since 2006, becomes a reality.

“An IPO is my dream. It’s a good adventure but also the type of exercise that keeps you going. It will happen. I don’t know if [that’s] in two years, three years or four years. But I will be there with a big smile on my face.”

Azria aspires to be like Louis Vuitton or Hermès as a global presence, “but we also follow trends from the Zaras of the world. I am thinking of where I can manufacture 25 million garments instead of 5 million. It’s not a problem how to sell it, it’s how to make it. That takes six months to a year of preparation.”

He says his business strategy is based on “what markets we fill up and the markets where we aren’t. In Europe, we do $100 million but we could do $500 million.”

By comparison, BCBG does $100 million in sales in Canada alone. Azria believes e-commerce, which launches in May, will enable him to do another $10 million there.

“If I can do 15 percent of my volume on e-commerce in any region, it means I can fill up that region with more stores. So imagine that we do $100 million in Europe and suddenly e-commerce can be $20 million. It’s clear that means [we need] more stores in Europe. Same thing in Japan, Mexico, Canada.”

Azria says his priority is growing his women’s business, which he feels “can easily triple in five years.” But in the next two years, he also plans to unveil a new men’s division. The firm produced men’s wear from 2000 to 2003.

“I feel what’s missing in the men’s market is that it lacks the same fashion positioning [as BCBG women’s wear]. It’s a huge opportunity, but a delicate balance. If women have become too masculine, then men have become too feminine. So it’s about defining those two.”

When he ponders life outside the office, he says, “I think fortunately or unfortunately, I am business first and life after. We typically get away for holidays  as a family, but our home is our dream house — there really isn’t any need to leave. If we do travel, we either go to our home on Fisher’s Island in Miami or to St. Barths and Saint-Tropez.” (For more on the Azrias’ home, see page 14.)

Conveniently, Lubov is also a workaholic. “You can’t do this job if you don’t put all yourself in it, and she does a great job,” Max said. “I respect my wife because she respects me. I understand how important the work that she does is, and how she puts herself first to secure us, the same way I do.”

Azria married Lubov in 1992 and they have three daughters: Chloe, 21; Anais, 18, and Agnes, 17. His marriage to first wife Ghislaine (Kiki) Azria produced Michael, 39, a film and television producer; Joyce, 32, and Marine, 30, co-owner and creative director of a gift company called The Piece Collective.

As for his younger daughters, he says, “I don’t know if I am doing the right ‘dad work’ because I don’t want to push them into my business. It’s hard, and I’m not sure they are prepared. They like anime, singing and photography. Everyone is different. I’m always checking, but I don’t impose any direction.”

Added Lubov: “If the kids want to do it, they have to start from the bottom and respect what they do. A lot of people think that because your dad owns the company, you can be a director. But my kids are interested in other things. The whole environment is shifting. The new generation has a really different point of view. For example, nobody wants to be a sewer anymore — who wants to work that hard? It’s going to affect us in a tremendous way in the [coming] years.”

Even though looking back on his achievements “is impressive, no?” there’s a part of Max Azria that will always strive for more. “I would like to see this company in 120 countries. It would be my dream come true if Generation had 500 stores. And can you imagine Hervé Léger for men? The potential is enormous.”

Ever the optimist, he grinned, “$1 billion today, $4 billion tomorrow.”

 

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