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NEW YORK — Nanette Lepore may be determined to keep production in New York City, but her broader vision is to expand her $140 million business into a global lifestyle company.
This story first appeared in the March 24, 2010 issue of WWD. Subscribe Today.
In recent weeks, the designer has unleashed several new initiatives. Among them: a swimwear collection, licensed to Manhattan Beachwear, will be introduced for cruise 2011; a footwear line, licensed to Tribeca Affiliated Brands, will launch in spring 2011, and a handbag collection, also with Tribeca, will hit stores this fall. In addition, a casual knitwear-based line, created in-house, called Oonagh by Nanette Lepore, made its debut for holiday and is on track to double its doors this year; Nanette by Nanette Lepore fragrance, licensed to Elizabeth Arden, hit retail counters last fall, and an e-commerce Web site, developed by Pod 1, will go live this fall.
After a year of belt-tightening and cost cutting, Lepore appears to have weathered the recession and is poised to take advantage of both U.S. and international growth opportunities.
“Things are looking better. It’s been challenging for everybody,” said Heather Pech, chief executive officer of Nanette Lepore. Since being brought in two years ago as the company’s first ceo, Pech has been methodical in making changes in operating procedures — cutting expenses, lowering inventories, broadening the offerings, and working on tighter margins, productivity and personnel issues.
Although Lepore has been a staunch supporter of “Save the Garment Center,” Oonagh (which is the designer’s daughter Violet’s middle name) is manufactured in China. However, the company is looking to switch production to California. Oonagh is comprised of casual knit dresses, pants, tops and skirts that wholesale from $24 to $74. The line is carried in stores such as Nordstrom, Bergdorf Goodman, Saks Fifth Avenue, Neiman Marcus and Bloomingdale’s, where it hangs adjacent to lines like Velvet, James Perse and Hard Tail. The company expects to generate $2 million in wholesale volume with Oonagh in the first year, said Pech.
“It’s the weekend counterpart [to Nanette Lepore], but it’s also a different department,” said Lepore in an interview at her West 35th Street headquarters. She said she is targeting women from 13- to 50-years-old, with the core audience being 25 to 35. Lepore noted that as long as the company can handle the knitwear line in-house, it will continue to do so.
The new swimwear collection features separates wholesaling from $32.50 to $42.50, and one-piece suits and cover-ups from $58.50 to $73.50. “It’s a natural extension for our brand [which emphasizes] print and color, and Nanette’s sensibility,” said Pech. “She’s a swimwear girl herself.”
Lepore has been making footwear in-house since 2006, and last year formed a partnership with Peter Marcus Group while exploring licensing deals. She decided to license Tribeca after forging a handbag alliance with the firm. Lepore’s shoes will wholesale for $112 to $228, while boots range from $158 to $274.
Lepore, known for her flirty and colorful designs and a favorite of celebrities such as Blake Lively, Leighton Meester, Scarlett Johansson, Taylor Swift and Miley Cyrus, manufactures 85 to 90 percent of her contemporary collection in New York City. Both Lepore and her husband, Robert Savage, president of the firm, have been staunch supporters of preserving what’s left of New York’s Garment Center and keeping their production here. “It’s about jobs, and we think it’s about American designers. Where can you go to get 100 pieces made?” asked Savage. He said the firm works with 10 factories within a five- to six-block radius.
Lepore believes there’s a misconception that people think firms can’t make enough profit if they manufacture in New York. “We’ve always had a really nice profit ratio,” she said. Lepore said she can have better control over the fit because she watches it every day. “I can cut closer to the season. People who work overseas have to make it three months ahead. I’m cutting at the last minute. We can get [reorders] back into the stores within two to three weeks.” Lepore imports Italian fabrics here for apparel manufacturing.
The New York factories, which ship between 20,000 to 30,000 Lepore garments a month, also make clothing for Jason Wu, Zac Posen, Anna Sui and Mary-Kate and Ashley Olsen’s The Row.
It has been a steady climb for Lepore, who began her label in 1991 with a $5,000 loan and a small office in her current building. Originally, the line was represented in the Annett B showroom, along with Anna Sui, Jill Stuart, Chaiken & Capone and Maag. In 1996, Lepore and Savage decided to open their own showroom at 214 West 39th Street, while running design and production from 225 West 35th Street. Now they’ve consolidated all operations at the West 35th Street location, where they occupy eight floors of the building. Design, production, sales, warehousing and shipping all take place there.
“They are a great New York story,” said Jeffrey Kapelman, co-ceo and partner at Hilldun Corp., which has been Lepore’s factor since she and her husband arrived from Ohio 20 years ago and started what was then a tiny designer business.
“What Nanette spends in trying to preserve the garment district, both in energy and resources, is admirable. She has been a model for using New York labor and preserving a way of doing business. We’ve been giving our industries away for too long. She’s a great example of what American companies should be doing to protect our industries,” said Kapelman.
For the past nine years, the firm has been actively opening freestanding stores in the U.S. and abroad. While there are no new stores on deck for the rest of the year, the firm continues to scout locations in cities such as San Francisco, Dallas and Atlanta. The company has 11 freestanding stores, 10 of which are coowned and one is licensed. In February, the company opened a freestanding store in CityCenter in Las Vegas, the only contemporary brand among the high-end designer boutiques. It already has a store at the Forum Shops in Las Vegas. Lepore closed its store on Melrose Avenue in Los Angeles in April 2009, 10 months after it opened due to underperformance, but a store on Robertson Boulevard has been in operation since 2003 and does well, said Pech.
Last May, Lepore opened a 2,500-square-foot flagship at 958 Madison Avenue, its second store in New York (the first opened on Broome Street in May 2001). Although Lepore admitted it was a “nerve-racking” time to open a boutique during the recession last year, first-year sales are on plan to reach $3 million. The company also has stores in Boston, Chevy Chase, Md., Bal Harbour, Fla., Chicago, London and Tokyo.
Maintaining their financial independence appears to be working in the couple’s favor. Over the years, Savage and Lepore have spoken to investors about buying a stake in their business, but none of the deals ever materialized. “We almost got the last deal done, but we couldn’t get it done. I’m happy doing it on my own,” said Savage.
“I would not want to be in this environment with somebody talking about how they would blow the company up, and we have to grow so much. There were a lot of issues,” added Lepore.
“We started the search during the [sale] process, and we got Heather,” said Savage. Earlier, Pech spent 18 years with Jones Apparel Group in various positions including president of Jones Retail Co./Nine West Retail and president and ceo of Polo Jeans Co.
The company employs 120 people in New York. One of the moves Pech made was hiring Jennifer Pinto to ramp up marketing and public relations of the brand. “We felt we were not telling Nanette’s story cohesively,” said Pech. Pinto hails from Juicy Couture and before that Calvin Klein.
“We’ve grown every single year, even in 2009,” said Savage. “We were growing at 20 percent a year for five years before that,” he said. Today, Lepore’s four biggest accounts are Saks, Neiman’s, Nordstrom and Bloomingdale’s. Saks will launch the new Lepore handbags in 30 doors.
“Nanette’s been a great partner with us,” said Joseph Boitano, group senior vice president and general merchandise manager at Saks. “We’ve been doing extremely well with the collection,” he said. Strong areas are the jackets, outerwear and dresses. He said Lepore worked with Saks to rebuild the key classifications, sharpen the price points and add trends.
He noted that Saks added Oonagh for holiday 2009. “It’s gotten off to a terrific start. It’s a big opportunity for us in many of our doors,” he said, noting dresses have been selling particularly well.
“They’re holding their own,” said Frank Doroff, vice chairman and general merchandise manager for ready-to-wear at Bloomingdale’s, about Lepore’s business. He said the fall line looked very good in the showroom.
Discussing how Lepore managed the business during the recession, the designer said, “We cut back on the number of bodies and flow. We cut back 20 percent in [stockkeeping unit] development.” Pech noted the company became more productive with the remaining styles. Lepore had been doing 12 deliveries a year, and reduced it to 10. She said spring’s regular price business is running about 5 percent ahead of a year ago.
“We never had a plan. Now we have a plan. We achieved things I never thought would happen with the brand, and if we continue on this trajectory, we’ll have a broader global presence,” said Lepore.
As part of that goal, Lepore is expanding her business with its Japanese licensee, Tokyo Style. Pech explained the Japanese licensee is looking to make Nanette Lepore the number-one contemporary brand in Japan. “They’re opening shop-in-shops, adding new stores and creating product categories,” said Pech, noting the line is distributed at Barneys Japan, Isetan, Takashimaya and Seibu Ikeburkuro. The firm also sells to Lane Crawford in Hong Kong and has a shop in Taiwan.
“My husband’s been really cautious about China. We have a new distributor that handles business in Western Europe, and we launched it in Harrods and in Harvey Nichols in Dubai. We’re talking to people in the Middle East about a distribution deal,” said Lepore.
For Lepore, jackets and dresses are her two best-selling classifications. Some 70 percent of Lepore’s contemporary collection is geared for daytime wear, and 30 percent is nightclub attire. Fifty-five percent of the business is done with department stores, and 45 percent with specialty stores.
Lepore intends to launch an e-commerce site in the fall, which it projects will be its number-one store.
Social media is another way the company is connecting directly with its customers. The designer posted a seven-day blog on Facebook leading up to her fashion show last month “chronicling the grueling aspect of putting a show together,” said Lepore, with photos of the models racing around, the design room, the sewers and cutters. “We got 300 new fans from the blogs. The more pictures [I run] the better,” she said.
In her efforts to keep her production local and provide a future for other designers who seek to set up a business in New York, Lepore has become politically active in rallies, speaking on panels, visiting Washington and attending zoning meetings. She and Savage hosted a cocktail party at their West Village apartment for Sen. Kirsten Gillibrand (D., N.Y.) on March 1, with guests such as Kristin Chenoweth, John Slattery and Talia Balsam of “Mad Men,” Yeohlee Teng and Joerg Schwartz, an architect and consultant to the Council of Fashion Designers of America and Save The Garment Center. “We designed her [Gillibrand’s] campaign T-shirt,” said Lepore.
But truth be told, what initially motivated her to get involved in saving the Garment Center was an incident that occurred three years ago when her dad’s cousin visited New York and took a double-decker tour bus. When the bus rolled down Seventh Avenue, the tour guide pointed out, “That used to be the garment center.” The cousin called Lepore and asked, “When are you moving?”