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Oak is moving beyond New York.
This story first appeared in the March 27, 2014 issue of WWD. Subscribe Today.
The specialty retailer has opened two stores outside the city, where it was founded nine years ago by Jeff Madalena and Louis Terline. The openings in Los Angeles and Paris foreshadow more to come as Oak leverages new parent company American Apparel Inc.’s resources to grow its retail domestically and internationally.
Situated near the Ace Hotel and Acne Studios in downtown Los Angeles at 910 South Broadway, the 1,700-square-foot store marks Oak’s retail debut on the West Coast and resulted from Ace’s efforts to populate the area surrounding the hotel with fashionable tenants. The store is housed in a building owned by accessory brand Tarina Tarantino that Oak gravitated to because of its high-ceilinged, loftlike feel.
“It is an emerging market, I think, and Oak has always been about emerging markets,” said Madalena, discussing downtown L.A. “We at heart are a Brooklyn brand. We started in Brooklyn, and that was 10 years ago. So downtown L.A. made a lot of sense for us.”
Demonstrating Oak’s increasingly versatility is the 1,300-square-foot Paris unit, which is its first international location. At 29 Place du Marché Saint-Honoré, Oak has replaced an American Apparel men’s store, and counts Marc Jacobs and Comme des Garçons among its neighbors.
The design of the Paris store reflects Oak’s glossier side, with redone matte white floors, marble and mirrors, while the downtown L.A. unit shows its grittier side with raw floors, deteriorating paint and unfinished walls.
The neighborhoods will play a role in dictating the merchandise mix as well. Oak is, at least for now, sticking to a formula in which its house label accounts for roughly half of the merchandise assortment and third-party brands for the other half, and merchandise is split evenly between men’s and women’s. But Madalena noted regional variances and customer preferences will guide merchandise decisions at specific stores.
Brands that have been standouts at Oak include R13, Jonathan Simkhai, Silent by Damir Doma and DRKSHDW by Rick Owens. For the L.A. store, Oak has tweaked its offering to suit the warmer climate by emphasizing tank tops and shorts over heavy outerwear, and is diving deeper into colorful pieces. In Paris, the selection is slightly higher-end, and Madalena mentioned Oak is carrying Saint Laurent, Costume National and accessories from Calvin Klein Collection there.
Oak isn’t finished with its retail expansion this year. In a month or so, it will open a second Los Angeles location in a 3,600-square-foot space at 7228 Beverly Boulevard that will serve as a comprehensive flagship. After that, a location in Tokyo’s Shibuya district is expected. Following those stores, Madalena forecast one to two additional Oak units could open this year.
To spread to secondary and tertiary markets, Oak is developing a retail concept with a smaller footprint focused on its house label. “Expansion in the U.S. is a definite yes, but there aren’t so many large cities like New York and L.A. that can support avant-garde emerging designers from a business perspective. We are thinking about how to break into these other markets that aren’t so forward,” said Madalena.
American Apparel has made Oak’s accelerated expansion possible. “They are great. They basically have been there to support us logistically and financially,” said Madalena. “It is no secret that they have their situation [American Apparel has missed its deadline for filing its annual report with the Securities and Exchange Commission, and is on track for a $122.1 million net loss for the year] and the press is kind of hard on them sometimes, but, on the inside, it is not as bad as everyone thinks. They are very supportive, and it has been an interesting team-up.”
American Apparel now handles a portion of Oak’s apparel manufacturing. Madalena explained, “Our line is diverse. We do a lot of leather, and we do a lot of outerwear, and we do a lot of wovens, all of those things are done in our factories that we were working with before. Only our jersey and fleece that we were doing in L.A. already [are manufactured by American Apparel]. We moved our core styles to their manufacturing because it made the most sense, especially for replenishment. American Apparel has the ability to make things very quickly and get it to the store super-efficiently, which is something that we had never been able to do before.”
When Oak was purchased for an undisclosed price last year by American Apparel, its chief executive officer and founder Dov Charney estimated Oak’s annual revenues at $5 million. Madalena indicated the sales total for this year is hard to pin down because of the store openings, but he expressed confidence that the new stores could reach at least $2 million each in yearly sales.
Oak’s two New York stores — it has a unit on Bond Street and a Brooklyn store on Nassau Avenue — have been performing strongly, and Madalena said their sales are up 40 percent over last year. “The ability to never be out of stock on our bestsellers has increased our sales already,” he said. “When we were on our own, everything was a little bit harder. Cash flow was a little bit harder, getting deliveries on time was harder. That has been remedied with American Apparel, so that helps the bottom line.”