New York & Company Inc. will adopt a new name reflecting the firm’s “reinvention” from a mono brand to a multibrand “lifestyle” retail platform.
The specialty retailer, which has been swimming along due to the power of its celebrity partnerships with Eva Mendes, Gabrielle Union and as of last month, Kate Hudson, will change its corporate name to RTW Retailwinds to reflect the firm’s evolution. It’s gathering momentum, with the name change expected to occur sometime next month, a new lingerie brand in the works, and big plans for the Kate Hudson collection, which has yet to be named. Once the corporate name change occurs, the stock will be listed as RTW.
“We are at a defining moment in our corporate reinvention, with a proven track record for developing celebrity and sub-brand collections that resonate with our consumers,” said Greg Scott, chairman and chief executive officer of New York & Co. “We are leveraging our expertise to accelerate sales and profitability across our multibrand lifestyle platform, expanding the core NY&C brand while also incubating new brands that are accretive to the portfolio.”
Last month, the specialty retailer struck a multipronged, multiyear agreement with Kate Hudson under which the star of “Almost Famous” and “How to Lose a Guy in 10 Days” will serve as ambassador of the $225 million Soho Jeans subbrand at New York & Co. Hudson will also partner with the company to develop her own ready-to-wear brand. According to Scott, plans for the Kate Hudson collection include selling it on New York & Co.’s Web site, at New York & Co.’s stores — there are 425 across the country — and creating a Kate Hudson e-commerce site. Scott also sees selling the Kate Hudson collection on other Web sites, and possibly opening Kate Hudson stores. The company benefits from a flexible real estate portfolio, with 70 percent of store leases able to be terminated in two years or less providing the ability to rapidly open, close and reformat stores.
Signing Hudson, Scott told WWD, has caught the eyes of other celebrities who could team with New York & Co. on other projects.
One of them could end up being the face of the new lingerie lifestyle brand that RTW Retailwinds will launch next year. RTW Retailwinds has Grace Nichols, the former Victoria’s Secret ceo, on its board and recently Victoria’s Secret has been losing momentum. Lori Greeley, another former Victoria’s Secret executive, is also on the board.
In another maneuver, RTW Retailwinds will expand Fashion to Figure, to grow the plus-size brand’s online and brick-and-mortar businesses. New York & Co. bought Fashion to Figure in November 2017 in a bankruptcy auction and paid $2.4 million for the business.
Scott told WWD that the company is open to other smallish acquisitions, to bring additional categories and celebrities to the portfolio. Other priorities are to continue to grow the online business, which currently accounts for 30 percent of total volume. The company will continue to focus on women 25 to 50 years of age, fashion and value. The retailer has a customer file with over 13 million names, over 165 million annual visits online and in stores, and expects to get deeper into leveraging its customer data and data analytics. The company’s loyalty member base represents 43 percent of total sales.
While New York & Co. has a “high-low” pricing scheme, Kate Hudson’s pricing will be somewhat higher and less promotional.
Between the addition of the Kate Hudson and lingerie collections, growing Fashion to Figure and continuing to build volume at the New York & Co. chain, Scott projects volume eventually reaching $1.5 billion to $1.6 billion from $920 million achieved last year just with New York & Co. The New York & Co. business is seen soon surpassing $1 billion in annual revenues.
Scott said the company is seeking to hire a talent relations executive. “This person will be our guru around amplifying relationships with celebrities, and will help us determine what else should we be doing with Kate Hudson and other celebrities and to secure other talent.”
“This is a pivotal period for the company,” John Howard, co-managing partner of Irving Place Capital, which owns 49 percent of New York & Co., told WWD. “We are going to find products in different categories that don’t cannibalize our existing sales and that make sense to sell to our customers, and celebrities will be part of it. These will be freestanding, independent consumer brands — not just brands to put inside New York & Co.
“It occurred to us that as we looked into our business, we continued to get better and better at our business,” said Howard. “Growth has come from nontraditional places. It occurred to us we could also be like an incubator fund of brands. We have no debt on our balance sheet. We have significant cash approaching $100 million, and significant debt capacity so we can borrow. We have tremendous financial capability and sourcing capabilities to do what we want to do.”
The new business model, Scott added, is “really the evolution of what we began in 2011 and 2012, including developing our own brands with Eva and Gabrielle, and getting stronger on sourcing, digital and real estate.” He said digital sales represent about 30 percent of the total business and has room to grow.
Howard noted that IPC bought New York & Co. 15 years ago when the company was called Lerner and was part of L Brands, formerly Limited Brands. “This is a world record for being the longest private equity investment,” he said, half joking. “I guess I’ve attended 62 board meetings. A significant portion of my life has been in and around New York & Company. I’m very proud of my association. We’ve stuck with it during good times and more challenging times. There’s been a lot of hard work over the years. The management group is terrific. There is a whole different approach to our business, before we were in the business of finding items and pumping out millions of them. We’ve changed from a commodity [business] to a more thoughtful, fashionable curation of product.”
While looking to accelerate the digital business, Howard said the company is sticking to brick-and-mortar as well and that the New York & Co. stores will not undergo any name change. He said the name still resonates with consumers but no longer reflects the company DNA.
“We should be launching several initiatives every year; these efforts don’t require that much capital,” Howard said, adding that the company already has expertise in sourcing, production, design and marketing and experience with celebrities. “Selective acquisition” is also part of the strategy going forward, he added.
“Celebrities bring the heart and soul to the business, without us spending a ton of marketing dollars,” said Scott.
“Eva and Gabrielle have really helped us and since the Kate Hudson announcement, more people are really now noticing us and want to be associated with us. It’s opened up new doors in the last two weeks,” he added.