By
with contributions from David Moin
 on February 24, 2020
Rue21 sees an opportunity in plus sizes, an underserved market.

Rue21 on Monday named John Fleming interim chief executive officer.

Fleming, a board member of R21 Holdings Inc. since October 2017 when Rue 21 emerged from bankruptcy, held merchandising positions at Walmart Inc. and, prior to that, Target Corp., and also has served as an adviser and board member of StitchFix, and currently serves on the boards of Bed Bath & Beyond, Visual Comfort & Company and Untuckit.

Rue21 has had a tough time during a period when retail has been hard for even the strongest and most resilient of retailers. It survived not one, but two trips to bankruptcy court, the first time in 2002, emerging in 2003, and again from May 2017 to September 2017.

“We thank Michael for his contributions in leading us through the transition after our 2017 reorganization,” the board said of Michael Appel, who is stepping down as full-time ceo.

Fleming said he’ll assume the role for “as long as it takes to find the next new leader. I have to get back to my life at some point.”

While the recent landscape hasn’t been kind to retailers, what with the bankruptcies of Barneys New York, Pier 1, Forever 21 and Papyrus, Fleming nonetheless sounded optimistic. “Contrary to the view that the apocalypse of retail is imminent, this is an exciting time to build relationships and serve customers,” he said. “There are winners and losers. Target has embraced [physical retail] and leveraged the assets they have. We’re delivering value to our customers.

“Traditional retail was store-focused and product-driven,” Fleming said in an interview with WWD on Monday, his first day in the new role. “Modern retail is store-focused and data-driven. We have a pretty clear understanding of what our customer needs and expects.”

Fleming said Rue21 is in the process of building the infrastructure that will allow it to interact with consumers the way they want to shop, including personalizing its offer while continuing to deliver a seamless omnichannel shopping experience.

“We’re servicing the customer,” he said. “We’ve improved the assortment and presentation. We have some work that needs to be done to refresh the stores. We’re aggressively adding plus [sizes]. It’s an underserved customer and we deliver a value to a consumer who doesn’t have a lot of choice.”

The Warrendale, Pa.-based Rue21 last month said it was adding a dedicated merchant team for plus sizes and tripling the size of its West Coast buying office in the Los Angeles Fashion District to accommodate the expansion of the business. The retailer said it had bolstered its team of merchants for plus sizes to eight, from three.

Also on Monday, Scott D. Vogel was named chairman, with the company citing his “deep experience investing in both public and private companies, and experience as a director of and adviser to companies in the midst of transition and transformation.”

Apax Partners bought Rue21 out of its first bankruptcy for $1.1 billion, put $800 million in debt on the books, and sold the business to hedge funds BlueMountain Capital Management, Southpaw Asset Management and Pentwater Capital Management in September 2017 to get the company out of its second bankruptcy.

Rue21 was a victim of overly aggressive store expansion under Bob Fisch, a past ceo, who took the company on a fast track until it ran out of speed. Fisch in October 2016 left Rue21 after 15 years. With its second bankruptcy, Rue21 closed about 500 stores. It’s still a sizable business with 690 units and, according to sources, $700 million in annual sales.

Insufficient marketing and technology, critical fashion misses and too much debt have also been problems in the past. Customers turned to trendy fast-fashion and direct-to-consumer brands to fill the void. Rue21 itself can be considered fast fashion, considering its low prices and speed to market, though the company doesn’t consider its fashion to be “throwaway.”

E-commerce is underdeveloped, and represents less than 10 percent of the business. “The web site has all got to be refreshed,” Fleming said. “There’s a lot of work that has to be done to improve the user experience. We have a very good roadmap. It’s onmichannel and customer-first. Customers go away, if you don’t deliver what they want. We cross with Walmart, Target and some department stores. The customer is coming back online, and our store business is very positive right now.”

Appel spent the first 20 years of his career as a merchant at Bloomingdale’s and elsewhere, became a consultant, and has had a handful of interim ceo stints including at Laura Ashley, MacKenzie-Childs and Wilkes Bashford, and board seats at AlixPartners and Charming Shoppes, once a formidable competitor to Rue21. When he first became Rue21 ceo, Appel was an adviser to one of its lenders.

While the French nameplate remains on the facade, Rue21 has been eliminating the Parisian decor within the four walls, including wallpaper murals of the Left Bank and Parisian lampposts and sconces, to create a clean white backdrop for the merchandise to stand out.

Rue21’s technology has been seriously lacking, but the retailer is installing traffic counters from Springboard in the U.K., First Insight is digitally testing the response to new products, and Reflexis Systems is managing the scheduling of labor. E-commerce payment solution Klarna last year was leveraged to enable customers to pay in four installments over two months with no interest.

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