NEW YORK — Rather than wait out the still-stalled economy, Steve Madden is on the hunt for new labels and is ramping up Betsey Johnson’s business.
This story first appeared in the January 31, 2011 issue of WWD. Subscribe Today.
Last fall Steven Madden Ltd. took over a $48.8 million loan to Johnson’s firm and absolved it in exchange for ownership of the brand’s intellectual property. Madden is so comfortable with the designer’s stewardship that he will be at a Las Vegas shoe show instead of her Feb. 14 runway show at Lincoln Center. “The last thing she needs is Steve Madden there,” he said during an interview last week.
Unlike other designer takeovers where the financial executives often commandeer the apparel design, Madden is leaving that to Johnson. Nor does he plan to cover the country with Betsey Johnson boutiques. Perhaps that’s because Steven Madden Ltd. has been clicking along even before the purchase of Johnson. For the third quarter ended Sept. 30, net sales increased 31.4 percent to $184.1 million, and comp-store sales jumped 16 percent.
Madden’s plans for further growth at Betsey Johnson include:
• Ramping up shoes to make that category 25 percent of the designer’s total business within the next 12 months.
• Introducing children’s wear for infants through tweens through a licensee for fall 2012.
• Launching a fragrance this fall.
As for Steven Madden Ltd., the founder said the company is:
• Actively looking for footwear and accessories labels to acquire this year.
• Opening eight Steve Madden stores this year, although a few will close.
• Opening the first boutique for Big Buddha, a handbag label acquired last year, in the Smith Haven Mall.
• Adding a designer canvas sneaker brand this fall.
• Unveiling a contemporary sportswear label within the next three months.
Within the next 18 months, Johnson’s footwear sales should account for $25 million of her $150 million business. The collection will be in 500 doors in March, with many styles retailing for about $110, or 20 percent less than the designer’s previous shoe lines. Intent as he is on bolstering the shoe business, Madden is taking more measured steps with the designer’s sportswear. Distribution centers on specialty stores and select major department stores like Nordstrom and Bloomingdale’s. There are no immediate plans for a secondary label.
“We want to keep it small and special,” he said. “Unlike many designers who have teams, Betsey actually designs the clothes. It’s been an interesting deal, because she really wants to design. I said we can get you some help, some assistants, but she didn’t want that.”
Madden relishes interaction and noted how he visits his own stores several times a week to watch shoppers and see what they have to say. Launching a mobile site has also helped the company stay connected to consumers. Last year nearly 10 million minutes were spent by consumers on the site and more than $1 million in revenue was generated directly.
Like many of his competitors, Madden is looking to Asia for further growth. The company is “beefing up” sourcing in China’s emerging Putian area to have a greater presence there, said Madden, adding, “In that part of the world, you really have to be married to your sourcing.”