CLUB MONACO’S U.S. FLAGSHIP FEVER

Byline: Jean E. Palmieri

NEW YORK — Joseph Mimran wants a bigger piece of the U.S. casual market.
It won’t be easy to get, considering the abundance of casual goods on the market already, and such formidable competitors as Gap, J. Crew and Banana Republic, which aren’t about to readily let go of market share.
But Mimran, president of the Toronto-based Club Monaco chain, has devised an aggressive plan to put the chain on the map in the U.S. He raised $13.6 million (C$18.9 million) through an initial public offering on the Toronto Stock Exchange last month to help fund the effort.
Mimran is quite confident, based on his experience in Canada, where Banana Republic has operated for over five years. “They came in at the height of our recession and they were well funded,” Mimran said. “And in every location, we’ve proven that we can go toe-to-toe with them.”
Club Monaco’s moderate-to-better- priced women’s apparel, which has been compared to J. Crew, features pared-down silhouettes in fabrics such as rayon, denim, cotton and panne velvet. Along with classic pieces, Club Monaco offers trendier items such as asymmetrical tops this spring. Like J. Crew, the company makes frequent deliveries — new merchandise arrives at Club Monaco stores every month.
The 12-year-old Club Monaco, which also sells apparel and accessories for men and women, plans over the next three years to add 20 to 25 stores, or about 200,000 square feet of retail space, in the U.S. and develop flagship stores in Boston, Philadelphia, Chicago, Washington, D.C., Seattle and Minneapolis-St. Paul.
According to the prospectus: “The company’s U.S. store strategy is to develop a dominant urban flagship presence and to cluster additional locations in dominant fashion centers, supplemented with select outlet locations.”
Currently, the chain operates seven stores in three U.S. cities: Los Angeles, San Francisco and New York. Its largest is on 21st Street and Fifth Avenue in the Flatiron district of Manhattan. That store, which opened in November, was originally 6,000 square feet, but is being expanded to 12,000 square feet by opening a lower level for the CMX sports-inspired line for men and women. The party for the store’s expansion is slated for Thursday night.
In addition to the U.S. units, Club Monaco operates 48 company-owned stores in Canada. There are also 84 franchised stores, including nine in Canada, 32 in Japan, 41 in Korea and two in Thailand.
Plans also call for expanding stores in Canada by a total of 125,000 square feet by the turn of the century.
Additionally, the company will increase its presence in Japan and Korea to approximately 60 stores in each country and expand in Thailand to between 15 and 20 stores. Club Monaco is also “considering the development of company-owned stores in key European markets, such as London and Paris,” according to the prospectus.
In addition to facilitating expansion, the IPO allowed Dylex Ltd. to sell its stake in the company. The controlling interest in Club Monaco, which was founded by Joseph Mimran and his brother Saul in 1985, was acquired by Dylex Ltd. in 1989. In the fiscal year ended Feb. 1, 1997, Club Monaco posted net income of $2.2 million ($C3.1 million) on sales of $100.4 million ($C139.5 million).
“There’s a great growth opportunity for us in the U.S.,” Mimran said. In fiscal ’97, the U.S. accounted for 11 percent of sales while Canada accounted for 57 percent and Asia for 32 percent.
However, Mimran is not expecting a walk in the park. “There’s no question that Canadian retailers haven’t fared well in the U.S. market. But then, Canadian retailers haven’t fared well in the Canadian market either.
Club Monaco’s U.S. units outperform their Canadian counterparts, with average sales of $428 a square foot. That’s 5 percent higher than in Canada.
According to Mimran, Club Monaco’s merchandise, which is all private label, is “more modern, updated and fashionable” than Gap’s.
Women’s wear accounts for 55 percent of sales and men’s wear, 45 percent.
While Club Monaco designs and manufactures one collection, the stores are assorted differently depending upon location. In Canada, Club Monaco tends to appeal to younger shoppers. “We skew older in the U.S. than Canada,” Mimran said.
While Mimran declined to provide sales figures for stores, according to the prospectus, the company’s 10 largest stores achieved average sales per square foot 16 percent above the overall average. Consequently, Club Monaco, as the prospectus notes, “plans to close some of its older, smaller locations over the next several years as their leases expire,” or convert them into children’s stores. New stores will be at least 7,000 square feet.
Outlet stores are also in the cards, with only one in the U.S., in Niagara Falls, N.Y., and another in Canada. “We don’t have as many outlet stores as other retailers with our number of stores,” Mimran said. “We’re looking at that part of our business and the U.S. is great for that. But outlets only work well when the brand is well recognized and we haven’t really marketed ourselves here yet.”
To gain recognition in the U.S., Mimran is planning to be “more dominant in U.S. publications. We’ve had limited exposure in the past, but we haven’t had enough critical mass to justify more. As we roll out over the next three years, we will increase the amount we spend in the U.S. And there’s also a great opportunity to spill over to the Canadian market with many publications.”
The marketing campaign will include direct mail, international fashion magazines, billboards, transit, local newspapers and broadcast media. Special in-store events will also play a role.
“We’ve been called ‘cheap chic,’ but although our clothes are inexpensive, we still have a quality atmosphere. It’s a shame to have the image and not get it out there.”
Club Monaco also hopes to make a splash Thursday night with its grand reopening party. While the company has been in possession of all 12,000 square feet of the store since last fall, Mimran said the top level wasn’t merchandised until this season.
“The U.S. is a real window to the international market,” Mimran said, “Especially New York.”

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