FIRMS CRAFT NEW APPROACHES
Byline: Anne D’Innocenzio
NEW YORK — As moderate, better and contemporary sportswear firms sizzle with licensing fever, it seems that many fashion companies are making up their own rules as they go along.
While some firms, like BCBG by Max Azria, the contemporary powerhouse based in Los Angeles, prefer to take a more cautious approach, Halston International is at the other extreme, launching a blitz this fall of licensed products to support its moderate-priced Halston Lifestyle line and Signature Collection. At least 20 licensed products, from handbags to hosiery, will be introduced.
BCBG by Max Azria this month has signed its first two licensing deals — one for swimwear with Raj Manufacturing and the other for eyewear with Japan Optical USA. However, Azria, owner and designer, said that he actually prefers to buy niche companies as a way of getting into a category, rather than going into licensing.
“I feel I have better control that way,” said Azria, who is in the midst of acquiring a children’s sportswear firm, though he would not say which.
Whatever the strategy, licensing is becoming imperative for developing brand recognition. Apparel giants like Liz Claiborne and Jones Apparel Group are all aggressively pursuing opportunities in this area.
“We have aggressively picked up the pace for going after future licensing opportunities,” said Mary Belle, president of licensing for Liz Claiborne. Over the past 1 1/2 years, the company has signed up three of its current seven licensed products — shoes, with a group headed by Wayne Weaver, an original founding partner of Nine West; a home collection, with Springs Industries, and most recently, swimwear, with Sirena Apparel.
Herb Goodfriend, vice chairman of Jones Apparel, estimates that licensing volume at retail has increased by 15 percent annually since 1994. Last year, the firm wound up with more than $300 million in wholesale volume from licensed products. The company has a total of 43 licensed products for its Jones and Evan-Picone brands. Royalty income from licensing last year was $13 million, against $10.3 million in 1995.
This month, the firm signed a licensing agreement with Tahiti Apparel to produce swimwear, which will be out next spring, and it is also exploring children’s wear and home furnishings. In the men’s area, it is planning to license shirts and accessories.
“There’s definitely a sharp increase in licensing,” said Kurt Barnard, a retail consultant. “Everybody seems to be getting in on the act.”
“Licensing is a way of reinforcing the value of your trademark, which is important for growing your business,” added Andrew Jassin, a partner in Marketing Management Group, a consulting firm. “It is also a way of getting into a new market quickly and efficiently.”
One of the most successful licensing machines, Ralph Lauren, struck gold again last year with a licensing deal with Jones Apparel for the Lauren Ralph Lauren better sportswear line. It premiered in stores last fall. The deal has enabled Lauren to market his preppy styling to a broader audience who can’t afford to pay designer and bridge prices. Lauren Ralph Lauren, the biggest launch since DKNY, has analysts raising this year’s projection to $170 million. (Based on this and other cash cows in the Lauren stable, Polo Ralph Lauren last week filed for an initial public offering of stock, as reported. The company hopes to raise $600 million.)
Lauren Ralph Lauren has expanded its repertoire for next fall to include dressy coats, suits and petites. Its in-store shops will range from 750 square feet to 3,600 square feet, up from the current 500 to 1,800 square feet. The misses’ sportswear line started out in 250 doors last fall, expanded to 500 doors for spring and will be in 665 for next fall.
Another winner has been Tommy by Tommy Hilfiger, licensed to Pepe Jeans. Now in its second year, Tommy is expected to post sales of $125 million for 1997, said the designer. As part of its expansion strategy, the number of stores carrying the better sportswear line should double to 1,000 in a couple of years.
Tommy women’s swimwear, which was launched this spring, was a big hit, the designer said, and he is interested in licensing the category out in a few years.
Controlling licensed products isn’t easy, however.
Nautica, which built a strong image in men’s wear with its vibrant, colorful, logo-heavy activewear and sportswear, is intent on developing that image in women’s through a number of licensing deals — primarily its deal with Bernard Chaus to produce women’s sportswear. The Nautica women’s line, which was launched last fall in 142 doors, is in 148 doors for spring. It is expected to rake in $50 million in its first year.
“The most important thing that we are realizing is that when consumers can relate to a consistent fashion message, they want to buy other products in other categories,” said David Chu, president, chief executive officer and designer of Nautica International.
However, the deal with the ailing Chaus hasn’t been smooth sailing — in either the fashion concept or retail execution.
The line began in bridge for its fall debut, with plenty of tailored sportswear, but soon Nautica officials realized that customers weren’t looking to Nautica for such items as serious blazers — they wanted the trademark sporty stuff of bold colors and logo fashion.
Starting with this spring, company officials have worked vigorously to correct their mistakes. They cut prices on casual basics and drastically reduced tailored offerings. That makeover continues for fall, with a push toward bright colors, logo styles and plenty of basics, such as ribbed turtlenecks and leggings.
Commenting on market reports that Nautica is looking elsewhere for a new licensing partner, Chu said: “I’ve been pretty happy with the product, though there has been a problem with merchandising it at retail, including deliver- ing the right assortment and set- ting up the shops. Chaus has made inroads for spring regarding that, and I think the line is positioned much better.”
Meanwhile, Nautica is doing well with its licensed fragrance line called Nautica Woman, licensed to Paul Sebastian. It has been in stores since January. Its swimwear line, with Apparel Ventures, made its debut this spring and is also strong.
It also signed Dan River for sheets and decorative bedding coordinates, Leshner for towels and Ex-Cell Home Fashion for shower curtains and bath accessories. The bedding and bath lines will be in stores at the end of June.
As reported, Nautica Marine Denim, a division of Seattle Pacific Industries, is negotiating with Chaus to do a licensed women’s jeans line under the Nautica label.
“There are a lot of people who want to get into licensing, but the question is this: Can the company do the right product? If the product of the licensee is not right, it can affect your core business,” said Jones Apparel’s Goodfriend, who said he turns down 10 prospective licensees for every one he takes.
Goodfriend noted it took a year to find the right partner for swimwear.
Belle of Liz Claiborne agrees. She noted that Claiborne works closely with its licensees in the early process of product development to make sure that the concept is correct.
“Licensing is an integral part of our megabrand strategy, but picking partners who can execute the vision is difficult,” she said. “Our consumers transfer those expectations to every category that bears our name. It is not just about slipping a name on a category to increase your exposure. It is about making a difference to the consumer and enhancing the value of the brand.”