XOXO GROWS AGAINST THE TIDE
Byline: Kristi Ellis
LOS ANGELES — XOXO is defying the odds.
While many junior manufacturers struggle with a weak market and the effects of downsizing, XOXO — made by Lola Inc. — continues to post double-digit sales increases and has expanded its factory space and showrooms.
Attracting the attention of most major department stores, XOXO has made its name with a mix of fresh junior and contemporary looks, banking on sexy, feminine styles in knits, printed polyester, georgettes and shantungs for spring and summer.
Under the direction of Gregg Fiene, co-owner and president, the company has grown from a $4.5 million business to a $50 million business in four years. Fiene projects a wholesale volume of $60 million in fiscal 1996. Marc and Michelle Bohbot of Bisou Bisou are silent partners.
Success is a fragile concept in a fickle junior market, but XOXO has demonstrated its staying power during one of the worst business cycles in recent history.
Fiene is a firm believer in controlled growth and product development. He has taken the company from a one-room operation on South Broadway to a 73,000-square-foot facility in Vernon, Calif., which will soon be expanded with a 43,000-square-foot facility across the street that will house the fabric and trim department.
XOXO also expanded its Los Angeles showroom from 1,100 square feet to 2,900 square feet in February and will enlarge its New York showroom from 1,800 square feet to 3,500 square feet in six months. “I don’t believe in expanding,” said Fiene. “I wait until I am bursting and then go a little step further. I would rather pay a little bit more and have to move all of these times than go lease a 200,000-square-foot building and play football in it because I am not busy,” he added.
Fiene says he is confident that his full-time workforce of 148 and cadre of 70 domestic contractors will continue to make products of superior quality. He said he has stayed domestic because of time, fast turn and control over quality.
To maintain growth, the company plans to diversify and add new divisions.
Fiene is positioning the company as a brand because he believes consumers are becoming more brand conscious.
“They would rather buy one or two of something that is a brand than three or four of something at a cheaper price that is more disposable,” Fiene claimed.
To that end, XOXO launched a sportier, logo-driven grouping called X and O by XOXO last November and is about to cross over into the contemporary market with Lola by XOXO, which will open a New York showroom April 1.
Currently, XOXO has two divisions: dresses and sportswear, the latter divided into knits and wovens. Fiene claimed that the 1 1/2-year-old dress division was an afterthought that paid off. It has grown from $2.4 million in volume to finish fiscal 1995, which ended Jan. 31, at $12 million. The sportswear division posted a volume of between $38 million and $39 million at the end of fiscal ’95.
Another growth strategy is product development. Fiene said 40 percent of his expenses are related to design and product development. Such a focus on those areas has given XOXO a competitive advantage, Fiene claimed. He pointed to the 1996 spring/summer season, when there was a flourish in prints. Although XOXO is not a big print house, Fiene went into the print business and created printed polyester, shantung and georgettes. Instead of relying on market prints, his team went to Europe and bought exclusive prints and designs. “We determined the right prints and did them our own way,” he said, adding that his people stayed away from the regular fabric print houses.
“When everyone else was showing large flowers at the November market, we were already showing brights and polka dots,” he said.
Perhaps justifying his hard-driving attitude and aggressive stance, Fiene admits that every day is a challenge.
“Every day I wake up scared to death because I am driven to be successful and I am never satisfied,” he said. “In this business, you are only as good as your last season, so we try to be two to three seasons ahead in our thinking.”
Further diversifying, Fiene has hired Logan James Ltd. of Evergreen, Colo., to set up licensing agreements in such categories as accessories, shoes, swimwear and outerwear. He hopes to emulate the licensing strategies of Calvin Klein, Ralph Lauren, Guess and Giorgio Armani because they control the packaging, advertising and image.
Fiene has hired Sisman Design, a New York advertising agency, to create a new fall campaign. He plans to do three to four fall ads in four magazines and a catalog.
Retailers have had strong results with the collections.
XOXO has been one of the fastest-growing vendors in the related separates area of Macy’s East, according to Rick Leto, general merchandise manager and executive vice president. The line is carried in 60 Macy’s East stores.
XOXO represents 30 percent of Macy’s East’s related separates business and the XOXO dress business is also “growing rapidly,” Leto said. Macy’s East has plans to increase its business with XOXO in 1996.
“Gregg does a great job of identifying the customer and putting together the right package,” said Leto. “His use of colors and fabrications and his ability to identify and pick prints and interpret major designers are strong.
“A lot of guys can pick items and put them together, but he covers most classifications from casual Ts to careerwear and dresses, and satisfies a lot of different lifestyles,” he said.
Wendy Red, fashion director of Up Against the Wall, a 15-unit chain based in Washington, D.C., attributed the success of XOXO to its brand name recognition.
“The junior and better junior market doesn’t have a brand name line — and he has captured a market that no one else has,” Red said.
XOXO’S GROWTH CHART
1992: $4.5 million
1993: $9.5 million
1994: $20 million
1995: $50 million
1996: $60 million (projected)