Byline: Julie L. Belcove

NEW YORK — Model Imperial Inc. is continuing its quest to bring the prestige fragrance business to off-price apparel retailers by signing an agreement with Stein Mart Inc.
The Stein Mart deal calls for the creation of leased fragrance departments, similar to those operated by Model Imperial at Filene’s Basement and Burlington Coat Factory, according to Harold M. Ickovics, chairman and chief executive officer of Model Imperial, which is based in Boca Raton, Fla.
“We’re going to open a leased department in what today is 80 Stein Mart stores,” Ickovics said. “Their intention is to open 10 stores in the course of the year, and we’ll participate in all of those.”
Although Model Imperial’s focus has been on off-price apparel stores since 1993, when it signed with Filene’s Basement, Ickovics said he hopes to broaden the company’s scope to other channels of distribution this year.
He said he expects to ink deals this year for leased prestige fragrance departments with a drugstore chain, a supermarket chain and a mass merchant.
The arrangement with Stein Mart, based in Jacksonville, Fla., grew out of a two-store test conducted last fall.
“It’s a well-run company. It’s a well-financed company. It’s a well-managed company,” Ickovics said of the chain, which he called “the most upscale of the off-price apparel retailers.”
Ickovics said the Stein Mart fragrance departments should do 2 to 2.5 percent of the retailer’s volume. Taking Stein Mart’s 1994 sales of $419.2 million, the department’s volume should be upward of $11 million.
The 54 Filene’s Basement fragrance departments did $13 million in 1994, Ickovics said, churning out sales of almost $2,000 per square foot. The 144 Burlington Coat Factory units did $4 million in the last two months of the year.
Ickovics said the Stein Mart operation will mirror the company’s other leased departments, stocking roughly 120 to 150 stockkeeping units of prestige fragrance.
Brands typically include Elizabeth Arden, Liz Claiborne, Hugo Boss, Christian Dior and Giorgio Beverly Hills. The stores also carry Model Imperial’s own brands, including Camp Beverly Hills, Pavlova, Listen, EarthSource and Adolfo.
“The mix we have is a fairly upscale mix,” Ickovics said.
While the company acquires many of its upscale brands from secondary sources, Ickovics said he is not concerned about acquiring merchandise in light of the recent Parfums Givenchy v. Drug Emporium lawsuit. That case upheld foreign manufacturers’ authority to control the first sale of copyrighted goods in the U.S.
“We’re reaching out to manufacturers, soliciting their cooperation,” he said, noting that Model Imperial is even negotiating with Givenchy for brands other than Amarige and Ysatis. “Having the Givenchy trademark for our retail stores won’t be the issue. The specific brands will be.”
Givenchy executives could not be reached for comment.
Ickovics projected that Model Imperial will acquire 60 percent of its merchandise this year directly from manufacturers.
“Going back to the early Eighties, it was virtually nil,” he said of direct sourcing.
The Stein Mart fragrance departments will be located in the accessories “bullpen,” according to Ickovics. Each store will have one or two full-service counters and an open-sell area, he said.
The open-sell unit will have about five shelves of four to six linear feet. Each glass case will be about five feet long and will hold three shelves.
Model Imperial will advertise in conjunction with the retailer, Ickovics said, and the company is in the beginning stages of developing sampling programs.
Profits at Model Imperial surged 56.3 percent in the fourth quarter of 1994 to $2.2 million, or 31 cents a share, from $1.4 million, or 23 cents a year ago.
Sales rose 24.7 percent to $56.5 million from $45.3 million.
In the year ended Dec. 31, earnings climbed 42.3 percent to $4.5 million, or 69 cents, from $3.2 million, or 53 cents, a year ago.
Sales gained 23.5 percent to $160.5 million in 1994 from $130 million in 1993.
Gross margin increased to 23.8 percent of sales in the latest quarter, Ickovics said, up from 16.4 percent in the year-ago quarter.
In 1994, 70 percent of the company’s sales were of prestige brands to mass outlets, 20 percent were in leased retail departments and 10 percent were made up by Model Imperial’s own brands. Ickovics said a conservative estimate of this year’s ratio is 65 percent distribution, 25 percent leased retail and 10 percent in-house brands.
“The leased departments are growing more rapidly than the distribution business,” he said. “Distribution is a growing business as well.”