CLEANING HOUSE AT ESCADA
Byline: Eric Wilson / With contributions from Melissa Drier, Munich / Kristen Young, Los Angeles
NEW YORK — Two years ago, the German fashion house Escada celebrated its 20th anniversary by setting out on an extensive research campaign in four countries to figure out what customers thought about its brand.
Millions of dollars were spent. Thousands of women were polled. And the research concluded with choice revelations such as: Women think of Escada as “feminine,” “colorful” and “Mediterranean.”
Pretty simple, one might think, but not to Escada executives who took a whole lot more from the excercise and have completely overhauled the brand in a more “colorful” and “feminine” direction, including a host of changes: a new logo, fragrance and store concept, among them.
There are changes going on on a global scale, from the redesign of the line — fully evident under the direction of Brian Rennie in the spring collection he showed in Munich on July 15 — to the coincidental launch of a leather accessories business, developed in-house.
There are also major changes that are now making their way to the U.S., with the first U.S. opening of its redesigned Escada store concept in Seattle last Friday and the U.S. press launch of its new fragrance, Escada Sentiment, in New York on Tuesday. Both were unveiled in Paris last month.
At the helm of the directional change in the American market are Lawrence C. DeParis and Caryn A. Lerner, who became co-presidents of Escada USA 18 months ago after Massimo Suppancig left his position as vice chairman of Escada AG to launch Hugo Boss’s new women’s venture.
DeParis, who is also chief operating officer, came from Calvin Klein, where he was senior vice president and chief financial officer, after spending 11 years at Escada earlier in his career. Lerner, who is also chief marketing officer, was recruited by Escada in 1996, just before DeParis left, to head its Escada Sport division. She had been at QVC as senior vice president of Q2.
The duo sat down recently for their first in-depth interview on the changes going on at the $800 million company and their specific impact on the U.S. market, which represents about 30 percent of sales. These are changes, they said, geared toward updating the classic Escada image for a modern generation.
“We’ve been around for 20 years, but we want to be around for another 20,” said DeParis. “To position this company successfully for the next 20 years requires becoming more conscious of our brand image today and becoming a company that is more customer-oriented, as well.”
“That is not just about service,” added Lerner. “It requires engaging her and making sure she has the best experience possible, but also staying in touch with her even when she’s not in the store.”
When DeParis and Lerner took on the co-president duties in November 1998, their chief objectives were to put together a senior management team, corporate strategy and identify initiatives to revive the Escada brand. They have made eight senior management appointments in that time to build a team that totals 16 at the top level. Among the new hires are:
Roger Korey, vice president and chief information officer, who joined the company from Donna Karan to overhaul Escada’s logistics, warehousing and distribution technology, centered in Hasbrouck Heights, N.J. That includes the integration of state-of-the-art technology, like hand-held communications devices, automated allocations and shipping programs and updated bar coding to improve operating efficiencies and merchandising.
Carl Barbato, vice president of retail stores, came from retail management positions at Versace and Shanghai Tang to direct full-price retail sales, while Jodi Sandman, vice president of Escada Company Stores, joined from Tahari to manage inventory liquidation.
Sylvia Spitalnick, vice president of Escada Couture, joined to direct retail and wholesale business for its eveningwear division. She was director of At Your Service for Bloomingdale’s.
Robin Scheer Ettinger, vice president of marketing, is responsible for marketing operations and advertising. She was a strategic marketing consultant to the World Gold Council, Jantzen and Internet Shopping Network.
Mona Esphahani was promoted from within to vice president of merchandising. Scott Klion, vice president and general counsel, came from Tiffany & Co. and Susan White, vice president of human resources, came from MTV.
The changes, according to DeParis, are paying off. For its 2000 fiscal year, which ends in October, Escada expects to post about a 10 percent U.S. sales gain and, more importantly, its operating income as a percentage of sales improved in excess of 5 points from the prior year.
Escada USA’s bottom-line profitability is planned to increase by more than 30 percent annually, he said, crediting that projection to planned full-price selling improvements and operating efficiencies. Full-price retail sales in Escada stores also are up 20 percent for the six months ending April 30, compared to year-ago figures.
“I have my dream team in the U.S.,” said Wolfgang Ley, chief executive officer of Escada AG in Germany, as well as Escada USA. “Caryn brings not only the enthusiasm and energy one normally finds in fashion, but in 18 months she turned the company upside down, coaching people, empowering people and at the same time, making the necessary changes.
“Larry has restructured the company in a very short time,” Ley said. “We’re not hesitating to take special charges or amortization, such as those to reduce warehouse space and to give up showrooms around the country we didn’t need.”
In the U.S., Escada is taking a three-pronged approach in rolling out its cleaned-up brand image — by changing the way its stores look, changing its logo and changing the look of Escada’s product, advertising and marketing.
The new logo is a cleaner, leaner Escada, sans serif and sans Margaretha’s signature, and was unveiled last month with the Paris launch of the Sentiment fragrance, which will be in stores beginning in September. The change will be apparent on clothes beginning with the spring 2001 collection and at retail with the Seattle store opening — its 15th in the U.S. — and in France at its flagship that opened last month in Paris .
“The logo itself is more feminine,” Lerner said. “It is softer and more in line with how women around the world associate the name Escada — more elegant, colorful, feminine and soft.”
The design of the 6,000-square-foot Seattle store, located at 1302 Fifth Avenue, will be mirrored in its other U.S. boutiques in the next three to five years, as well as in new stores the company plans to roll out.
The Seattle store features a more minimalist interior, with monochromatic tones, off-white stone flooring imported from Belgium and cream-colored furniture. The only color in the store is a red front on the cashier’s desk, located in the center of the room. Lizann La Grange, who was formerly a regional manager of operations for Nine West Asia, has been tapped as the store manager.
The Seattle store also has dedicated space for handbags, shoes, belts and some small leather goods, a first for Escada.
“We are redesigning our accessories areas to better show off the new areas, with dedicated real estate for the first time,” Lerner said.
Escada is also incorporating all of its divisions under the umbrella brand, moving the Escada Sport concept into the overall retail operation and dropping Escada’s Laurel and Elements collections in the U.S. Its two locations dedicated to Escada Sport, in Manhasset, N.Y., and in Beverly Hills, have been closed — both were adjacent to Escada Boutiques, which now incorporates the two collections.
The Beverly Hills space, located on Rodeo Drive, is being turned over to Escada USA’s Badgley Mischka division for its first freestanding unit, scheduled to open around Labor Day.
To broadcast the new changes, Escada is planning to intensify its national advertising spending, as well as continuing to promote celebrities wearing Escada at red-carpet events and in movies. Its past campaigns have generally been narrowly focused with two to six page sections. But with pre-spring images that will break beginning in November, Escada is increasing its U.S. budget by about 25 percent to $10 million.
The revamped Escada collection was shown on July 15 near Munich alongside its first stand-alone accessories collection. The line included rhinestones, beading and sequins on HotPants, micro-miniskirts, tight-cropped pants with decorated hems and body-skimming dresses in bold floral prints.
“The collection itself is more sportswear-inspired and it is becoming more item-driven,” Lerner said. “We are also making a specialized push to allow stores to custom tailor their assortment.”
Under Mona Esphahani’s position, Escada has assigned responsibility for developing a regional merchandising organization that now includes five dedicated employees in the field to service its top wholesale accounts as well as the Escada full-price boutiques.
“Their sole mission in life is to drive full-price sell-throughs,” Lerner said. “They are armed with digital cameras and are highly trained in fabrics and how to merchandise. This has never been formalized before.”
Also making a debut at the show was the stand-alone accessories collection for spring 2001.
Escada has long offered selected accessories to coordinate with its apparel, which generated sales of about $18.6 million in its 1998-99 fiscal year. The company aims to increase accessories business to $119 million by its 2002-03 fiscal year, through merchandise produced in-house and licensees. Escada has two accessories licenses — eyewear with Airess, launched in fall 1998, and women’s scarves, shawls and men’s ties, launching in November with the Italian printer Ratti.
Escada accessories designer Simonetta Ciampi described the line of roughly 50 handbags, 50 styles of shoes and 30 other leather goods as “just the start.” Ciampi comes to Escada after 19 years as Prada’s chief designer for accessories. Prior to that, she was a designer for Loewe.
Ciampi has come up with a few key models which she hopes will become signature looks for the house, including a wavy “Ondina” bag, a long, thin envelope, a hard, metal-framed jewel box bag called the “bauletto” and a roomy, open shopper.
Set to make its debut in November, the line will be carried by 45 leading Escada boutiques worldwide, including the U.S. Escada stores in Palm Beach, Beverly Hills, New York, Dallas, San Francisco, Las Vegas and Chicago.