NEW YORK — It’s no longer just Grandma’s favorite store.
Since launching its turnaround strategy in 2001, Lord & Taylor has cut the clutter, refocused on fewer and more casual styles and higher price points, and has been aiming to shed its dowdy image by capturing such of-the-moment categories as premium denim and furs.
Moreover, moderate has been tossed aside and better, contemporary and bridge lines are being emphasized.
The 72-unit chain has also shuttered 14 weak locations and has another 18 slated to close. It’s part of a downsizing announced last July that will lead to a 38 percent reduction of the store base, but only an 19 percent drop in volume to $1.6 billion. L&T, a division of May Department Stores Co., is pulling out of the South to concentrate on the metro New York, upstate New York, Washington, Boston, Detroit and Chicago markets.
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Now all the store needs are more customers to buy into the changes, and improved results over a few consecutive quarters to call the turnaround complete.
“Enough people don’t know that we’ve changed,” Jane Elfers, the store’s chairman and chief executive officer, acknowledged during a tour of the Fifth Avenue flagship between 38th and 39th Streets, where the transformation is most evident. “But we’ve done a lot in a really short period. We were pleased with the fourth-quarter results and there is momentum in spring business.”
L&T’s store divestitures are seen contributing a $50 million annual savings, including $20 million that was realized in the second half of 2003, so there’s already been a lift in the division’s profitability to the 5 to 6 percent rate, according to analysts.
However, Lord & Taylor has a lot of ground to make up. The nameplate, among the most venerable in retail, was founded in 1826 as a dry goods store on Catherine Street in lower Manhattan and in the Forties and Fifties blossomed under the leadership of Dorothy Shaver, the first woman to run a major store. A picture of her still hangs in Elfers’ office. But for several years, the chain has only been marginally profitable, with earnings down in the low-single digits as a percent of sales, and well below Hecht’s, the top May Co. division, which reportedly exceeds 10 percent profits as a percent of sales. Generally, finer specialty chains have a tougher time generating as much return on sales as department stores because they incur higher expenses associated with staffing, fixturing, marketing, visuals and overall ambience.
“Lord & Taylor does have a chance to get higher profits because there’s the potential for higher customer acceptance,” said retail consultant Walter Loeb. “The Fifth Avenue store looks much better. It’s got more excitement and more color, and the branches look better.”
“It makes sense to close the stores. There are too many upscale stores out there and all those Lord & Taylor stores were losing money,” said A.G. Edwards & Sons analyst Robert Buchanan. “They are making some improvement with their private brands [notably Grant Thomas in men’s and Identity in women’s] and editing branded goods. The stores are less overassorted. With that said, while bringing in contemporary and more modern men’s wear, it’s hard for them to stage a true turnaround without juniors and young men’s. That’s something they really need to think about developing.”
While L&T’s current business is good, most of the transition period has been marked by declining productivity. In 2003, sales per square foot came to $163, down 4.7 percent from the year before, and down from $222 in 1999. Elfers wouldn’t comment directly on any results, but did say store closings and discontinuing many lines would affect productivities. Reportedly, since 2001, L&T dropped a couple of hundred million dollars in moderate merchandise volume, including over $80 million alone in moderate dresses. Gone are such labels as Napier, Chaps, Marvella, Monet, and Chaus, and the Liz Claiborne label in misses’ sportswear, though brands from the Claiborne corporation, such as Laundry, Ellen Tracy and Sigrid Olsen, are sold.
During the tour, Elfers highlighted the main floor’s new Nars and Coach shops, the cleaner and more colorful accessories presentation, and some jewelry upgrades, including the recent addition of Roberto Coin, a high-end jewelry designer specializing in gold, gemstones and diamonds. L&T wants to strengthen the presentation by bringing in a higher-priced range of skin care and antiaging products, known as cosmeceuticals, and Nars has been rolled out to 21 doors.
Moving to the upper floors, she cited the new Larry Forgione’s American Place restaurant and Forgione’s cafe, the fur salon, higher-priced jeans brands like Mavi, and a men’s wear floor marked by some less widely distributed labels including Cabral, Alex Cannon and Hudson, all introduced to the store in the past year. The floor is noticeably devoid of certain widely distributed megabrands like Tommy Hilfiger and Nautica.
It was as much about what the store no longer has, as what it does have.
“Before, everything was vendorized,” Elfers added.
Now, she said, the store has been reorganized more by the way people want to shop — according to their lifestyle.
And to prove her point, she showed off one of the areas she’s most proud of — the contemporary floor.
“There’s 20,000 square feet of contemporary product that didn’t exist here two years ago, and we have contemporary goods in our branches, too. Contemporary is one of the best trending businesses in the store. A lot of it is fueled by premium denim,” such as jeans starting at $98 from Hudson and Rock & Republic, she noted. Other key contemporary brands are Nanette Lepore, Trina Turk, Ruth, Petro Zillia and Rebecca Beesom. Contemporary has been added to 22 doors.
She called L&T’s turnaround a five-year mission that began in 2001. “The first thing we had to do was address the merchandise,” Elfers said. “The assortments weren’t edited or focused. It was just stuff.”
Three years later, she says, “Sixty-five to 70 percent of the merchandise is different. That’s pretty serious.”
There are also more mannequins and forms to highlight outfits, she added, and suggested the process has been like a delicate balancing act. “We want to be relevant to the 25- to 44-year-old. We also have a very loyal base of customers 45 and older. We don’t want to do anything to disturb that.”
“Lord & Taylor had been very career and dress-up,” she observed, though for the core customer, there’s still such offerings as Tahari, Anne Klein, Dana Buchman and Ellen Tracy, as well as Oscar de la Renta, Yeohlee, Ralph Lauren and Calvin Klein in designer. Key updated classic lines are Jones New York Signature, Lauren by Ralph Lauren and Sigrid Olsen.
She stressed that the store is not chasing teenagers, since it doesn’t offer juniors, but is broadening the offerings to attract younger and more casual customers. The bulk of the business is in the better-to-bridge price range, as L&T moves up the price spectrum, toward Nordstrom and Bloomingdale’s, and away from middle market and more traditional department stores like Hecht’s or Dillard’s.
Aside from the dramatic merchandising changes and reduction in store count, turnaround efforts have also entailed “thoughtfully” reducing price promotions, including eliminating coupons entirely, Elfers said. L&T had the dubious reputation of being “the coupon king.” The promotional aura has further dissipated since certain brands that institutionalized day-in and day-out promoting have disappeared from the racks.
In addition, the store has been sustaining a more sophisticated calendar of sales promotions and special events, with artists, musicians and cause-related activities to attract shoppers and raise its profile. L&T’s first-ever “accessory week” was held in 2001, Richard Estes and the late Larry Rivers made flagship appearances and distributed posters of their work, and just last month, there was a tribute to the late Henry Mancini.
The advertising has been updated and the decades-old America’s Dress Address slogan was canned last year.
The store is even sending Lavelle Olexa, senior vice president of fashion merchandising, public relations and visual, and Carol Hudson, vice president of fashion, on a trip to the Far East for the first time. “There is so much happening in Shanghai and Tokyo, it’s in our best interest to go through the stores there, photograph windows, explore the trends, and expand our horizons beyond just the same old places like Paris, Milan and Saint-Tropez,” Olexa said. “I’m sure we’ll come back with some real interesting things.”
Elfers said the company is renovating stores, including the Eastchester, N.Y., branch, which is the chain’s biggest in terms of both size and volume. It reportedly approaches $100 million in sales. The branch is also expanding to 200,000 square feet by adding over 10,000 square feet. Ironically, the prototype for store remodels was the Plano, Tex., store, which closed, and had featured wider aisles; longer sight lines; an open-sell handbag area with contemporary, custom-made fixtures and no caselines; greater use of mannequins, and perhaps most important, there was a consistent tone and taste level.
The Stamford, Conn., store is also being renovated, and the Paramus, N.J., unit will be overhauled beginning next month. The Lakeside Mall store outside Detroit was renovated in November.
“We’re putting money into our core doors,” Elfers said. “In 2005, we will renovate more doors.”
The flagship has had renovations here and there, but at the moment, there is no master plan for the kind of sweeping, multimillion-dollar overhauls that other New York City flagships have been undergoing, including Saks Fifth Avenue and Bergdorf Goodman.
But as Olexa maintained, “We’ve added new lines, restaurants, a cafe, a fur salon, and removed the clutter. It’s not only about hammers and paint when you change the look of the store.”