Lafayette 148 is up for a global challenge.
The 20-year-old sportswear firm, which caters to the lifestyle needs of the professional woman, has been climbing steadily since it began in 1996. Cofounded by Deirdre Quinn, chief executive officer, the brand generated $160 million in revenue last year and shows no signs of slowing.
The company, with its vertically integrated international operation, takes full advantage of its own factory in Shenzhou, China, where it manages the entire process from design to production.
“That’s the secret weapon,” said Quinn, at company headquarters at 148 Lafayette Street in New York. “Nobody is able, in my opinion, to turn production [like we do] in three weeks. It’s a huge competitive advantage.”
Quinn said Lafayette 148’s design team frequently travels to China, and in one location, “we’re able to create a collection and get the knits, the leather and the embellishments, and they can fringe it and bead it and get the samples back in a day.”
The brand, which has a thriving wholesale business, also has a catalogue, web site and freestanding stores. Selling such stores as Neiman Marcus, Nordstrom, Saks Fifth Avenue, Bloomingdale’s and Holt Renfrew, as well as 150 specialty shops, Lafayette 148 has carved a niche for itself as a lifestyle wardrober for executive women.
Quinn’s production background led her to her late business partner, Shun Yen Siu, who was an engineer and factory owner, and his wife, Ida Siu. They met in 1986 while Quinn was vice president of global production for Liz Claiborne Inc. and the Sius were doing production for a host of brands including Claiborne, Anne Klein, Bill Blass, Donna Karan and Dana Buchman. Quinn moved to Hong Kong for several years and worked for Escada and Ermenegildo Zegna, but then moved back to the U.S. Shun Yen Siu approached her and suggested they start a business together.
“He had a vision in how to transform a factory into a brand. He knew if you put the right team together, he could make a difference,” Quinn said. In 1996, she took a desk, phone and one other person and set up shop in Siu’s factory at 148 Lafayette Street in New York’s SoHo neighborhood, which he had owned since 1985 and was making clothes for various companies. They started production, named the line after the factory’s address, and a company was born. The line was aimed at what was then known as the bridge segment.
“We looked at brands in the market at that point and felt it was good a fit for what we were manufacturing,” said Quinn, explaining that when she worked for the Italians and the Germans, she learned about the quality of the fabrics. “Taking his great manufacturing with our European fabrics and putting them together, it was a hit right away,” she said.
The company ramped up quickly, selling to bridge departments of major department stores. These days, bridge has virtually disappeared, and the Lafayette 148 line has notched up in price to the low end of designer.
For the first eight years, the brand manufactured all its wovens at its Manhattan facility, made knits in Italy and leathers in Hong Kong. In 2002, the company moved all production to China. Barbara Gast came on board in 2002 to help set up the knits business overseas. Then in 2008, the company unveiled a 240,000-square-foot LEED-certified design and manufacturing facility in Shantou, China. Gast was named the company’s first chief creative officer in 2012.
“We decided we’d do everything ourselves,” said Quinn, noting the design team started to travel to China to develop the collection within the factory, where there’s a design studio on the premises, along with manufacturing.
Several years ago, Lafayette 148 focused its expansion strategy on the Chinese market. The company opened an office in Shanghai, with local merchants who had design and retail expertise, as well as its first store there. There are now 11 stores in China, and the company intends to have 13 stores throughout China by the end of this year. Quinn believes the market can support three to four new stores a year. “I really want to establish the brand in China,” said Quinn, noting the line also wholesales in the Philippines and the team is exploring opportunities in Singapore.
Lafayette 148’s move into the designer world began in China, where the brand is considered a designer line. “We’re next to Prada in China,” Quinn said. “You’re a designer over there, or you’re not. We started bringing those pieces into the U.S., and everybody wanted them. The luxe became the norm. It was exactly where we wanted to go anyway.”
Since the strategy worked well in China, the company opted to raise its game in the U.S., too, and now Lafayette 148 hangs near such brands as Akris Punto, Escada, Hugo Boss, Burberry and sometimes St. John or Brunello Cucinelli.
Lafayette 148’s average retail price is $498, but items range as high as $4,000. Quinn said the brand offers 58 different fits, such as petites, women’s regular and a European fit for Asian consumers. As a result, they feel they are able to be more custom than many other brands. “They come to us for the consistency in fit,” she said. The reason their online business is so strong is that the customer knows her size, they make everything in one place, and the brand can control fit and production.
In 2006, Lafayette 148 launched its e-commerce web site, lafayette148ny.com. Three years later, it began its branded catalogue strategy with 12 issues a year, which drives business to the web.
With so much talk about customers wanting things faster and as soon as it hits the runways, Quinn believes that having its own factory enables the firm to move quickly and be more nimble. “The fashion industry is in a state of radical transformation. Supply exceeds demand. Shopping patterns have changed. More customers are shopping online and buying on promotion. Customers are focused on ‘buy-now-wear now’ versus buying pre-season. This is causing a major shift in seasonal calendars and creating a pressing need for speed-to-market.”
Because it is vertically integrated, Quinn said the company can develop lines close to delivery time and cut to order with fast turnaround. Making small quantities allows personalization based on customers’ requests. “This enables us to manage our inventories effectively and balance supply with demand. And while we face the same challenges as others due to falling mall traffic, our catalogue and web business help to offset these trends and allow our loyal customers to shop anywhere, anytime.”
Quinn said the company ships merchandise three times a week, flown from Hong Kong to JFK and then trucked to the fulfillment center at the Brooklyn Army Terminal. Lafayette employs 1,600 people — 1,300 in China (1,200 of them sewers, 100 in the stores) — and 300 in New York, including a team of 25 sewers and patternmakers to handle late fabrics, celebrity dressing and alterations. Another 23 people work in the field, calling on and servicing retail clients. The company has showrooms in Dallas, Atlanta and Chicago.
Lafayette is building six in-store shops at Neiman’s this year. “The shops helped define our branding and proved successful,” she added. The brand also participates in 300 trunk shows a year. The strongest pockets for the brand are Washington, New York, Dallas, Atlanta and Houston.
Until 2013, Lafayette 148 was designed by Edward Wilkerson, who served as design director. His role has since evolved into fashion director, and he travels the country, working with the clients and doing store personal appearances. Emily Smith is creative director and Gast is chief creative officer.
The past two decades haven’t been without a few hiccups. One early setback was opening too many freestanding stores too quickly. In the beginning, the firm opened five stores in the New York area and Montreal, but closed them within the first year. “I said, from then on, we think big but start small,” Quinn said of the learning curve. “We just got a little ahead of ourselves with that vertical idea. But now we’re back in it.” The company opens its second New York store in SoHo this week — the first store is a concept store at the Lafayette Street headquarters — and it will open a unit at Brickell City Centre in Miami in November.
Interestingly, for a company of this size, it has no licensees. The brand makes jewelry in Italy and its own footwear, which is offered only in the catalogue. “We really want to get it right before we launch it,” said Carol Schuster, a marketing consultant to the brand. “The company is really about testing and learning. We create assortments that complement the collection.”
Stores agree that Lafayette 148 is a “go-to” brand.
Ken Downing, senior vice president and fashion director of Neiman’s, said, “It is a phenomenal brand for us. They bring a great sense of luxury to clothes that really are often seasonless, somewhat timeless, always on trend, and speak to a woman.” The collection is housed in women’s sportswear, between upper contemporary and designer. “It’s for a woman who wants clothes that let her be herself and give her confidence,” he said, citing standouts like suedes, leathers, cashmeres and wovens.
“They have elevated that brand over the past several years. It continues to be a powerhouse and go-to brand — the fit is perfect and it’s for many different body types,” Downing added. “The quality you see in the showroom is the quality that arrives in-store. You can’t always say that.”
Tricia Smith, executive vice president and general merchandise manager of designer, women’s and kid’s apparel at Nordstrom, said, “The team at Lafayette has been a strong partner and our customers continue to respond well to the collection. The brand is steadfastly committed to knowing who its customer is and staying nimble enough to remain connected to her. It has developed the ability to engage one-on-one with the customers, particularly through events. It also has an impressive commitment to quality.” At Nordstrom, Lafayette 148 is housed in designer sportswear near brands such as Burberry and Akris Punto.
The company enlisted Jill Granoff as a consultant to create a strategic plan for 2020. One priority is growing internationally; it hasn’t ► cracked Western Europe yet. Another is expanding product categories, particularly casualwear and knitwear.
Born in the Bronx, Quinn grew up in Cresskill, N.J., and graduated from Bauder Fashion College. She has sat on the board of the Fashion Institute of Technology since 2012 and has been an associate member of the Partnership for New York City. “I’m very proud of being a New York story,” Quinn said, adding she never imagined she’d be running a company this size.
Shun Yen Siu died three years ago of cancer; the factory continues to be run by his widow, Ida, who manages the design and manufacturing facility.
According to Schuster, Quinn’s management style is passionate and committed to the point where it’s contagious. “People want to work here and want to be here for her and the brand. She leads a very collaborative and team-oriented environment where people work together to find solutions to the problems and drive the business forward. There’s a lot of transparency.”
“I believe in relationships,” Quinn added. “A lot. Whether it’s with our retail partners, our vendors, our mills and our bankers. We stick with people.”
Quinn recently won the Ernst & Young Entrepreneurs of the Year award for the New York region in the consumer and retail category. The ceo said her plan is to grow the business about 8 percent a year. “We’re looking to grow organically. I like the number eight. It’s a really important number for this company. Eight is good luck in Chinese, that’s why the store is on the eighth floor. Every style ends with an eight, and every price ends with an eight. Eight is good feng shui.”
She said she assesses the company every six months, and her goal for 2020 is to generate $225 million. “Because we’re private, if it’s not working, we don’t need to grow it, we fix it. We’re not selling a lot of places. Everyone we’re doing business with agrees we can have a longer shelf life. We don’t mark it down in-season on the web. We hold the goods a year before we sell them off-price. This model works for Lafayette.
“Being private, I’m driven differently. [Our] employees are like family,” she added. “People say they love to work here. It’s got a different feeling about it. Maybe it’s the [downtown] location. It’s still a family. You have to understand the culture. It’s an East-West culture.”
Quinn said she’s poured all her energy into the business, and it was a big risk: “To be an owner, I didn’t draw a salary for five years. I spent all my money in the 401(k). You have to be willing to fail. It’s not for everybody. We don’t borrow money.” As for possibly going public, she said, “Not now. The discussion whether private equity or public is always thought of, but not at the moment.”
She said she’s open to a strategic alliance, and she’s looked at them, but hasn’t found one that made sense. She said that throughout the past 20 years, there was only one year — 2008 — when volume didn’t rise, and that’s when the company decided to launch the catalogue to drive the business to the web. The catalogue’s customer care center is located at the headquarters, so Quinn gets immediate feedback and can react. In analyzing her customer, she said 10 percent are early career, 35 percent are mid-career and 55 percent are late career. To combat potential retirement of a large part of its customer base, the company does a lot of prospecting, and its U.S. retail strategy is to bring in younger customers. In China, it targets a younger customer and offers a European fit that’s cut closer to the body. Executive women in China tend to be younger, and many already are in their mid-to-late 30s. They’re looking for a more professional but still fashionable work wardrobe. With rising disposable income, there’s also a willingness to invest in their wardrobe.
One way the brand attracts younger consumers is online. “We’re developing our digital marketing,” Schuster said. “We’ve got a robust e-commerce business. There’s an opportunity to build awareness and drive younger customers into our stores.”
The company publishes 12 catalogues a year, sending out six million books annually. The catalogue is the largest division and regarded as the best tool to get new customers.
The executive believes that the company has a business model that few others have.
“Not a lot of factories want to own a fashion company, and not a lot of fashion companies want to own a factory. It’s a different business model,” said Quinn, who goes to China once a year.
With so many plans percolating at once, it seems unlikely that Quinn has time to take a break. But she said she was able to carve out some time for herself this month and plans to climb Mount Kilimanjaro with her sister and some friends for breast cancer awareness. She’s been getting ready, riding her bike about 25 miles a day on the weekends and working out intensely.
Has she ever climbed such a steep mountain before?
“Just the company,” she said.