MAN OF THE WEEK

LET IT ‘B’PLUS:Tuxedo Park, N.Y., played host to two days of festivities in honor of the jacket’s 150th anniversary. Page MW6

LEE’S WAY

Barneys Boosts Scope of Offering In Men’s Dept.New ceo Mark Lee’s vision taking shape at the men’s store.

October 13, 2011

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by JEAN E. PALMIERI

MARK LEE IS putting his stamp on Barneys New York and his influence is perhaps most evident within the men’s department.

Since joining the upscale retailer as chief executive officer last September, Lee, whose résumé includes successful runs at Gucci, Yves Saint Laurent, Giorgio Armani and Jil Sander, has been building a merchant team, tweaking the mix and reinventing the store’s creative direction.

Although Lee has kept a fairly low profile, the changes that he has made within the men’s store speak volumes about his vision and the direction he’s taking the venerable retailer. This fall, the store has added a variety of new vendors, with more on tap for spring. Most of the additions are exclusives and several are only available in the U.S. at Barneys.

“Our overall goal is to ensure Barneys is really, truly the best specialty store in the world,” Lee told WWD.

And although Lee said he’s working on every category — from women’s and Co-op to Chelsea Passage — the new direction has really taken hold in men’s.

“Barneys began as a men’s store, and it’s had that heritage since 1923,” he said. “That gives it a unique position in the world and we need to work on keep moving that forward.”

When Lee arrived last fall, he quickly dispatched many of Barneys’ longtime ex-ecutives, including Judy Collinson, execu-tive vice president and general merchan-dise manager of women’s wear, and Julie Gilhart, fashion director. Other key execu-tives were also vanquished and a new cre-ative director hired.

But through it all, there has been one constant — Tom Kalenderian, the evp and gmm of men’s wear, who has been with the store for more than 30 years and who cut his teeth under its legendary former owner, Fred Pressman. Pressman, son of founder Barney Pressman, is credited with transforming the company from a dis-count men’s store into a fashion emporium and was the first to bring Giorgio Armani to America.

“Nobody does men’s better than Bar-neys,” Lee said. “Tom is fantastic. He’s a di-rect link to Fred Pressman and Gene Press-man [Fred’s son and a former co-ceo]. Tom and Barneys have always managed to find new, rare and exclusive product. With me jumping in, it’s just pushed that up a notch.”

Kalenderian added: “The heritage of Bar-neys has always been to launch new talent. It’s indicative of the culture of the company

{Continued on page MW2}

Bright SpotsIt’s been a roller coaster at retail this year. While luxury players are experiencing strength, the midmarket is still struggling. But at every level, there are opportunities for growth, such as these brightly colored suits. For more spring essentials, see pages MW4 and MW5.

Zero + Maria Cornejo’s cotton suit and sweater.Marc by Marc Jacobs’ cotton suit and shirt.

Paul McCartney leaves some room for improvement with his wedding attire. Page MW6

Men’s WeekMW2 WWD thursday, october 13, 2011

and the Barneys customer expects to discover new, different and special things that are relevant and move with the trend.”

Lee said the men’s merchant team pounds the pavement to find new additions to advance the offerings at the store.

Case in point is Piombo, a respected Italian luxury label that is making its debut in the States exclusively at Barneys. The brand will be celebrated with a party at the store tonight.

“We have to thank Mark Lee, who fell in love with our project and with the Milan boutique,” said designer Massimo Piombo. “I think that the decision to add our label to its of-fering is part of Barneys’ general renovations, which are not just architectural but also involve products.” Piombo is es-pecially excited about the Madison Avenue windows that are being dedicated to the brand. “In order to reflect our aesthet-ics, we will decorate it with our signature yellow and black panels, carpets and plants, creat-ing a sort of tiny forest,” he said.

Lee agreed that he was first at-tracted to the brand’s store in Mi-lan. “I had been a customer and a fan,” he said. “Tom and I felt it was the right time [to bring it to the States.] It’s clothing, furnish-ings and accessories, and we saw it as an opportunity since it wasn’t present in America. It’s our way of updating and bringing forward Fred’s idea of haberdashery.”

Lee said Piombo is one of sev-eral new additions this season. “There are one or two special things per floor on Madison Av-enue,” he said.

“It helps make the floors inter-esting,” Kalenderian said.

Another newcomer is Andrea Campagna, whose updated cloth-ing collection is being housed on the seventh floor. “Tom is respon-sible for that,” Lee said. “He had known of him and his father, Gianni, who was a master tailor. Andrea’s collection is new, modern and fresh but keeps the tradition of real Italian master tailoring.”

Kalenderian said the clothes are “young and modern, but based on an old-world sartorial luxury. It’s an interesting blend, and something a runway client would buy.”

The collection, also exclusive to Barneys, has been “per-forming exceptionally well,” Lee said, noting that it has “only been in the store for a handful of weeks.”

Turning to the Co-op, Barneys’ more edgy cousin, addi-tions include AMI by Alexandre Mattiussi, a line of modern classics, along with Alexander Wang, who has created a men’s collection for Barneys that is exclusive for this season and next.

Other changes in store include the addition of Fendi on

the second floor, joining Armani Black Label and Prada, as well as an “outpost of men’s accessories,” Lee said. “We’ve created a luxury Italian floor with a new energy and a nice connection to the third floor.”

On the third floor, Lee said there’s are several “special things there” including the return of Alexandre Plokhov. “Barneys had a relationship with Cloak,” Lee said of Plok-hov’s former brand. In fact, the designer actually used the eighth floor at Barneys to show his spring collection during fashion week.

Other new additions include Black Fleece, the Thom Browne-designed brand for Brooks Brothers, whose fur-nishings are being offered on the main floor and tailored clothing on the sixth, as well as Monique Péan, “one of the great women’s jewelry brands,” according to Lee, which will launch in men’s for holiday.

Kalenderian also pointed to the Camoshita by United Ar-row line, as well as Ian Velardi, the agnes b. collaboration, Costume National, Jack Spade clothing and additions in footwear and accessories as giving new life to the men’s mix. “There is a lot of good, tasteful, relevant product in the mar-ket,” he said. “It’s a creative moment.”

Lee said that spring will see additional newcomers in men’s as well. “Michael Bastian will be back next season and we’re working on something special for tailored clothing.” In addition, Salvatore Piccolo’s handmade shirts will be added on the main floor. This, along with Piombo, “will add a lot of energy to the sport furnishings world,” he said.

Lee noted that brands “have control who they sell to but the power of Barneys’ position in men’s wear” has helped the store score exclusives in a time when all its competitors are clamoring for the same thing. “They know if they give us the exclusive, we will really get behind it with our press, Web site and marketing.”

Kalenderian acknowledged that “there’s more com-petition in men’s than ever before, but there’s also much more talent.” But before Barneys decides to add a new brand, it has to be trend-right, Kalenderian said. “Piombo is not a new brand but we felt it was really in sync with our strategy and where men are today, which is dapper, but slightly eccentric.”

Staying in sync with its customers has been a hallmark of the store over the years. “Our success at Barneys is always moving and not standing still,” Kalenderian said. “Manage-ment is extremely sensitive to planning for the evolution of the business so people contact us as the place to launch and feature their brand.”

They also may sense that Lee is working hard to bring Barneys back to its prime position in the retail industry.

Istithmar World, the investment arm of the state-con-trolled holding company Dubai World investment fund, bought Barneys in 2007 from Jones Apparel Group Inc. for $942 million, and has since pumped millions into the stores. The retailer’s valuation declined sharply in the recession and it accrued significant long-term debt. For the past sev-eral years, the retailer has been mired in a sea of red ink — losses reportedly approached $60 million last year — and it was criticized for overexpanding and losing its edge. Its volume is reportedly in the neighborhood of $675 million to $700 million.

Without disclosing figures, Lee said Barneys is benefiting from a recent rebound in business at the luxury end of the market. “All things considered, we’re happy with the trend of the business, and men’s is pulling its own,” he said.

Kalenderian said the luxury level is doing best at the store, driven by classic and designer apparel and footwear. Acces-sories is also experiencing “major double-digit” growth.

Business is expected to be further bolstered by a multi-million-dollar renovation under way at the Madison Avenue

flagship. In August, part of the main floor was revamped, with another round planned for after the holidays. Construc-tion on the eighth floor is nearly complete, with the men’s and women’s Co-ops being combined. “That should give us a big jolt there,” Lee said.

Beyond that, he said the rest of the store will be reno-vated at the pace of “a couple of floors a year. It’s always an ongoing project working on stores.”

So is the crystallization of his vision for Barneys. “It’s a big work in progress,” he said. “That’s the nature of retail, the world changes every day and you have to change with it.”

That said, this is Lee’s first foray into the retail end of the apparel industry, and he’s loving every minute of it. “I’ve spent most of my career at great fashion houses, so having the freedom of seeing the whole market and being multi-brand is very freeing for me,” he said.

— With Contributions from ALEssAnDrA turrA

Barneys enhances Men’s Mix for fall

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Piombo is exclusive to the store.

Tom Kalenderian

Mark Lee

Andrea Campagna is the son of an Italian custom tailor.

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Men’s WeekWWD THURSDAY, OCTOBER 13, 2011MW4

For spring, designers offered a vibrant assortment to create buzz at retail. Retro-printed silk tops, brightly colored suits, safari jackets and modern double-breasted blazers are among the key looks. — Alex Badia

RETAILTHERAPYPhotos by

ELI SCHMIDT

Patrik Ervell’s silk bomber jacket, cotton shirt and pants. Bottega Veneta shoes.

Patrik Ervell’s silk print shirt, cotton shirt and

pants. Corneliani sandals.

PRINTED TOPS

CREATIVE EVENINGWEAR

Men’s Week WWD THURSDAY, OCTOBER 13, 2011 MW5

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Ami’s wool jacket and pants and cotton shirt.

Ermenegildo Zegna’s cotton jacket, silk and linen sweater and linen and cotton pants. Salvatore Ferragamo espadrilles.

Band of Outsiders’ cotton suit and

shirt. Sperry Top-Sider by Band of

Outsiders shoes.

Corneliani’s silk sweater and linen pants. Torrubia & Torrubia bracelets.

Salvatore Ferragamo’s

linen sweater and shirt.

E. Tautz’s nylon parka, cashmere sweater and wool pants.

MODERN DOUBLE

BREASTED

SUMMER PARKAS

THICK SUMMER

KNITS

FOR MORE LOOKS, SEE

WWD.com/menswear-news.

Men’s WeekMW6 WWD THURSDAY, OCTOBER 13, 2011

InspIred by the John MalkovIch character in “the sheltering sky,” set in the african desert after World War II, Joseph abboud creative director bernardo rojo created a col-lection for the traveling man, whether that travel was by land, air or sea. this translated into three segments with distinct color palettes: greens, blues and rusts. the hues were faded, which worked well with the overall worn look of the collec-tion of unconstructed tailored jackets and textured sports-wear pieces. the silhouette of the suit has become more mod-ern with a slim cut, wide peak lapels and cotton voile linings. the overriding sensibility of the spring line was targeted to a man of adventure as seen in the faded form-fitting canvas safari jacket paired with tonal khakis and shirt. although still primarily a department store brand, rojo is moving the col-lection forward in anticipation of the line’s return to the run-way in February.

Time Travel

Window Dressing at Paul Stuart paul stuart has entered the blogosphere. For the first time in its 73-year history, the new york city-based specialty store has turned five of its Madison avenue windows over to blog-gers and stylists for the rest of the month, invit-ing them to showcase their interpretations of the paul stuart and younger phineas cole brands. “It’s a dy-namic and unexpected way to show the diver-sity of paul stuart and phineas cole,” said shahriar shahandeh, paul stuart’s head of marketing and brand development. those participating are nick sullivan, fashion edi-tor of esquire and esquire black book; christopher callis from Men of habit; Michael Williams of a continuous lean, and lawrence schlossman of sartorially Inclined.

shahandeh, who joined paul stuart last year, added: “We put a lot of effort into our windows and they’ve always been controlled by us and show how we want our brand to be perceived. but we decided to let the stylists and bloggers have free rein, offer a different perspective and let

them interpret paul stuart the way they see it.”some of the results were a bit of a surprise, he

admitted. “Michael Williams is very preppy, but the rigs he pulled together are not preppy at all.”

shahandeh said the only prerequisite for the

bloggers and stylists was that they had to incorpo-rate tweed into their window displays in some way.

he said the participants will use social media to talk about the project. “It will be interesting to see what happens.”

— J.E.P.

Black Tie, No Tailsby Jean e. palMIerI

tuxedo park, n.y. — the tuxedo took center stage last weekend as fashion industry executives and stu-dents mingled with society mavens here to fete the 150th anniversary of the little black jacket.

the festivities kicked off Friday night with an exhibition at the tuxedo historical society that showcased updated designs created by london college of Fashion students. In addi-tion to prof. Frances corner, head of the university, the evening brought to-gether descendants of the key figures in the creation of the tuxedo. these included angus cundey and his son simon of henry poole on london’s savile row, who created the first din-ner jacket 150 years ago for the then-prince of Wales.

the elder cundey, who admit-ted this was only his second visit to america, said the manufacturer was planning to “take some measure-ments” at the tuxedo club over the weekend to fit some of the members for bespoke suits. simon, the seventh generation of the original henry poole, said he visits the u.s. five times a year for trunk shows at country

clubs such as augusta in Georgia and lyford cay in the bahamas.

the cundeys were joined by linda davison-Michonski and her brother henry, fourth generation descendants of James brown potter, the man cred-ited with bringing the short dinner jacket to america — and tuxedo, and spawning the name.

on saturday, the tuxedo club, whose male members shocked the country by wearing short dinner jackets to its inaugural autumn ball in 1886, hosted a gala dinner party to celebrate the formalwear staple and mark the 125th anniver-sary of the event. It was hosted by Giorgio armani.

“I liked that it was a different place,” said Graziano de boni, chief executive officer of armani u.s. “and being in tuxedo is as authentic as it gets, so it made a lot of sense to get involved. Giorgio armani is known for its dinner jackets and we want to keep it going. there’s nothing like style, nothing like tradition.”

he quipped that the only other time he’d been to tuxedo was to at-tend the renaissance Fair, “but they weren’t dressed like you guys,” he told the attendees.

Tuxedo Park fetes the 150th anniversary of the dinner jacket.

Man of THE WEEK Paul Mccartney: B

In men’s wear, you should only wear a trend once in a lifetime. The former Beatle had his moment with skinny suits in the Sixties. Although he still looks amazing at 69, the navy wedding suit designed by his daughter Stella fits him well but needs a bit of a tweak to be age-appropriate. Stella also designed bride Nancy Shevell’s dress. (Meanwhile, do we sense a men’s collection in Stella’s future?)

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the designs created by the london college of Fashion students.

Winning design student Maria thelin with curator Ben Whyman.

Valerie and Graziano de Boni

angus and Simon cundey

nick Sullivan’s window.

a little too feathery, but still

flattering and rejuvenating.

too skinny, but the pastel color is bridal

and works with his

boutonniere.

the silhouette is very trendy but

enhances his trim physique.

too narrow. a wider lapel would

be more elegant and classic.

Perfect amount of shirt cuff showing

the break is a bit too long.

For More IMAGeS, See

WWD.com/menswear-news. looks from the Joseph abboud spring line.

w13b006a.indd 1 10/12/11 6:17 PM10122011181834

Men’s Week WWD THURSDAY, OCTOBER 13, 2011 MW7

by KELLY WETHERILLE

TOKYO — Uniqlo parent Fast Retailing Co. Ltd. said Wednesday that its full-year net profit slumped 12 percent as it blamed unseasonable weather patterns and an unsuit-able product mix for the drop.

Net profit for the 12 months ended Aug. 31 declined to 54.35 billion yen, or $665.79 million at average exchange rates for the period. Operating profit fell 12.1 percent to 116.37 billion yen, or $1.43 billion. Net sales for the year were close to flat, rising just 0.7 percent to 820.35 billion yen, or $10.04 billion.

Both the net profit and sales figures are lower than the guidance the company gave when it released nine-month results in July.

The retailer said it faced a shortage of popular products such as its Heattech line of heat-retaining inner wear. It also said unseasonable tem-perature patterns hurt the sale of certain items, causing the retailer to discount prices in order to move stock later in the season. That bit into the retailer’s margins, which were also impacted by the sharp rise in raw cotton prices.

“Our product creation itself was a little off,” Fast Retailing’s chairman, president and chief executive officer Tadashi Yanai said at a press conference on Wednesday, before flying to New York to inaugurate two new Uniqlo flagships.

On a more positive note, Fast Retailing said it expects to post double-digit profit and sales growth for its current fiscal year, ending Aug. 31.

The retailer said it sees net profit rising 30.6 percent to 71 billion yen, or $925.91 million at current exchange rates. The company is predicting sales of 965 billion yen, or $12.58 billion, an increase of 17.6 percent.

While full-year sales from Uniqlo’s operations in Japan were down 2.4 percent year-on-year, Fast Retailing’s in-ternational business continued to grow. Sales from Uniqlo stores outside Japan increased by 28.7 percent on the year, and Yanai said Wednesday that by the year 2015 he expects Uniqlo’s international sales to surpass those in Japan.

Uniqlo International’s operating profit spiked 40.6 per-cent to 8.9 billion yen, or $109.03 million while sales ad-vanced 28.7 percent to 93.7 billion yen, or $1.15 billion.

Yanai laid out ambitious plans for Uniqlo’s continued international expansion. He said that he aims to open 200 to 300 stores a year in the near future, and that by the end of the current fiscal year the company will have 288 stores outside Japan, some 100 more than it had as of Aug. 31.

His expansion goals center on Asia, where he hopes to eventually open 100 stores a year in China and 50 in Korea. The executive also plans to expand his company’s pres-ence in countries such as Vietnam, Indonesia, India, Australia and New Zealand, and he aims for Uniqlo’s first store in the Philippines to bow next spring.

The retailer is preparing to open two high-profile stores in New York City over the next two weeks, and Yanai said that he also wants to have a presence in other major U.S. cities such as Los Angeles, San Francisco and Chicago.

“Our Uniqlo business is valued more internationally than domestically in Japan, and we have great hope [for its growth],” Yanai said. “More than a risk, we see this as a big chance.”

When asked whether he worried about poor economic conditions in the U.S. and Europe affecting international expansion, the executive replied, “The economy in the West is bad, but Japan is the same. I don’t think that just because the economy is bad [a company] won’t grow.”

Fast Retailing Net Profit Slides 12%

by SAMANTHA CONTI

LONDON — Burberry’s plans to roll out stores in China and worldwide are on track as the company reported a 29.5 per-cent increase in first-half revenues to 830 million pounds, or $1.34 billion, and a 21 percent rise in second quarter rev-enues to 463 million pounds, or $745.4 million.

All figures have been converted at average exchange rates for the respective periods.

The company said Wednesday in a trading update that capital expenditure would remain at 180 million to 200 mil-lion pounds, or $283 million to $314 million, for the year, with a net eight to 10 mainline stores set to open in China, Latin America and Paris. Average retail selling space will increase by about 15 percent in the second half.

Burberry shares, which are down more than 20 percent from their peak at the end of July, gained 3.5 percent in London to 1,308 pence, or $20.44 at current exchange.

Despite European banks’ recent reports of a “hard land-ing” in China if there is another global recession, Burberry remains bullish on the country’s prospects.

“From today’s numbers you can see there has been no slowdown at all,” said Stacey Cartwright, executive vice president, chief financial officer. “It’s steady as she goes, and we will continue to open more stores in the region. We have no intention of slowing down.”

Comparable-store sales growth in China was 30 percent, and the country’s retail outlets kicked in 14 percent of the 45 percent underlying growth in retail sales. Cartwright said that China now accounts for around 10 percent of Burberry’s overall business.

She said business is so robust in Asia overall that even with a slowdown in demand, Burberry would still meet its internal targets for return on investment in the re-gion’s stores.

In the half, Asia-Pacific was the top performer by region, with sales growth of 51 percent. Europe grew 23 percent, while the Americas rose 20 percent, and the rest of the world category increased 31 percent.

Sales drivers in the half continued to be the core out-erwear collections and large leather goods, with Burberry London also adding fuel to growth. Wholesale sales rose 9.7 percent in the six months, driven by footwear, children’s wear and men’s tailoring and accessories.

While Cartwright remains bullish on China, she said the company was mindful of the macro economy, and prepared for a slowdown in certain markets.

“It’s not the first time we’ve been here and we are in a better position than we were three years ago,” she said. “Today, we have our SAP [information technology] systems and proper processes in place,” she said. “Last time, we cut costs out of the business, but nothing from the front end, nothing the consumer could see. We’re being very responsi-ble in the way in which we manage the business, and we’re making sure our regions are totally up to speed, thinking about travel costs and head counts.”

Analysts were bullish on the company’s prospects. On Wednesday Seymour Pierce maintained its “buy” recom-mendation on the stock and said in a report: “Burberry’s long-term growth story remains intact, operating in a market with strong long-term growth credentials and with significant geographical and product mix opportunities plus operational leverage to come. The balance sheet re-mains very strong.”

In a report called “Burberry — Luxury Slowdown, What Slowdown?” analyst Thomas Chauvet at Citigroup Global Markets in London argued that the company is far stron-ger now than it was three years ago. “Burberry is a much more robust company today. It is more exposed to emerging markets and structural emerging market tourist flows, has greater control over its brand globally, and benefits from a much more efficient supply chain and a greater proportion of carryover and replenishment styles carrying low fashion risk,” he said.

He added a note of caution, however, saying there was “low visibility” into Christmas and luxury demand could slowly deteriorate as the months pass.

“It is too early for luxury demand to be materially af-fected by recent equity market dislocation and deteriora-tion in economic conditions. In 2008 an abrupt shock — the collapse of Lehman Brothers in September — acted as a catalyst for the consumer to turn defensive and luxury de-mand to move into strong negative territory.

“In the absence of such a shock, we expect a gradual, rather than severe, deterioration in demand patterns in coming quarters in developed markets. The health in global tourist flows to Europe and the U.S. is likely to continue to be supportive,” he said.

Burberry Sales Climb 29.5% in Half MEMO PAD

Uniqlo parent Fast Retailing reported nearly flat sales for the year.

TABLET TALK: Publishers have spent the last two weeks declaring that they just love their tablet businesses, and Hearst Magazines president David Carey did it again on Wednesday morning, telling an audience at the Paley Center, “That business is flying.” Why are they so optimistic? The Kindle Fire has a lot to do with it.

“We are as excited as we can be for the Kindle Fire,” said Carey, a little hoarse-voiced as he fought through a cold. “There’s going to be this fantastic trade war between Barnes & Noble and Amazon and Apple that’s going to be an enormous benefit for the magazine industry. These are people bringing out better devices that are used to consume our content at lower prices.”

Last week, Carey made a bit of a stir among his competitors when he said at The American Magazine Conference that tablets that emphasize portability — i.e., a smaller

tablet, à la the Nook Color or the Kindle Fire — could become a more significant business for publishers than the iPad. He elaborated on that on Wednesday.

“When the iPad came out, we thought, ‘This was the ultimate device,’” he said. “All of our content had to go through the iPad. The screen is so good, the ads look so good, it’s a little computer that can do everything. And then when the Nook Color arrived it didn’t have as many functions and we started producing

replica products — we were the first of the big companies to go in with all of our portfolio — and, boy, what an incredible surprise. It taught us that there are two kinds of consumers of tablet media: Those who want their video of Oprah and want every page to be interactive. But the replica market is potentially far bigger where portability of content is the key benefit and not the enhanced features. The economics for us out of that part of the business is far better.”

Carey told WWD last week that Hearst will bring in at least $10 million in e-subscriptions by next summer. Condé Nast president Bob Sauerberg said the company would bring in $15 million through tablet subscriptions and advertising by the end of this year. It’s revenue that once didn’t exist, but Carey did acknowledge ultimately that it is still pretty small stuff.

“Thus far, the digital or the tablet content feels like it’s mostly additive,” he said. “There will be a time perhaps that will not be so. Right now, we have 25 million print subscriptions in our company. And that complexion could change. Maybe one day it will be 22 million in print and 6 or 7 million tablet. We have growth, but I think the mix will start to shift but over a long period of time.”

And, by the way, what does it look like to be an editor in chief at Hearst these days? Well, editorial sentimentalists, be warned: You’re not spending your day with writers and editors developing features and cover stories. Instead, it’s time for diet books, TV shows and slide shows. To which Carey, the businessman, says, “Thank goodness.”

“We had a big business review yesterday with one of our key businesses, Good Housekeeping,” said Carey. “And the editor in chief [Rosemary Ellis] began by giving an overview of the activities she’s personally involved in: the magazine; the Web site; the tablet editions; a set e-books that we’re carving out of the archives; a physical book born out of a section of the magazine called Drop Five Pounds, and she just came back from producing a television show around this as well. I think I ran out of fingers by time she was done talking about what she was involved in. I said: Thank goodness that the job of being an editor in chief today is so dramatically different than what it was just a few years ago.” — JOHN KOBLINPH

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Tablets are creating opportunities for magazines.

Men’s Week

Global Markets ForumKnowing the local customer proves invaluable.

MW8 WWD thursday, october 13, 2011

By ALEXANDRA STEIGRAD

FoR bRANDS hoping to broaden their reach to faraway lands, look no further than Coach Inc. and its international expansion guru, Ian bickley.

bickley, who took the reins as president of Coach international in 2006, first helped establish the men’s and women’s accessory brand’s presence in Japan.

“I think it all starts with thinking about what we’ve learned, and we have this pro-cess at Coach called hindsight-ing,” said bickley. “We take the experiences that we’ve had and try to use the best practices and develop the best way to move forward.”

The executive said that in order for a company to expand abroad, it would need a “clearly articulated and focused road map for growth,” as well as in-depth consumer and market re-search on the part of the world it is entering.

The brand must also have great custom-er service and a “consistent formula” for marketing and merchandising efforts.

Since becoming a public company in 2000, Coach’s sales have increased by more than eight times to over $4 billion. International sales have grown 15 times during that period, nearly twice the rate of growth as the rest of the company.

Sales outside North America repre-

sent close to a third of total company sales. Coach, which has roughly 500 North American stores, has about 450 doors abroad in 24 countries.

The company is shooting to achieve over 50 percent sales growth from its stores out-side of North America in the next several years. Much of that growth is expected to come out of China, followed by other Asian countries, Western Europe and brazil.

“In China, there are more than 120 cities that have a population of one million or more, and if you want to guess how many there are in the U.S. and Japan, well there’s nine and 11,” he said, adding that Coach is in just 22 of the 120 cities, with a presence of about 53 locations.

Coach has recently become more aggressive in Asia — in 2008, it took over its distribu-tion in China — and now, it’s looking to Western Europe, which bickley calls a “white space for the company.” Coach has 19 locations in Europe —

eight in France, seven in Spain and Portugal, and four in the U.K. and Ireland.

brazil, which is “one of the largest and fastest growing economies,” is Coach’s new-est target. The firm inked a distribution deal with Aste Group that will allow it to expand into freestanding stores in shopping centers. Coach’s first stores are set for São Paulo in the spring with units in Rio de Janeiro and brasilia to follow.

“EXPANSIoN IN global markets is an art and a science,” said Michael Moriarty, a partner of the retail practice at manage-ment consultant A.T. Kearney.

Success in global expansion requires the ability to strike that fragile balance, which, as Moriarty noted, isn’t always easy.

Instrumental on the science side of the equation is “attractiveness.” This includes whether the market makes sense for the brand to enter and how difficult it is to work in. Another element is whether the retail environment is overly saturated. Is there too much international competition?

A third factor, which Moriarty calls “ur-gency,” measures the relationship between the growth in a retail sector compared to the growth in the economy overall.

“This is an important measure because as the retail sector grows more rapidly than the economy as a whole, then choice locations can get snapped up, real estate prices may rise more rapidly and the in-frastructure may get overtaxed,” he said, while stressing the importance of having “eyes in the marketplace.”

“Risk” is the final element to the science side, which includes identifying volatility and the “volatility of that volatility,” he said.

Keeping an eye on the social and politi-cal situation is key when looking to invest in foreign markets.

on the other side of the coin is under-standing the intangible, or the “art” of ex-panding abroad.

“Where the science is what you know, the art is what you are — your organiza-tional DNA,” he said. “And while you don’t

make good decisions without the knowl-edge that science brings you, you definitely won’t enjoy real success unless you get the elements of art right.”

“Art” includes “love,” “genius,” “re-spect” and “self-knowledge,” he said, ex-plaining that you have to have a “passion” for what you do, which requires resilience.

“There’s a lot of stuff that’s pretty hard to love about building success in global markets,” said Moriarty, who noted that obtaining success includes having “vision-ary leadership.”

Moreover, companies must respect or “ap-preciate the consumer,” meaning they should cater to different customers in their new mar-ket without straying from their brand’s DNA.

Moriarty underscored the importance of knowing your own capabilities and not be-coming overly ambitious or arrogant, which is central to becoming a global company.

“This commands engagement and awareness of the facts, as well as the intro-spective appreciation of how we respond to them,” he said. “In many ways it’s the most important of the dimensions required to prepare for the journey of global mar-ket expansion, for without it, we cheat our brands.” — A.S.

By DAvID MoIN

INDIA AND the Middle East are emerging markets yet India is “close to the inflex-ion point to where China was 15 years ago,” said Sanjay Kapoor, managing director of Genesis Luxury Fashion Pvt. Ltd., which owns Indian fash-ion labels, operates stores and partners with foreign brands entering the country.

And the Middle East is “quite volatile,” observed Said G. Daher, chief ex-ecutive officer of Azadea Group, which is based in Lebanon and manages over 35 brands in the region. “We live in a market where we are not sure what’s going to happen in the next week, especially after the Arab Spring, which is actually boosting the retail market.”

At the Global Sourcing Forum’s roundtable discus-sion, Kapoor said India re-tailing is undergoing “a sec-ond revolution.…The first time, when lots of brands came, rents were terribly high and productivity was terribly low. People were selling as much as they were paying rent. They tried to control businesses from Milan, Paris, Singapore or Hong Kong. but we are now seeing some real growth rates. In the last three, four years, same-store sales are going up 30 percent,” with urban areas growing more rapidly than rural areas.

The Middle East “enjoys

great demographics,” noted Daher. “More than 50 percent of our population is actually below the age of 30. We are also blessed with countries that are extremely wealthy. We control the majority of production of oil. And the rev-enues from the oil are being invested into the region.”

Much of the female popu-lation doesn’t work. Instead, women shop often. “The

Dubai Mall is magnificent. It’s actually a leisure cen-ter, not just a place to shop,” though sales per square foot are probably three times as much as major malls in America, Kapoor noted.

Also on the panel were Stanley Silverstein, ex-ecutive vice president of international strat-egy and business devel-opment for Warnaco Inc.,

and Mortimer Singer, president of Marvin Traub Associates, who moderated.

Underscoring the po-tential of global growth, Silverstein said eight years ago Warnaco generated 20 percent of its revenues abroad. However, the busi-ness model changed and now 60 percent of revenues are generated overseas, and the company expects it to reach 70 percent in the next several years.

For Warnaco, China is red hot. The company does $170 million in revenues in China and sees the busi-ness growing to $400 million to $450 million in a “hand-ful” of years. brazil is also strong, accounting for $140 million in revenues which are seen doubling over the next several years.

India is a different story. brands need to adopt “a longer-term horizon” for growth, Kapoor said. “Many brands may not be very well known. To create brand awareness you need to spend money. The brand building exercise is slight-ly longer. We do expect to break even in three to five years,” with brand partner-ships. “I don’t think we are signing any contracts below ten years. Eight to ten years is really the bare minimum.”

“There’s a good deal of first-mover advantage in each of these markets. If I had a power brand I wouldn’t wait. I would fig-ure out a way to put my flag down,” said Silverstein.

By SHARoN EDELSoN

KEvIN bURKE left no room for ambiguities or mis-conceptions.

“I’m a pure and un-abashed free trader and a pure and unabashed gov-ernment relations person,” said the president and chief executive officer of the American Apparel & Footwear Association at the Sept. 23 WWD Global Sourcing/Global Markets Forum. “I’m going to talk to you about free trade from the perspective of a trade association president and how we view trade as help-ing our member companies. We have a 20th century trade policy with a 21st century apparel and footwear indus-try. other countries have fig-ured a way to get around the morass of free trade policy. They figured out how not to get stuck in U.S. politics.”

Unfortunately, the same can’t be said for U.S. firms.

one of the AAFA’s jobs is to lobby Congress, but getting the legislators’ at-tention isn’t always easy. Why should they listen? burke ticked off the vol-umes of six other industries to show why the apparel and footwear industry’s concerns should be heard. video games does $20 bil-lion in annual U.S. sales; toys, $20 billion; fast food, $75 billion; fresh food and vegetables, $100 bil-lion; soft drinks, $130 bil-

lion; alcoholic beverages, $270 billion, and apparel and footwear $340 billion, burke said. “We sell twice as much clothing as cars,” he said, noting that the auto industry racked up a mere $170 billion in sales last year. “The reason I put this up there is to show how im-portant free trade is to the growth of the country and the growth of the economy,” he said.

“Since President obama [was elected] there have been no new free trade agree-ments since 2009,” burke said. “The only thing we’re working on now is the Trans-Pacific Partnership and that was started by the bush Administration. [The U.S.-proposed free trade agree-ment so-called TPP countries include Australia, brunei Darussalam, Chile, New Zealand, Peru, Singapore and vietnam. The AAFA is insist-ing that any agreement must be commercially meaningful for the U.S. apparel and foot-wear industries.] “A global economy like the U.S., and no free trade agreement since 2009? I mean, come on, we’re the largest global economy in the world.

“Why do we need to look abroad?” burke said. “We represent one-quarter of global and apparel footwear sales, but only 5 percent of the world’s population. Why wouldn’t you want to be in China? We have great brands that ought to be sold

around the world.”The problem is barriers

to entry. “We’re one of the most regulated industries on the planet,” burke said. “Take brazil. Everybody wants to sell there. The chal-lenge with brazil is unless you make the product there, you’re going to have to pay an enormous duty to get your product out. We have to con-vince brazilians of reciproc-ity in trade. ‘You want to ship your products into the U.S. duty free and we want to ship our products into brazil duty free.’ brazil has a vibrant manufacturing base and they don’t want necessarily to be competing duty for duty against us.

“The challenge with China is that they want to make their own brands. We have to reduce burdensome regulations. Just because you make a great product doesn’t mean you’ll be able to sell it where you want to sell it.”

Bickley: Have a Road Map for Expansion Moriarty’s Tools

“In the last three, four

years, same-store sales [in India]

are going up 30 percent.”— Sanjay Kapoor,

GeneSiS Luxury FaShion pvt. Ltd.

Ian Bickley

Michael Moriarty

Kevin Burke

Burke Talks Free Trade India at Key Juncture

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