Jones New York Seeks Overhaul as Sales Lose Momentum: Retail
Richard Dickson, president of Jones Group, is applying the same methodology he used at Mattel -- “recognizing what made the brand great” and making it “relevant for today,” he said.
“This is absolutely a brand challenge,” Dickson, 43, said in an interview in his 36th-floor Manhattan office. “We haven’t solved it yet. We are at the beginning of our journey.”
Dickson is trying to win back Jones New York’s traditional customer: 40-plus career women who decamped after Jones moved into weekend and sporty apparel. Dickson is pushing his team to concentrate on office clothes that are more fashionable yet not too trendy or impractical.
His efforts come as traditional women’s wear is losing momentum. The category has underperformed at Macy’s Inc. (M), Saks Inc. (SKS) and Nordstrom Inc. (JWN) Clothing sales to women aged 35 to 54 fell 8.8 percent to $29.3 billion in the year ended in August, while those to women 18 to 34 gained 1.6 percent to $35.7 billion, according to NPD Group Inc., a Port Washington, New York-based research firm.
Because Jones New York is a non-premium brand sold wholesale to department stores, it must pay markdown allowances to the chains to compensate them for continuous discounts, said Mary Ross Gilbert, an analyst with Imperial Capital LLC in Los Angeles. That hurts profitability, said Gilbert.
Fixing the namesake brand is part of a larger effort to turn around Jones Group as a whole. The parent is struggling because demand for its moderately priced department-store goods dropped as many post-recession consumers decided to open their wallets only for unique higher-priced merchandise.
The shares have dropped 16 percent since Dickson joined the company on Feb. 8, 2010. Liz Claiborne Inc. (LIZ), which is selling its namesake wholesale apparel brand to J.C. Penney Co., gained 56 percent in the same period. PVH Corp. which benefits from the strength of its Tommy Hilfiger and Calvin Klein brands, soared 90 percent.
Three analysts recommend buying Jones Group shares; five say “hold.”
Sidney Kimmel, who remains group chairman, founded Jones New York more than 40 years ago to fill a department-store void: office wear that was more than sportswear and less than designer apparel, Dickson says.
Struck a Chord
Jones’s affordable suits struck a chord and became widely distributed at national department store chains; Macy’s, the No. 2 chain, became Jones New York’s biggest client. The label is the biggest-selling apparel brand in the Jones Group stable, which also includes Anne Klein and Rachel Roy, and generates about a fifth of Jones Group revenue, or some $800 million, according to Lazard Capital Markets LLC.
Encouraged by Jones New York’s success, previous management teams added extensions such as Jones Signature for weekend wear and Jones Sport casual clothing. As Jones strived to compete in a wider sphere in which Ralph Lauren and Donna Karan already were ramping up, it lost focus on its signature career clothes.
Jones Group also divided its attention among many more brands and distribution channels after buying Norton McNaughton and Nine West, with its multiple labels, says Jennifer Black, founder of an eponymous research firm in Lake Oswego, Oregon. Then the modest, tailored clothes sold by Jones New York lost favor to more youthful, playful and revealing outfits.
“Jones lost its identity,” Dickson said. “When you closed your eyes and saw Jones New York, what was the image that came up? It wasn’t crystal-clear. It wasn’t as relevant as it used to be.”
Still, consumer research showed that consumers continued to admire Jones New York, Dickson says. They gave it good marks for reliability, fit and value, he said. Prices range from $69 for a sleeveless top to $378 for a pantsuit.
Dickson brought in new designers and built a light-filled studio for them to work in; the previous team had toiled in dark cubbyholes scattered about Jones Group’s Garment District headquarters in Manhattan. The old setup had discouraged collaboration between the brand’s various lines and categories.
“We had to take a deep breath and admit we have to work together,” Dickson said. “Everybody had an opinion, but no harmony.”
Designers of the career wear now coordinate with their weekend wear and accessories colleagues to make sure the pieces complement each other better. That means a $109 floral khaki, cream and gray wrap shirt from the main Collection can be worn with an $89 stretch slim pant from the Signature line and a silver or gold $79 loop muffler.
As it moves beyond sober-hued matching suit pieces, Jones New York is offering more separates like dresses and skirts that can be mixed creatively. It’s pushing “unexpected duos” with “a clever twist,” encouraging “pops of color in rich tones.” Some skirts are above the knee, some jackets cropped, some pants slimmed down.
To turn up the volume, Dickson, whose own taste runs to collar-length hair and whimsical Thom Browne plaid, added a Jones New York line from 25-year-old guest designer Wes Gordon; it will be sold exclusively at Bloomingdale’s.
The marketing seeks to honor career women. A campaign called “Empowering Your Confidence,” shot by Annie Leibovitz in New York’s Grand Central Terminal, featured 10 women in heroic poses wearing updated versions of the power suit.
‘Spoke to Me’
“That is right on,” said analyst Black, who predicts a brand comeback. “That was a message that spoke to me.”
The company sponsored Maria Shriver’s women’s conference last year. The website has a “Little Black Book of Career Advice,” where working women can upload and share their wisdom. In one post, Arianna Huffington, founder of the eponymous Web newspaper, extols the importance of perseverance.
“It’s about getting up one more time than you fall down,” she wrote.
Dickson’s strategy is showing early promise, he said. Sales of suits and suit separates have surged more than 30 percent since last fall; non-iron white shirt sales more than doubled so far this year, and online sales are up 70 percent in 2011 to date, says Dickson, who declined to provide a specific growth forecast. Brand revitalizations take time, he said, citing the turnaround at Burberry Group Plc. (BRBY)
“It took consumers six years to wake up and say, ‘Oh my god, Burberry is cool,’” he said.
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