It’s a tricky business turning around a big fashion company.
There’s the big strategic question of what the retailer or brand needs to evolve into — and then there’s a million follow-ons, from who will lead which initiative to how the plan will be communicated to employees, partners and investors.
Most often, it’s a long process. Two years count as a lightning-fast turn and, in that regard, Victoria’s Secret & Co. chief executive officer Hillary Super seems to be the exception.
Usually, CEOs have to spend a long time selling the company’s future, while mining the present for signs that that future is brighter than ever.
At Day 2 of Goldman Sachs’ annual retail conference on Tuesday, Macy’s Inc. CEO Tony Spring and Capri Holdings chief John Idol were out and about, talking about promising trends, green shoots and how their master plans are coming together.
Here, the progress update on two of fashion’s headlining turnaround projects.
Managing Macy’s
Two-and-a-half years ago, Macy’s laid out its Bold New Chapter.
The plan had the department store mainstay narrowing its focus, reimagining its best locations and hitting the accelerator at Bloomingdale’s.
“The Bold New Chapter is working,” Spring told investors at the Goldman conference. “We closed underproductive stores. We started our reimagined program. We started with 50 [doors] to make sure that we could get it right and learn, added another 75 [as well as another 75] — the result two-and-a-half years later, nine of 10 quarters, those reimagined stores have grown.”
Spring described the store program as a recipe where all the ingredients are added at the same time, increasing complexity.
“We needed better merchandising,” he said. “We needed a better merchandise presentation, storytelling. We needed to improve the fitting room experience. We needed more colleagues in our store. We added people to handbags, people to shoes, people to work in the fitting room. We needed to make sure that our density on the floor was reflective of how we wanted the customer to shop within the stores.”
“Promises made, promises kept” is a favorite theme for CEOs in the midst of a turnaround, and Spring underscored how the plan is hitting its objectives.
“The Bold New Chapter was intended to improve the quality of the customer experience,” he said. “The customer experience is far better today. The strategy was intended to accelerate the growth of our luxury brands. The luxury brands are growing and have unique positions in the marketplace. And the intent of the strategy was to improve our end-to-end operations. We’re delivering packages faster, less expensively.”
Michael Kors’ Regent Street flagship.
Courtesy of Michael Kors.
Recreating Capri
Capri Holdings — which lost some time amid the failed takeover by Tapestry Inc. — is somewhat newer to the turnaround game than Macy’s.
But it’s on the move now. Versace has been sold and Michael Kors and Jimmy Choo are getting some TLC.
Idol had a philosophical take at the conference.
“You can look across the landscape of luxury brands and they go through moments,” he said. “Their product gets off trend. And you lose the attention or the zeitgeist of the consumer. I would say very much Michael Kors was in that position some 18 plus months ago.”
The changes are starting to show — but the road ahead will still be rough.
“Between the marketing, between the product and between the experience inside the stores, we can absolutely see the tangible results are there and happening for the business,” Idol said. “I’m going to call it the early innings of our complete brand repositioning. We are laying the foundation for what is going to be future growth.”
That includes cutting back on price promotions, which boost sales, but hurt margins and consumer perception.
“This will be probably the most painful quarter for us in our full-price business,” said Idol, who detailed inventory delays during the fiscal first quarter for analysts last month. “We ended our inventories down in Michael Kors almost 27 percent during last quarter. And we have 50 percent less clearance and markdown inventory this year than we did last year.
“That’s a big step for us to be able to say to the consumer, we’re full-price and you’re not going to see as much of that other type of product from us,” he said.
A big and difficult step.
#Macys #Capri #CEOs #Talk #Turnaround #Goldman #Sachs #Conference