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JONES NET FALLS 29.4%/2 LEE’S GUCCI AGENDA/14 Women’s Wear Daily • The Retailers’ Daily Newspaper • July 29, 2005 • $2.00

▲ Carmen Electra is Max WWDFRIDAY Factor’s new U.S. face. Beauty Lights, Camera, Action NEW YORK — The world, it seems, is a stage for fragrance launches from entertainers. The latest are True Star Gold from , which is being fronted by Beyoncé Knowles, and Fusion, a scent produced by AMC that will be introduced in a story line on the long-running ABC soap “All My Children.” True Star Gold launches in December, while Fusion will make its debut in October. For more, see pages 7 and 10.

Federated’s Game Plan: Macy’s to Add 330 Units, Future of L&T Undecided By David Moin NEW YORK — Macy’s will balloon next year to 730 units that will occupy almost every major U.S. market. Federated Department Stores Inc., owner of Macy’s and Bloomingdale’s, disclosed a game plan Thursday for its $17 billion merger with May Department Stores Co. that calls for the giant retailer to convert 330 May stores to Macy’s nameplates in fall 2006. The fates of two of May’s best-known divisions, Lord & Taylor and Marshall

Y JOHN SCIULLI/WIREIMAGE Field’s, haven’t been decided, but Lord & Taylor will not be converted to Macy’s, See Macy’s, Page18 Y BRYN KENNY; ELECTRA PHOTO B ELECTRA Y BRYN KENNY; PHOTO BY JOHN AQUINO; STYLED B PHOTO BY 2 WWD, FRIDAY, JULY 29, 2005 WWD.COM Jones Profits Drop 29.4% By Vicki M. Young WWDFRIDAY Beauty NEW YORK — Jones Apparel Group Inc. on Thursday reported a 29.4 percent drop in second- GENERAL quarter profits and said it was un- Macy’s department stores will balloon to 770 units next year, occupying dertaking a strategic review of its 1 just about every major U.S. market, as a result of its parent buying May Co. infrastructure in an effort to im- prove planning and production. Jones Apparel Group reported a 29.4 percent drop in second-quarter For the three months ended 2 profits and said it was undertaking a strategic review of its infrastructure. July 2, income fell to $54.8 mil- Longtime Estée Lauder executive Peter Lichtenthal has been named global lion, or 46 cents a diluted share, 2 general manager of MAC Cosmetics, focusing on day-to-day operations. from $77.6 million, or 61 cents, in Wall Street punished Kellwood’s move to shed three divisions and cut its the same year-ago quarter. Sales earnings forecast, sending shares down $4.24 to $23.87 on the NYSE. increased by 11.8 percent to 4 $1.17 billion from $1.04 billion. BEAUTY: Tommy Hilfiger and Beyoncé Knowles are expanding their President and chief executive 7 masterbrand with True Star Gold, a women’s scent launching in December. officer Peter Boneparth, during a Mark Lee, Gucci’s new ceo, has an aggressive agenda that includes conference call with Wall Street 14 boosting sales, redesigning stores and expanding in emerging markets. analysts, said, “Some of the Newly acquired Barneys New York was a bright spot for Jones in the quarter. process changes we are acceler- than a flow issue.” footwear and accessories due to House textile-state lawmakers cast the deciding votes in pushing the ating [are] because the business The Buckingham Research changes in the department store 17 controversial Central American Free Trade Agreement over the finish line. is changing, the in which Group kept its “neutral” rating of model, Boneparth said. SUZY IS ON VACATION [the retailers] do business and Jones, saying it would remain on Jones Apparel shares declined Obituary ...... 16 [are] successful is changing.” the sidelines until it sees some by $1.41 to close at $31.09 in New Classified Advertisements...... 19 He said the company has a turnaround in the business. York Stock Exchange trading. group of businesses it is comfort- On a segment basis, the bright For the first six months, in- To e-mail reporters and editors at WWD, the address is able with, but it needs to be more spot was , which soared 71 come fell by 17.6 percent to $141.8 [email protected], using the individual’s name. efficient. “It all goes back to percent to $339.7 million from million, or $1.17 a diluted share, WOMEN’S WEAR DAILY IS A REGISTERED TRADEMARK OF FAIRCHILD PUBLICATIONS, INC. COPYRIGHT ©2005 speed,’’ Boneparth said. “How do $198.6 million. The current quar- from $172 million, or $1.34, a year FAIRCHILD PUBLICATIONS, INC. ALL RIGHTS RESERVED. PRINTED IN THE U.S.A. VOLUME 190, NO. 21. WWD (ISSN # 0149-5380) is published daily except Saturdays, Sundays and holidays, with one additional you ship goods faster? What does ter includes results from Barneys ago. Sales climbed 11.2 percent to issue in June, July and November, two additional issues in April, May, August and December, and three additional issues in that mean in terms of distribu- New York, the upscale specialty $2.5 billion from $2.25 billion. February, March, September and October by Fairchild Publications, Inc., a subsidiary of Advance Publications, Inc. PRINCIPAL OFFICE: 7 West 34th Street, New York, NY 10001. Shared Services provided by Advance Magazine Publishers Inc.: S.I. Newhouse, Jr., tion requirements?” chain Jones bought last year. Jones reduced its anticipated Chairman; Steven T. Florio, Vice Chairman; Charles H. Townsend, C.O.O.; John W. Bellando, Executive Vice-President and C.F.O.; Jill The strategic review will Jones’ wholesale businesses post- 2005 full-year revenues to be- Bright, Executive Vice-President_Human Resources; John Buese, Executive Vice-President_ Chief Information Officer; David Orlin, Senior Vice-President_Strategic Sourcing; Robert Bennis, Senior Vice-President_Real Estate; David B. Chemidlin, Senior Vice-President_General focus on Jones’ vendor opera- ed mixed results. Wholesale bet- tween $5 billion and $5.1 billion. Manager, Advance Magazine Group Shared Services Center. Periodicals postage paid at New York, NY and at additional mailing offices. tions with an expectation of con- ter apparel sales fell by 6.1 per- Projected earnings per share on Canada Post Publications Mail Agreement No. 40032712. Canadian Goods and Services Tax Registration No. 88654-9096-RM0001. Canada post return undeliverable Canadian addresses to: DPGM, 7496 Bath Road, Unit 2, Mississauga, ON L4T 1L2. POSTMASTER: solidating third-party manufac- cent to $300.6 million from $320.2 an adjusted basis, excluding re- SEND ADDRESS CHANGES TO WWD, P.O. Box 15008, North Hollywood, CA 91615-5008. FOR SUBSCRIPTIONS, ADDRESS turing; and assessment of manu- million, while wholesale moder- structuring costs and manufactur- CHANGES, ADJUSTMENTS, OR BACK ISSUE INQUIRIES: Please write to WOMEN’S WEAR DAILY, P.O. Box 15008, North Hollywood, CA 91615-5008; Call 800-289-0273; or visit www.subnow.com/wd . Four weeks is required for change of address. facturing issues such as review ate apparel sales dipped by 1.4 ing inefficiencies, are forecasted Please give both new and old address as printed on most recent label. First copy of new subscription will be mailed within four of administrative support areas percent to $306.4 million from to equal or exceed the $2.39 the weeks after receipt of order. Address all editorial, business, and production correspondence to WOMEN’S WEAR DAILY, 7 West 34th Street, New York, NY 10001. For permissions and reprint requests, please call 212-221-9595 or fax requests to 212-221- to increase efficiencies, the $310.7 million. Wholesale foot- company posted for 2004. 9195. Visit us online: www.wwd.com. To subscribe to other Fairchild magazines on the World Wide Web, visit company said in a statement. wear and accessories sales, how- Retail, particularly at Barneys www.fairchildpub.com. Occasionally, we make our subscriber list available to carefully screened companies that offer products and services that we believe would interest our readers. If you do not want to receive these offers and/or information by mail Buckingham analyst Lee ever, rose by 2.6 percent to $218.7 New York, was strong, with a and/or e-mail, please advise us at P.O. Box 15008, North Hollywood, CA 91615-5008 or call 800-289-0273. Backus, in a research note, said, million from $213.1 million. comp-store increase of 13 per- WOMEN’S WEAR DAILY IS NOT RESPONSIBLE FOR LOSS, DAMAGE, OR ANY OTHER INJURY TO UNSOLICITED MANUSCRIPTS, UNSOLICITED ART WORK (INCLUDING, BUT NOT LIMITED TO, DRAWINGS, PHOTOGRAPHS, AND “Management blamed the re- One not-so-bright note was the cent in the quarter in addition to TRANSPARENCIES), OR ANY OTHER UNSOLICITED MATERIALS. THOSE SUBMITTING MANUSCRIPTS, PHOTOGRAPHS, ART duction on department stores’ junior L.E.I. operation, which a 15.1 percent gain in the same WORK, OR OTHER MATERIALS FOR CONSIDERATION SHOULD NOT SEND ORIGINALS, UNLESS SPECIFICALLY REQUESTED TO DO SO BY WWD IN WRITING. MANUSCRIPTS, PHOTOGRAPHS, AND OTHER MATERIALS SUBMITTED MUST BE insistence on improving turns. Boneparth said required a re- quarter in 2004, said Howard ACCOMPANIED BY A SELF-ADDRESSED OVERNIGHT-DELIVERY RETURN ENVELOPE, POSTAGE PREPAID. We believe that the problems go structuring. The second half will Socol, ceo of Barneys. He added deeper than that and some of be tough because the business that the Co-op concept remains [Jones’] key brands are losing was “uncompetitive,” he said. strong, and it has a “very, very market share….We believe that The quarter was also affected strong denim business followed this is more of a product issue by reduced receipt plans for by our collection business.” Quote of the Week “I’m way too young to retire. I’m committed to serving as chairman and Lauder Exec Named MAC General Manager [ceo] at least until the end of 2006.’’ — Paul Charron, chairman and chief executive officer, By Julie Naughton of Estée Lauder International. “MAC is one of the hottest Liz Claiborne Inc. NEW YORK — Longtime Estée brands in the marketplace, with Lauder executive Peter Lichten- a dynamic, talented and vibrant thal has been named global gen- team,” Lichtenthal said in an in- eral manager of MAC Cosmetics, terview. “This job is a profes- a new position in which he will sional dream come true. In Brief focus on day-to-day operations. “MAC is practically a force of MAC Cosmetics is said to nature in our industry,” he said. ● PRADA FINANCING: Prada said it has signed a medium-term fi- have generated upward of $500 “I’m looking forward to immers- nancing agreement with four leading Italian and international million in retail sales last year. ing myself in the MAC culture banks that will provide for a five-year credit of 700 million euros, The brand is best-known for from the inside, and want to em- or $840 million at current exchange rates. The funds will be di- color cosmetics and for its sup- phasize that all of what has made vided in separate installments of euros and Japanese yen. Prada port of the professional makeup MAC great — the links with fash- said in a statement that the loan will be used “to cover the finan- artist community. ion and entertainment and with cial needs of the company and, in part, to refinance existing “He is an intuitive leader and our consumers, all that has built debt.” The credit agreement is underwritten by Banca Intesa creative guy who I feel has the in- the brand — will continue.” SpA, Calyon SA, HSBC Bank Plc and Unicredit Banca d’Impresa tellect and the sensitivity to help When the Estée Lauder SpA. The announcement comes a month after Prada signed a MAC continue its great trajecto- brand was restructured in loan agreement that provided funding for 800 million euros, or ry,’’ John Demsey, global presi- March, the parent company’s $960 million at current exchange, and helped repay a 700 million dent of both the MAC and Estée chief operating officer, Dan euro ($850 million) bond that expired in June. In May, Prada de- Lauder brands, said in an inter- Brestle, said, “Peter Lichtenthal clined to release debt figures when reporting its year-end results. view. “The MAC business is strong has led the global marketing ef- and dynamic and continues to Peter fort for the brand for four years ● TOD’S TAPS TANNENBAUM: Italian luxury leather goods com- grow. Peter is the perfect choice Lichtenthal and has been a driving force in pany Tod’s has appointed Peter Tannenbaum as chief operating to help keep that growth going.” the brand for the past 16 years.’’ officer. Tannenbaum has been with the company since 1995, most The appointment is effective marketing for the Estée Lauder At that time, Demsey pointed recently as executive vice president. He is credited with coordi- Aug. 15. An announcement could brand, a post he has held since out that Lichtenthal was the nating the wholesale strategy for Tod’s and its sport brand, Hogan, be made today by the brand’s 2001. He also served as execu- Lauder brand’s first global mar- which are both owned by Diego Della Valle, president of Tod’s parent, the Estée Lauder Cos. tive director of U.S. skin care keting director and launched its SpA, as well as helping launch the newly acquired shoe and hand- Lichtenthal, 48, will report to marketing for the Lauder brand, first global fragrance hit, Pleas- bag company Roger Vivier. Tannenbaum will oversee day-to-day Demsey. He joined the company vice president of U.S. fragrance ures, then followed up with Be- operations of Tod’s in North and South America, reporting to in 1989 and was most recently marketing for the brand and yond Paradise, which was also Claudio Castiglioni, chief executive officer of Tod’s USA. senior vice president of global vice president/general manager very successful. Driving Today’s Cosmetics with Innovation and Value

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By Ross Tucker

NEW YORK — Private investigators working for The North Face have uncovered a ring allegedly responsible for making an estimated 100,000 counterfeit jackets that brought in more than $8 million since 2002, according to the company. The North Face, a division of VF Corp., said the jackets were seized during raids on warehouse facilities in California, New Jersey and New York. In documents filed in U.S. District Court in California that have been unsealed, The North Face stated that one of its retailers in Utah was approached by an individ- ual identified as Michael Stoof about buying 13,000 jackets. The North Face hired the private investigation firm Vaudra Ltd. The investigators contacted Stoof by posing as potential buyers and requested a sample be mailed to them. The sample was found to be a counterfeit, the company said. “After a series of phone calls to Mr. Stoof, he informed me of his suspi- cion that the subject jackets were counterfeit,” the investigator said in a court filing on May 16. Stoof referred the investigator to an man identified as Steven Niman, the court papers said. When contacted, Niman confirmed that he had more than 13,000 jackets for sale and requested a $5,000 deposit to hold them. Stoof could not be reached for comment. Niman did not re- turn a call. Counterfeit goods seized during warehouse raids in California, New York According to the investigator’s court filing, after wiring the and New Jersey. $5,000 to an account registered in the name of Niman’s wife, Niman and the investigator met at a CXN Freight Systems Inc. had come from China as early as November 2002 and made warehouse in City of Industry, Calif., on May 12. A warehouse their way to New York. clerk told the investigator that CXN was holding more than 18,000 So far, The North Face said it has recovered a total of 28,122 North Face jackets. The goods were seized and uncovered a docu- jackets and restrained 24 bank accounts. ment trail that led to several other local warehouses where thousands “I’ve been doing this for 15 years and this is one of the largest busts of jackets were discovered. we’ve done,” said Roxanne Elings, an intellectual property lawyer with Days later, The North Face filed its complaint, naming Niman and others Greenberg Traurig, who is representing The North Face. “The sheer number and alleging violations on eight counts, including federal trademark counterfeiting of goods from a single product line, seizing more than 20 bank accounts — this is big.” and infringement, false designation of origin and unjust enrichment. Stoof was Elings alleged that the counterfeit ring was run by Michael Chu. He conducts busi- named in a subsequent filing. ness out of an office on West 38th Street in Manhattan, the court papers said. The scope of the case quickly expanded after seized documents revealed several David Singer, a lawyer representing Chu, denied that his client had knowledge of East Coast warehouses had received shipments. the counterfeiting. On June 6, Randall Rabenold, president of Vaudra, filed a declaration with the court “He thought he was selling overruns and irregulars,” said Singer. “He has a letter stating that the seizure of documents from one of the raids indicated that seven full truck- from the supplier that says they’re authorized to sell overruns for North Face. Our loads of counterfeit North Face goods had come through California. The raids had recov- client thought they were legitimate.” ered the equivalent of only two truckloads of goods. The documents, said Rabenold, indi- Singer said it was not yet clear that the goods were actually counterfeit. cated that 200 boxes of counterfeit goods were shipped to a warehouse in Passaic, N.J. The complaint filed by The North Face has expanded to include more than 15 Meanwhile, a raid of a New York warehouse on June 10 turned up another 1,422 companies and individuals. Preliminary injunctions have been issued against most of jackets, Rabenold said in the court papers. Seized documents showed that goods the defendants, said Elings. Kellwood Shares Sink After Firm Lowers Earnings Forecast Frederick Schmitt, vice president of they are in highly competitive niches,” By Julee Greenberg Robert C. the Sage Group, an investment banking said Harry Bernard, executive vice presi- and Karyn Monget Skinner Jr. firm in Los Angeles, said Kellwood’s de- dent and chief marketing officer at Colton NEW YORK — After announcing it would cision to shut businesses would lead to Bernard, a San Francisco-based strategic shed three underperforming divisions greater profitability. marketing firm. “This decision will help and reduce its earnings forecast, “It’s the right move for Kellwood. It’s Kellwood’s overall business to get rid of Kellwood Co. stock fell on Thursday as necessary for them to improve their prof- those that do not perform. So maybe there some industry analysts and executives it margins and this is a good place to are people out there willing to buy these questioned whether the apparel firm start.” As for the brands being disposed, businesses, but I can’t imagine why they would find buyers for the brands. he said, “They’re money-losing brands. would. Is there a store out there that sells Kellwood shares dropped 15.08 per- Kellwood needs to migrate toward brands that do not perform?” cent, or $4.24, to close at $23.87 in New brands with higher gross margins. It’s my Andrew Jassin, managing director of York Stock Exchange trading. estimate that these brands generate the the consulting firm Jassin-O’Rourke The $2.6 billion company’s decision lowest gross margins within the Group, said he believes there are buyers announced Wednesday could also put Kellwood company.” out there for some of these labels. 1,800 Kellwood employees in the U.S. Some industry consultants said “For the intimates brands, Komar and overseas out of work. Kellwood needs to focus on the type of comes to mind right away,” Jassin said. Lazard Capital Markets analyst Todd company it wants to be. “And there are any number of companies Slater downgraded the stock to “sell” on “It was a very smart, if not essential, out there willing to acquire brands — its “sagging outlook” from its previous strategic move,” said Robin Lewis of include Kellwood private label men’s there’s Jones and Claiborne, of course, but “hold” rating. He noted that Kellwood also Robin Lewis Inc., strategic consultant and wear, which primarily produces denim- also Li & Fung or Land & Sea may look at cut its earnings guidance by 40 percent on publisher of the Robin Report. “In [presi- based sportswear for retailers, and does them. But the overall question here is how shortfalls at core/new brands, such as Sag dent and chief executive officer] Bob not include the Smart Shirts division, much damage has been done to these Harbor, Calvin Klein and O Oscar. Skinner’s own words, it will allow them to makers of the Claiborne and Nautica brands? When we know that, we’ll know if As for the restructuring and shedding better focus on building a top branded ap- men’s shirts collections. The company will they will be purchased or not.” of three of 14 divisions and smaller parel company — and I might add this will also shed Kellwood Intimate Apparel, Gilbert Harrison, chairman of Financo brands, Slater wrote in a research note, also allow them to better focus on and which includes Biflex, LA Intimates and Inc., which has been retained as an advis- “Kellwood is taking impressive and nec- leverage their considerable supply chain Dotti, and Kellwood New England, which er to Kellwood to sell the brands, said he essary steps in streamlining its opera- skills more efficiently and effectively.” has the David Brooks, Pink Poodle and has already seen some action. “We’ve tions, but the fruits of these efforts could As for the likelihood of the brands being Pink Inc. brands. It also includes the Bill had calls from over 15 strategic buyers take years to unfold.” sold, Lewis added, “My concern would be, Burns and Northern Isles women’s licens- today,” he said, adding they are interest- The analyst said there could also be fur- and their great challenge will be, for the es, which will be discontinued. ed in Biflex intimate apparel, as well as ther risk to revenue in 2006, as department very same reason they’re shedding these In addition, Kellwood will restructure the women’s brands such as Pink Poodle store consolidation progresses into a more businesses there will be correspondingly its Oakland operation by eliminating, and David Brooks. “The objective is to advanced stage. He cited Federated very few suitors interested in buying them.” and perhaps selling the Jax and Beliza move as rapidly as possible to achieve Department Stores’ acquisition of May Within the divisions that Kellwood will labels to sharpen its focus on the Koret Kellwood’s objectives,” said Harrison. Department Stores and the closure or sale shed, it’s the Kellwood-owned brands brand. Kellwood will continue to ship its Both Jones Apparel Group and Liz of 68 doors, as well as the sale of Saks Inc.’s that are for sale. Several licensing agree- licensed Dockers tops through December Claiborne Inc. declined comment on northern department store group — Carson ments will be discontinued, while others 2005, but will not be shipping after the whether they are interested in purchas- Pirie Scott, Boston Stores and Herberger’s such as Izod sleepwear would be includ- holiday and resort seasons. ing any of these Kellwood brands. — as another event that could “result in fur- ed in a potential sale of LA Intimates. “The divisions that are being dismissed — With contributions from ther unit closings and supplier dislocation.” The divisions that will be discontinued are because they don’t perform or because Vicki M. Young THE 92% SOLUTION

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The Doctor Is In at Kiehl’s Einstein Lip Theory Cooling Relief and Hydrating Cream. ▲

NEW YORK — Kiehl’s Since 1851 is looking to both the past and the future with its latest skin care lineup. Kiehl’s Dermatologist Solutions, a new three-item collection that will launch in October, honors the brand’s beginnings as an apothecary on Third Avenue, and reaches into the future with technology the brand says is first-to-market. Kiehl’s, which has collaborated with Harvard NOAH GREENBERG PHOTO BY Medical School researchers for nearly a decade, also announced at a skin care symposium it held this week GEORGE CHINSEE PHOTO BY that it was awarding the Kiehl’s Postdoctoral Fellowship Award to Adrian Salic, assistant professor of cell biology at Harvard Medical Ben Einstein Putting School. Salic is also a member of the brand’s Dermatology Advisory Panel, which comprises nine scientific experts who specialize in various skin care areas, many at lead- New Theory to Test ing universities. The panel consulted on this product col- NEW YORK — Ben Einstein, one of the original co- lection, and Philip Clough, pres- founders of , thinks lip care doesn’t ident of Kiehl’s Since 1851, have to be expensive to be luxurious and effective, noted that future products could and he’s hoping to prove that with his new line of come from the collaboration. Philip Clough at the brand’s lip products, Einstein Lip Theory. The line’s key technology, said skin care symposium. After selling Hard Candy with then-girlfriend Clough, is a stabilized version of vi- Dineh Mohajer (who recently launched her own line tamin C found in the line’s professor of dermatology at the of cosmetics, Goldie) to LVMH Moët Hennessy Louis Powerful-Strength Line-Reducing University of Pennsylvania, the Vuitton in 2001, Einstein (no relation to the famed Concentrate. “While vitamin C is not stable vitamin C in the product scientist, for the record) began working as a beauty a new ingredient for skin care tech- is equal to or better than consultant in Japan. It was during this stint when he nology, being able to provide a stabi- retinol in several areas and realized that price and quality didn’t necessarily go lized version of it is,” said Clough. better tolerated overall. hand in hand when it comes to beauty products. “I Because vitamin C is sensitive to Powerful-Strength Line- don’t want to debunk the cosmetics industry by say- light, temperature variations, heavy Reducing Concentrate will ing the ingredients in the most expensive brands are metals and oxygens, the ingredient retail for $55 for 1.7 oz. a lot of times very similar in performance to those in easily degrades. Kiehl’s concocted an Epidermal Re-Texturizing the less expensive ones,” he said. “But a lot of times, anhydrous formula with 10.5 percent Micro-Dermabrasion, which it’s like the emperor’s new clothes — you rub in [the pure vitamin C in a stabilizing base. Clough calls a “skin polish- product and] it just disappears.” And that’s critical, said Marie- ing” cream, includes di- Einstein said he stumbled across the idea of pair- Pierre Stark-Flora, vice president of atomatious earth, willow ing affordable pricing with high-end ingredients when product development for Kiehl’s, be- herb and aluminum oxide, he found a bin of countless lip products in his moth- cause the more stable the vitamin C, which together are said to er’s bathroom. He realized that not only were there the more intense benefits that it de- The Dermatologist Solutions line. reduce the appearance of too many products out there on the market, but obvi- livers. “When applied topically, vita- large pores and lines ously there weren’t enough that were actually effec- min C has been shown to make skin look radiant and and smooths the skin. “The ingredients, particularly the tive. “I opened up the box and there were no quality to diminish the appearance of wrinkles and lines,” aluminum oxide and ‘diatomatious earth’ — micronized products in there,” he said. “My mom had everything she noted, adding that this product was tested against shells — thoroughly, but gently, remove dead skin cells,” from low-end balms to a La Mer lip product in the $45 retinol in a split-face, double-blind clinical study. “No explained Stark-Flora. A 2.5-oz. tube will retail for $40. range. I wanted to take the high-end cream’s perform- product has had an effect like this on marionette Centella Recovery Skin-Salve, the third product in ance and make it into an affordable lip product.” lines and crow’s feet,” she added. the range, is designed to soothe and moisturize skin, The line, which is currently sold in a total of In fact, according to James Leyden, a member of particularly skin irritated due to at-home microder- 1,000 doors, including select Sephoras, Apothia at Kiehl’s Dermatology Advisory panel and an emeritus mabrasion procedures. The key ingredient is centella asiatica, a tropical plant extract said to soothe skin; the formula also includes It’s about creating a brand honey, aloe vera and vitamin E. A 2.5-oz. “ tube will retail for $42. identity that will stand the While the team was reluctant to put an age range on the products — particularly be- test of time. cause today’s consumers are increasingly ” sophisticated about skin care, said Stark- — Ben Einstein Flora — she said that the core customer Fred Segal and Ulta, will roll out to all Sports Clubs would likely be thirtysomething or older. locations (including New York, Los Angeles and Dermatologist Solutions will be available Boston) next month. It currently features two prod- in the brand’s full distribution, currently 150 ucts: a Hydrating Cream and a Cooling Relief balm, specialty store accounts and 16 freestanding which retail for $6 each. The Hydrating Cream, Kiehl’s doors. To accompany the launch, which comes in portable pink-and-white packaging noted Clough, the brand — always known for and features the brand’s catchy first aid-inspired its generous sampling — will undertake its “cross” logo on its cap, contains vitamins A, C and biggest sampling campaign to date. “We’re E, while the Cooling Relief balm, available in simi- targeting 500,000 samples of this collection,” lar red-and-white packaging, features cocoa butter he noted. The brand traditionally does not in addition to vitamins A and E. advertise nationally. Educating salespeople While Einstein declined to comment on sales fig- as well as consumers is a goal for Clough ures, industry sources expect the line to do at least $1 and Stark-Flora, who promise an extensive million in first-year retail sales. And Einstein said he training program. “We want our people to already is working on expanding the line, with plans have special qualifications,” said Clough. to launch Hydrastick, a $16 stick formula Although neither executive would comment with “antiaging properties,” this fall. “[Hydrastick] on sales projections, industry sources estimat- has a very light formula — it doesn’t mess up what ed that the collection would do upward of $5 you already have on your face,” he said. million at retail in its first year on counter. In terms of future launches, Einstein said he’s in “Our aim was to produce a line which no rush. “If I played you 25 songs that are really great, would deliver extraordinary results in a by the 10th one, it’s like, ‘OK, you do really good music, safe way,” said Clough. “We wanted, also, to but can I listen to the rest later?’ ” he said. “It’s about make sure that this line met a real and creating a brand identity that will stand the test of voiced need for our consumers — to bring time — it’s about creating solid products and making something new to the party. I’m pleased to sure each one really blows away the competition.” say that we have accomplished this.” — Bryn Kenny — Julie Naughton WWD, FRIDAY, JULY 29, 2005 7

WWD.COM Hilfiger Goes for the Gold With Beyoncé By Julie Naughton

NEW YORK — Tommy Hilfiger and Beyoncé Knowles have gold in their sights. The duo are expanding the Tommy Hilfiger Toiletries True Star masterbrand — which already includes a men’s and a women’s scent — with True Star Gold, a new women’s scent that will launch in December. During an exclusive phone interview with WWD from a North Carolina stop on her Destiny Fulfilled tour, the multihyphenate Knowles — singer, actress, apparel designer and fashionista, just to name a few — proved that she is remarkably down- to-earth about her fame. “I grew up around sewing machines,” Knowles said with a laugh, alluding to the apparel line she is creating with her mother, , her longtime stylist. The line, House of Déreon, is named for Tina’s late mother, Agnes Déreon. “I’ve been surrounded by fashion and glamour my whole life, so it feels natural to do the fash- ion and the fragrances.” Knowles said that she sees the original True Star fragrance as “a private per- formance, sensual and soft,” and True Star Gold as “a reflection of me on stage — it’s a sexy, confident fragrance.” That’s an analogy that Hilfiger completely agrees with. “This fragrance cele- brates the talent and the brilliance of Beyoncé as a superstar,” said Hilfiger. “She’s really a true star — she’s talented, beautiful, intelligent and charming — not to men- tion down-to-earth. And this fragrance is about glamour, beauty and sexiness — which is a feel we haven’t explored yet with this brand and Beyoncé.” The ad, shot by Mario Testino. Not only that, True Star bridges the gap between the designer and celebrity gen- res, noted Fabrice Weber, president of the Aramis and Designer Fragrances division. The brand plans national print advertising, featuring Knowles and shot by Mario “This brand is an evolution of Tommy’s franchise, and music has always played a Testino. The first ads will drop in November, although the bulk of the print will ap- major part in that,” Weber said, adding that Knowles’ “high profile and multifaceted pear in December fashion, beauty and lifestyle magazines. “Mario makes the most talents” give the brand a strong platform on which to build. beautiful women in the world look even more beautiful,” said Hilfiger. True Star Gold is a contemporary, rich floral, said Raymond Matts, vice president The brand is also aggressively sampling the fragrance, with upward of 40 million of corporate fragrance development worldwide, Aramis and Designer Fragrances, scented impressions targeted, said Carol Russo, senior vice president of sales and who created the scent in cooperation with International Flavors and Fragrances. “I marketing for Aramis and Designer Fragrances. In addition to traditional sampling was inspired by Tommy’s home in Mustique,” said Matts, who visited Hilfiger’s vaca- vehicles such as vials on card and scented strips, the brand will add a “fun element tion home shortly before beginning work on True Star Gold. “Soon after my arrival, at the counter” with rhinestone tattoos, said Russo. As well, gifts with purchase also Tommy had a new sisal rug installed, and along with lilies he had in the room, it cre- are planned at holiday, including one of a Knowles poster packaged with the scent. ated an inspiring, unique scent. This aroma became the heart of the fragrance.” Robin Mason, vice president of Aramis and Designer Fragrances, said Internet The juice has top notes of green watery elements of Provence melon, paired with initiatives will play a larger role in True Star Gold’s launch than in past projects, as golden kiwi and hints of red current; a heart of pumpkin flower combined with a well. The division is working with Knowles’ and fan club Web site to soft floral nuance that includes the wetness of linden blossom and the softness of maximize awareness. Microsites also are being considered, she noted. golden pollen, and a drydown of creamy milk notes paired with raspberry, honey, Knowles will make an appearance at a press event being held at her Destiny’s sisal, essence of lily and tulip wood. Child concert at Madison Square Garden tonight, promoting the fragrance. Eaux de toilette in two sizes — 30 ml. for $29.50 and 75 ml. for $48 — will be offered Looking past her fragrance projects, Knowles noted that she and her mother are in the initial rollout. In spring 2006, two ancillaries, the 200-ml. Go Gold Shimmering planning a runway show for their ready-to-wear collection this spring and are Body for $24 and the 30-ml. Good as Gold Shimmer Stick, $24, will be added. launching a denim line in October. The fragrance’s bottle is a recolored version of the original True Star for Women As well, the House of Déreon has designed all of the costumes on the Destiny’s bottle. Where the original was a pale blue capped with silver, the new scent has a Child tour. And over years of touring, both Knowleses have learned what works: “It hot pink bottle topped with gold. all has to be breakaway-able,” Beyoncé said. “We have something like 10 costume Weber felt particularly strongly about including a 30-ml. version of the juice, as it changes each night, and you learn quickly what works on stage and what doesn’t.” provides an entry-level price point for the scent’s target consumer. “These are con- Has she ever had, um, any wardrobe malfunctions? “Between snaps and zippers, sumers who aren’t currently shopping in department stores,” he said of the 15- to 25- I’ve had all of it sort of go wrong at one point or another, but thankfully, not so any- year-olds who are expected to make up a significant percentage of the fragrance’s one could see!” she said with an infectious laugh. sales. “This gives them an accessible price point to do so.” In November, Knowles will begin rehearsing for a big-screen version of “Dream- While none of the executives would discuss sales projections or advertising girls,” in which she’s playing the role of Deena Jones. “It’s been my dream to do a mu- spending, industry sources estimated that True Star Gold would do between $20 mil- sical for so long,” she said, adding that she is excited about the opportunity to play lion and $25 million at retail in its first year on counter, and that about $10 million the character from her late teens to her early 30s. would be spent on advertising and promotion. And there’s another benefit, too: “The fashion in the Sixties was incredible!” Group Sales Up 9.3% Second-Quarter Sales 7.5% TOKYO — Shiseido Group announced a 9.3 percent increase in sales for the first — Groupe Clarins reported Thursday that its second-quarter sales rose 7.5 quarter compared with a year ago. percent at average exchange to reach 235.5 million euros, or $286 million. For the three-month period ended June 30, the Japanese cosmetics group an- At constant exchange, sales would have risen 8.8 percent. nounced net profits of $8.8 million (982 million yen) against net losses of $59 mil- For the half ended June 30, the company’s sales grew 6.3 percent at average ex- lion (6.6 billion yen) for the same period a year ago. The Group showed net losses change to 460.6 million euros, or $559.5 million. At constant exchange, sales would of $79.1 million (8.9 billion yen) for the fiscal year ended March 31. Figures are on have increased 7.7 percent. a consolidated basis and were converted at current exchange rates. Clarins said its Perfume Division posted growth of 25 percent at constant exchange Sales increased to $1.4 billion (157.5 billion yen) while income from operations to 172.7 million euros, or $209.8 million. On a like-for-like basis it would have risen 27.5 was $94.9 million (10.6 billion yen), compared with operating losses of $6.9 million percent. Clarins explained the sales hike was due to the introduction of Clarins’ Par (778 million yen) a year ago, reflecting the gross profit increase from sales growth, Amour fragrance duo, Miss Me, Stella Cadente’s debut scent, plus the ongoing success in addition to a decrease in domestic personnel expenses. Sales from cosmetics of perennial bestsellers Angel by Thierry Mugler and Chrome by Azzaro. that made up 79.3 percent of entire sales increased 7.1 percent from a year ago. Clarins’ Beauty Division, which includes the firm’s signature treatment brand, According to Shiseido, contributing factors to the increases included a revital- posted sales that dipped 2.5 percent at average exchange to 287.9 million euros, or ized Japanese economy and increases in capital investments. As well, Shiseido $349.7 million. At constant exchange, they were down 1.6 percent. named Shinzo Maeda as the company’s new president, chief executive officer and In the half by region, sales increased 1.9 percent in Europe, 8.3 percent in North representative director, and initiated a new three-year plan aimed at maximizing America, 22.6 percent in Asia and 20 percent in other countries. On a like-for-like growth potential and improving profitability. basis they rose 2.3 percent, 12.3 percent, 23.4 percent and 23.4 percent, respectively. According to the company, domestic and international sales were robust, par- In the second half of this year, Clarins expects to introduce a new advertising ticularly in China. Domestic sales rose 7.4 percent to $1 billion (116.9 billion yen) campaign for its namesake brand and reformulate its Extra Firming treatment line. and sales in the Americas were up 3.9 percent to $108 million (12.1 billion yen). It is also set to introduce Alien, a new Mugler women’s scent, plus a reworked ver- Sales in Europe rose 5.8 percent to $195 million (21.8 billion yen) and sales from sion of the Azzaro Pour Homme men’s fragrance, which will be called Onyx in the the Asia-Oceania region jumped 26.4 percent to $125.4 million (14 billion yen). Americas and Silver Black in Europe. Clarins expects that its operating margin in The percentage of overseas sales against consolidated net sales was 28.8 percent. the second half should be about on a par with that of the first half. For the fiscal year ending March 31, 2006, Shiseido projects net income of Reiterating its estimate announced earlier this year, Clarins confirmed it is bank- $120.5 million (13.5 billion yen) and net sales of $5.9 billion (660 billion yen). ing on sales of 1 billion euros, or $1.12 billion, for 2005. That would mean a 7 percent — Koji Hirano increase in year-on-year turnover at constant exchange. — Brid Costello 8 WWD, FRIDAY, JULY 29, 2005

The Beauty Report WWD.COM Old Navy to Enter

care,” noted Clark. Kiss My By Molly Prior Select items from Kiss My Face’s OnBody Face’s natural bent bumps up collection for Old Navy. NEW YORK — Old Navy will sail into the personal care the kitsch factor for the retail- business this fall with Kiss My Face. Old Navy’s part- er’s core customers — young fitting the display with prod- nership with the niche natural products company adults, moms in particular, and uct testers. Hart, known marks the latest move by the retailer’s parent compa- teenagers. unofficially at Old Navy as ny, Gap Inc., to recruit outside beauty firms to develop “When we were approached “the vice president of cool,” its personal care business. by Old Navy to create this line, it will assume the newly creat- Last week, Old Navy’s sister divisions, Gap and made perfect sense,” said Bob ed position Aug. 8. His past Banana Republic, inked an exclusive agreement with MacLeod, co-founder and co- experience includes a post at Inter Parfums to design and manufacture fragrance owner of Kiss My Face. “We both The Studio at Fred Segal. and personal care products under the two brand share the same goals and we try to Old Navy expects to roll names. Previously, Gap Inc. had developed its person- achieve them with honesty, humor out the collection chainwide al care businesses in-house. and style.” by late October. The OnBody “Personal care products are a natural extension for Old Navy dabbled in the beauty assortment will include four us,” said Old Navy’s executive vice president of mer- arena in the late Nineties, intro- fragrance collections, namely chandising, Sheryl Clark, echoing a statement last ducing a smattering of items, such Green Tea & Mint, White week from Gap Inc. chief executive officer and presi- as body care, and nail lac- Chocolate & Orange, Pear & dent Paul Pressler, referring to the Inter Parfums deal. quers, under the Old Navy White Tea and Lavender & Clark continued, “They are a great way to add fun to moniker. After inconsistent mer- Sandalwood. Each scent collec- the store, pump up innovation and extend our brand.” chandising and sales, Old Navy tion includes a body moisturiz- Under the terms of its partnership with Old Navy, exited the category, noted industry er, shower gel, body scrub, self- Kiss My Face has developed a co-branded body care col- consultant Allan Mottus. foaming hand soap, soy candle, lection called OnBody with the tag line, “Obsessively “Now, we are really hooked into bar soap and . The line’s Natural by Kiss My Face.” The line’s bright green pack- what the customer wants,” said price points range from a $2 lip aging, replete with an illustration of blades of grass, Clark, noting that the principal les- balm to $10 for a soy candle. Six overshadows the Old Navy logo, which is found in the son learned from the retailer’s gift sets also will be available,

lower right corner. Clark said the two companies worked first beauty endeavor was to align JOHN AQUINO PHOTO BY and will range from the $5 Lip together on mapping out a branding strategy and deter- with an expert. Balm Trio to the $25 Daily mining which brand ought to take center stage. In the Old Navy first approached Kiss My Face with the Therapy Set, a kit that includes a end, explained Clark, because Old Navy had sought the concept in late October. The company, which began foaming soap, moisturizer, body scrub beauty firm for its expertise in personal care, the com- selling homemade vegetable-based soap from the back and shower gel. pany decided to magnify the Kiss My Face brand. of a Volkswagen in 1981, currently sells its 200 products Old Navy will promote OnBody to its customers “The brand gives Old Navy legitimacy in personal in 10,000 doors globally. While the firm would not com- through its circular, bag-stuffing coupon program, in- ment on sales, industry sources estimate the company’s store radio and direct-mail efforts. To heighten aware- sales for 2005 will near $75 million, a 27 percent ness going into the holiday selling season, between increase over last year. Thanksgiving and Christmas Old Navy will dispatch a Old Navy’s 850 stores will significantly pad Kiss My dedicated salesperson to the display each Saturday to Face’s store distribution. The big win for the privately promote sampling and trial. held firm is that the deal will place Kiss My Face in Neither company would comment on sales, but heavily trafficked retail outlets without any surround- industry sources expect OnBody to generate $25 mil- ing competition, noted Herbie Calves, director of mar- lion in first-year retail sales. keting for Kiss My Face. Kiss My Face, which sells products across nearly all Old Navy will merchandise the OnBody collection on personal care categories, from toothpaste to hair care, stand-alone display units, some 8 feet by 8 feet. They will already is churning out ideas for spring and summer be located at the store’s front entrance, behind the retail- collections, as well. er’s “Item of the Week” display. In locations that also “It’s still intriguing to us that a company as large as include maternity sections, Old Navy may opt for a second Old Navy was innovative enough to partner with a com- OnBody display. While the details of the unit have not pany as small as Kiss My Face,” said MacLeod. “It’s a PHOTO BY STEVE EICHNER PHOTO BY Bob MacLeod and Steve Byckiewicz of Kiss My Face with Jane been finalized, Clark noted that Old Navy’s newly hired great thing for the natural products industry. It will Elam of Old Navy in the retailer’s NYC showroom. head of nonapparel design, Shayne Hart, insisted on out- bring mass market consumers to the category.” Inks Deal With Carmen Electra Avon’s Salma Hayek NEW YORK — The quickened pace to add Flexes Celeb Muscle celebrities to beauty companies’ rosters of Carmen Electra spokesmodels continues, the latest move being NEW YORK — Avon spokeswoman Salma Hayek spent two Max Factor’s signing of Carmen Electra as the days meeting with politicians last week, leveraging her face of the P&G cosmetics line in the U.S. Max megawatt star power to help stamp out domestic violence. Factor, a brand that was founded almost 100 years Through her affiliation with Avon, Hayek has partnered ago and immediately linked to Hollywood’s most with the Avon on its new Speak Out Against beautiful faces, developed the celebrity endorsement Domestic Violence program. concept, beginning with Clara Bow in the Twenties. On July 19, Hayek spent the day in Washington testify- “Carmen embodies the glamour and spirit of ing before the Senate Judiciary Committee on the impor- the brand and will speak to our trend-conscious tance of renewing and expanding the 1994 Violence consumer target in a dynamic way,” stated Anne Against Women Act, which is due to expire in September. Martin, vice president of Global Cosmetics and Earlier this year, Senator Joe Biden (D.-Del.), Senator Beauty Marketing, Procter & Gamble, in a release. Arlen Specter (R-P.) and Orrin Hatch (R-Utah), coau- Electra, whom industry sources estimate will thored the proposed new version of the act, The Violence earn as much as $1 million for her partnership Against Women Act of 2005, which would provide $795 with P&G’s makeup brand, will be featured in million a year to fund state and federal programs for future TV, print and public relations efforts. The training, outreach and education to assist victims. The stunner’s résumé is impressive, featuring a mix act also would stiffen penalties for repeat abusers. of movie, TV and stage experience. Currently, The following day, on July 20, Hayek traveled here Electra is filming “Cheaper by the Dozen 2” for to join Mayor Michael Bloomberg and Avon 20th Century Fox, due out next year. Upcoming Foundation president Kathleen Walas, at the opening films include “Dirty Love,” starring Jenny of the city’s first Family Justice Center, a haven and McCarthy, which premiered at Sundance 2005, support center for victims of domestic violence. The and “Searching for Bobby De Niro,” directed by Brooklyn-based center is expected to aid an estimated Paul Borghese. Last year, Electra released a 7,000 adults and 14,000 children each year, and is the DVD series, “Aerobic Striptease.” She has also first of 15 centers to open nationwide as part of a U.S. formed her own dance troupe ensemble called Department of Justice initiative. The Avon Foundation the “Bombshells.” is a member of the center’s Founders’ Circle of donors. — Andrea Nagel — M.P.

10 WWD, FRIDAY, JULY 29, 2005

The Beauty Report WWD.COM Fusion Puts New Spin on Reality TV

NEW YORK — Many of us feel our lives That’s the back story. Here’s my day group accustomed to a company promot- are like a soap opera. On Monday, mine on the set. ing its newest launch. Care was taken to really was. Critical Mass Arriving at the “All My Children” stu- replicate a real event — right down to To herald the debut of All My dios in Manhattan, my fellow editors sparkling goodie bags we received as we Children Fusion, a new mass market By Faye Brookman and I are swept into wardrobe where left the set. We even had notebooks, al- fragrance, ABC invited a cadre of beau- the outfits we brought with us were as- though many of us admitted we never ty editors to play themselves on an sessed. Mine passed with one small take notes during a presentation. All of episode of the famous soap watched by The Enchantment fragrance launched change — the addition of some Pine us enthusiastically nodded and giggled as more than 1.4 million a week. on “All My Children” and rolled out ex- Valley (the fictional town setting for “All “Simone” told us about the fascinating The premise was that we were at- clusively at Wal-Mart Stores last fall, My Children”) approved earrings — and launch — we were so carried away, we tending a press party hosted by Simone bringing much-needed drama to mass I was off to makeup and hair. wanted to ask her sales projections. Torres (Terry Ivens, offscreen), the head market scent sales. Enchantment quickly It may come as a surprise to those We shot our scene and our moment of of publicity for Fusion Cosmetics. rose to be among the top sellers at Wal- who haven’t seen most beauty editors, glory was over within 10 minutes. I’m not For those who aren’t familiar with Mart. Fusion is the second scent to get a but few wear much makeup (and most sure you’ll see me (Aug. 24, 1 p.m., ABC, daytime TV, Fusion was founded by starring role in the plot, along with place- don’t need to). Makeup artist Sheri green skirt), but I was there taking real Kendall Slater (Alicia Minshew) and ment at Wal-Mart and other chain retail- Kornhaber deftly made me up hiding notes about a fragrance that is uniquely Greenlee Lavery (Rebecca Budig) to rival ers. Fusion, aimed at a younger customer years of wrinkles accrued from too being launched on the show and in the Erica Kane’s (Susan Lucci) Enchantment than Enchantment, will hit shelves this much sun exposure. Her makeup of real-life theater of retail. Co. Fusion and Enchantment — just like October. Industry sources expect sales choice? “I can work with anything,” she “You are going to like this one even real life — were subsequently merged. could top $15 million in the first year. said, but mostly she used Nars, better,” said a stagehand, showing that Prescriptives and , while my the entire staff is excited about the proj- neighbor was also adorned with Bobbi ect. “It is more hip than Enchantment.” Brown. (Note to Max Factor: Why not Fusion is definitely aimed at a savvi- ship these artists some products to show er consumer. The scent has top notes of them mass can compete with class?) apple, mandarin and orange, followed Next, off to hair, where you could land by middle notes of freesia, peony, jas- an airplane on the strip made by my dark mine and honeysuckle. The finale: base roots. I was quickly shown a crisscross notes of sandalwood, amber and musk. part that hides at least some of the mousy The fragrance is from AMC Fragrances, brown. Salon products abounded on the which also produced Enchantment. counters including Matrix, Bumble and There is a 0.5-oz. eau de toilette bumble and Kérastase. spray retailing for $12; a 1-oz. edt for Anyone who has ever participated in $18.50; a Fusion Shimmer Fragrance any type of television or video produc- Stick, a glide-on solid fragrance stick, tion can relate to the next step — wait- for $12, and a first-to-mass market lip ing. Other scenes were being shot and gloss and edt Roll-On Duet for $12. we all had to await our five minutes of Ancillary products include a 7.5-oz. fame. Appetizers were quickly brought shimmering body lotion for $12 and a to us, but we were afraid of food in our Shimmering Body Fragrance in an 8-oz. teeth and passed on many of the delica- spray for $12. Fusion is riding high on cies. Several of the actors were gracious the current wave of celebrity scents hit- enough to come in and chat and show ting mass as well as the loyal following excitement about the fragrance launch. of “All My Children” devotees. “Can’t Finally, our big moment. The group you take me with you?” pleaded a was moved onto the set, given final neighbor. “I’ve watched that show since beauty tune-ups and the shots were high school,” begged another. blocked. The sets are astoundingly tiny Embedding the launch in the plot is a — a bed that would fit a 10-year-old, a shrewd device to build attention. window sill suited for Thumbelina. When the camera lights went off, the Even the actresses are tiny. set crew quickly whipped out the true We were given our motivation — we’re reason we all go to press events — a PHOTO BY STEVE FENN/ABC PHOTO BY “All My Children” character Simone Torres (played by Terry Ivens) introduces beauty editors to hearing about the exciting launch from Fusion-inspired cocktail called Fusion- the Fusion fragrance. The episode will air Aug. 24. Fusion. That should be easy enough for a tini. And that’s a wrap.

An H\E bronzer with brush Iredale Introduces Makeup Range for Men and lip balm. NEW YORK — With a new line called H\E, Iredale H\E also includes an applicator brush that’s Mineral Cosmetics Ltd. is the latest beauty brand to designed to resemble an old-fashioned men’s market men’s makeup. brush, a lip balm, a microfiber wash glove and a $58 kit While men’s facial and even eye-treat- that includes the full eight-item line, which ranges in ment products — billed by beauty marketers as exten- price from $12 for the lip balm to $42 for each Bronzer. sions of the shaving regimen — have developed a con- Each H\E matte-finish Bronzer, which doubles as a sumer following in recent years, suffice it to say the , is billed as a water-resistant “dry” sunscreen men’s makeup arena is quite a sparse playing field. designed to “make the skin look better and [to] not look Estée Lauder’s Aramis brand took a stab at the cat- like there’s anything on the skin,” said Theresa Robison, egory when it launched Surface, an 11- director of business development for item range of , a bronzer and Iredale Mineral Cosmetics. H\E products skin care items with cosmetic benefits feature titanium dioxide, a sun block and line is now carried in about 100 doors. Robison projects that was introduced in 2000 but is no anti-inflammatory ingredient said to help H\E could reach 30 percent of Iredale’s distribution longer on the market. Mass market brand address acne, rosacea and redness; zinc base by yearend. Iredale products are carried in 23 King of Shaves introduced XCD, a five- oxide for its antimicrobial benefits — to countries and, aside from the U.S., Canada, the U.K. item line featuring a mattifier, a self-tan- help prevent the spread of acne — and and Italy are among the brand’s largest markets. ning facial moisturizer and a tinted mois- pomegranate extract, an antioxidant. “Men’s is a growth opportunity,” said Robison, who turizer, in 2003. And Jean Paul Gaultier The Iredale brand, a business that is speculated that H\E could open new channels of distri- launched with great fanfare Le Male Tout said to generate in excess of $20 million at bution for Iredale, such as men’s apothecaries, grooming Beau Tout Propre, a dozen items includ- retail worldwide, features about 250 prod- shops and male-oriented spas. Iredale only sells her ing illuminator cream, a mattifyer and an ucts, including lip colors, foundations, products to professional outlets. Robison also sees H\E as eye pencil, in 2003. The designer subsequently concealers, blushes and eye shadows. Sources esti- a potential avenue into the men’s skin care arena — expanded the range with new products last year. mate H\E could account for about 20 percent of the Iredale does not currently market skin care — with the Now, H\E, an offshoot of the 11-year-old color cos- company’s sales, or more than $4 million in retail shaving category serving as a possible entry point. metics business founded by former casting agent Jane sales volume, within its first year on the market. Future extensions to the H\E collection could Iredale, features five shades of mineral-based, SPF 18 Four weeks after H\E was launched within Iredale’s include a brow grooming gel and darker shades of the pressed powder foundations, called Bronzers — or distribution network of 3,000 spas and dermatologists’ existing Bronzer, according to Robison. “bases,” as the U.K. native likes to say. and cosmetics surgeons’ offices in the U.S., the men’s — Matthew W. Evans WWD, FRIDAY, JULY 29, 2005 11

The HBA Report WWD.COM Cosmoprof Makes Business the Focus By Andrea Nagel attendees on the various packaging, ingredients and marketing rules and regulations in interna- LAS VEGAS — Mind-blowing rave music blasting tional markets. “People need to know the impedi- through a third-tier sound system wasn’t heard ments of marketing abroad before they sign on for miles, if at all, at this year’s Cosmoprof North the dotted line,” said Vincent Gallon, market ac- America, held at the Mandalay Bay Convention cess Internet director for SoGeCos France, a re- Center here July 24-26. That’s because in its gional arm of SoGeCos, Cosmoprof ’s organizer. third effort in the U.S., some changes were made Laura Zaccagnini, general director of that acknowledge the show’s international busi- SoGeCos, said that despite the absence of pavil- ness clientele. As a result, it was goodbye to the ion E, there were 50 more exhibitors this year; dance moves, 100-mile-per-hour haircuts and attendance remained constant at 20,000. Next spandex usually seen in pavilion E on the Looks year’s plans include some tweaking of the show’s Mainstage, where the industry’s hottest hairstyl- very successful Wellness Summit, which has to ists have in years past launched their interpreta- date invited such notable experts as Barry Sears tion for the season’s trends. to discuss lifestyle tips. Next year the Summit “It is much more civilized this year, I have to will be more business focused too, with educa- say. I can hear myself speak,” said Guita Dovas tional seminars discussing topics such as how of Oloff Beauty, maker of the Barex Italiana and cuisine can enhance a spa’s atmosphere and Aeto hair care lines. overall sales. Instead, a business-to-business approach took Guita Dovas at the Barex Italiana booth at Cosmoprof. Next year’s show will remain in Las Vegas at center stage, where more than 650 spa, wellness, cosmetics, packaging, raw mate- the Mandalay Bay Convention Center, Zaccagnini said, and is planned to be held rial and hair care exhibitors met with international buyers and distributors to dis- July 16-18. While pleased that the U.S. show has finally developed a real personal- cuss their expansion potential. To help these industry leaders understand the ins ity, Zaccagnini said there are still untapped markets. In 2006 she will further ex- and outs of exporting and importing laws abroad, a packaging club was set up on plore entering the trade show into mainland China, a region she said is ripe for a the trade show floor, complete with advisors and computers devoted to educating beauty trade show such as this.

FIRMLY PLANTED: Plantogen, straight from New Zealand, is a can be submerged in water. Tools will also have two-minute streamlined product line of fewer than 30 items that uses timers and a high-low setting. manuka honey as one of its star ingredients. The medical- SNIPPETS grade sweet stuff helps cure wounds, psoriasis and burns, LOVE YOURSELF: , which means love in Hebrew, is according to the company, and is available in Plantogen’s face launching three new items to bow at Nordstrom beginning in at Cosmoprof masks, body scrubs, moisturizers and firming . Spas are October. There’s a Foot Cream, a Lightening Hand Cream stocking the line, which is tested in batches to make sure and a Cuticle Cream, which will be packaged in a kit to LOST IN SPACE: U.K. makeup artist Glauca Rossi is looking to each contains the appropriate amount of active honey. retail for $28.50 — usually a $33.50 value. The kits will find a home for her space-themed color appear alongside other technologically advanced products cosmetics line, Satellite 3. Rossi believes SAM I AM: Hairstylist Sam Brocato was Nordstrom is grouping together for the month. a hip apparel retailer, say Urban Outfitters, presented with the North American would be best for her 24 eye powders and Hairstyling Awards’ Lifetime Achievement MAN OH MAN: Schwarzkopf Henkel is further pushing its Dep 18 . Packaging allows for refills, award Saturday night, and he was sure to brand into the male market, this time with Dep MGroom, a five- and cosmetics cases resemble rocket ships remind the audience it was only his item hair care line including a -conditioner, a shine gel and flying saucers. The line was recently halfway mark that should be celebrated. and a polishing paste. Dep Sport is also coming out with several offered in U.K.’s Michiko Koshino, but Brocato is also celebrating the relaunch products, including a shampoo, a and a hair glue. Rossi is seeking a new retailer partner — of his Cloud 9 Miracle Repair System, both here and in the U.K. — where Satellite 3’s eye powder compact. which now includes a shampoo, a repair NAILING IT: Essie is taking its most popular nail colors and perhaps there will be a larger female clientele. treatment, a style crème and a mousse. Products begin bringing them to lips — in the form of , that is. shipping to salons Sept. 12. Called Gloss-E, the lanolin-free, flavored lip gloss will be ESKIMO KISSES: Blinc, the makers of Kiss Me Mascara, is available in Ballet Slippers, Fed Up, Waltz and Tea & looking for distribution for its lash elongator, which claims to SILICONE VALLEY: Barex, the Italian hair care line formulated Crumpets, and will retail for $13. use an adhesive technology, not ink, to lengthen lashes. To with silicone, is undergoing packaging changes to better remove the mascara, just use “lots of hot water” said its navigate stylists and customers to its products. Color coding BEAUTY BLENDER: The newest product for the face isn’t an founders, and then get ready to see tubes slip off lashes. will denote one line from another, making it easier to select antiaging cream — it’s a sponge. Beauty Blender is a products for fine hair, normal hair, color treated hair, dry hair or teardrop-shaped sponge made from biodegradable foam that LET THERE BE LIGHT: Revitalight is the latest in light therapy frizzy hair. The new line makes its debut in salons in November. is the latest in foundation application looking to replace designed to help treat everything from acne to wrinkles. Red those pesky white wedges. Created by two makeup artists, light works to fight antiaging concerns; blue light is meant to MAKEUNDER: In response to the flood of mass market at- Beauty Blender is hot pink and comes with its own stand kill bacteria, and amber light is used to help alleviate pain. home microdermabrasion systems, DermaNew, the pioneer and all-natural . While Beauty Blender does not yet More than 2,000 dermatologists, spas and salons offer of the treatment, is lowering its prices. Beginning in 2006, have distribution, its founders, Reann Silva and Veronica Revitalight, which usually requires up to eight treatments at prices will drop from $80 to $60 for a microdermabrasion Lorenz, are pitching it to specialty retailers now. Beauty $100 per session to be effective. kit, which will now include a redesigned handheld tool that Blender will have a retail price of $20.

“Both products in this category result in a more natural feel and Express look as compared to a more traditional, contrived, held-together Paul Mitchell Has Time on His Side Style type [of] feel,” Kovner said. “[They] represent a modern way of ap- proaching styling and are hitting on a trend to a cleaner, more natu- By Sarah Ascione ral-looking style.” New York — John Paul Mitchell Systems is celebrating 25 years of Kovner explained that the Express Style products are different style and continuing to expand its collection with its Express Style from previous Paul Mitchell products because of the quick-drying com- line hitting shelves in September at professional salons. ponent, the clean and light texture they have compared with tradition- “[We] were looking at the Paul Mitchell brand and the philoso- al styling products and the natural-looking results they produce. phy that was started 25 years ago when Paul Mitchell, the hairdress- John Paul DeJoria, co-founder and chief executive officer of John er, created the product line,” said Nina Kovner, vice president of Paul Mitchell Systems, explained that the company develops its collec- marketing for John Paul Mitchell Systems, when referring to the in- tions in tandem with hairstylists, who “tell us what changes they need spiration behind Express Style. “It is about efficiency and time to meet consumer trends and we go in and make those changes.” management; our organization was based on that concept.” DeJoria added his company only focuses on the professional hair Express Style is designed to save time on styling and reduce dry- care industry. ing time. “Our competitors are spending a lot more money getting their customers to go to Its two initial products are Quick Slip, a hybrid styling and conditioning prod- supermarkets for products, [whereas] we focus on having customers go back to the uct that can be used on wet or dry hair, and Round Trip, a liquid curl definer fea- salon and not the supermarket,” he said. “We are, to my knowledge, the only large turing a reduced drying time. The products will retail for $12.95 for a 5.1-oz. con- major manufacturer out there that is only in the professional hair care industry.” tainer and $11.95 for a 6.8-oz. container, respectively. Paul Mitchell products are currently in more than 70,000 salons in the U.S. and Although Paul Mitchell Systems declined to comment on sales projections for 46 countries around the globe. The company is looking to expand its presence in the new line, industry sources estimate Express Style should bring in $10 million Russia, India and the Middle East. It has recently launched in Brazil and is look- during its first year. ing to expand further into Chile, Colombia and Bolivia. 12 WWD, FRIDAY, JULY 29, 2005 WWD.COM Media/Advertising September Riding the Current With Zehren NEW YORK — Monday marks the debut of Current, a youth-orient- ed cable network whose arrival might have gone unheralded were it Anne Zehren not for the identity of its chairman and co-founder: former vice pres- Scorecard ident Al Gore. Anne Zehren, Current’s president of sales and mar- Final September ad page numbers are in, and it keting, is no stranger to the youth market: She was the founding pub- looks like the fattest of the fashion behemoths won’t lisher of Teen People magazine. Here’s what she had to say about be packing quite as many pounds this year as last. starting a TV network and working with the man who, from the Vogue, as ever, tops the totem pole, weighing in at 689 sound of things, is still winning the popular vote. pages. While that’s even more than last year’s record- setting 651-pager, this year’s number gets a boost WWD: Tell us about Current. from the first stand-alone issue of Men’s Vogue, Anne Zehren: It’s a network for and by 18- to 34-year-olds. Our which is expected to carry at least 120 pages. (Just point of difference is that we’re asking our viewers to submit how many of those will be counted towards Vogue’s content. About 25 percent of the content that you’ll see at launch total was unknown at press time.) W, which will have will be from viewer submissions. The rest of it will be in the form the second-heftiest September issue, will actually of short-form, branded pods one to six minutes in length, with boast a bigger folio this year – 388 pages – but fall names like Current Style, Current Parenting, Current Hottie, short of the overall mark set last September, which Current Lies. factored in a 24-page Guess onsert. Among the other WWD: It seems as though the impulse behind the network was leaders, Elle and Harper’s Bazaar are up from last not primarily commercial. year, while In Style and Lucky are down. Vogue, W A.Z.: It’s not. Obviously we want to be profitable, but we think and Lucky are part of Advance Publications Inc., the best way to get there is by connecting with our audience and parent of WWD. — Jeff Bercovici giving that younger viewer something a little bit smarter, a little bit more courageous than what they might have available to them now. WWD: How did you get involved with it? HOW THEY STACK UP A.Z.: I moved to California for love. I left Teen People and Ranked by ad pages moved here because my husband lived here. He had a young child from a previous marriage, and I have a baby myself, a 19-month-old, 1. Vogue: 689 (including approximately so we decided San Francisco would be a good place to live. I believe Bob Pittman [former AOL Time Warner executive and a Current 120 in Men’s Vogue) investor] contacted Al Gore and Joel Hyatt [Current’s co-founders] 2. W: 388 and told them I was living out here and we should get together. WWD: What’s it like working with Al Gore? People are always 3. In Style: 369 saying how funny he really is. 4. Elle: 347 A.Z.: He is totally funny. I think he’s sort of come into his own here. It’s much more relaxed; there’s a lot of young energy here. When 5. Harper’s Bazaar: 275 I first went out to lunch with him, I was a little nervous. Afterward, we were walking down the street past this building under construc- 6. Cosmopolitan: 250 tion and all the construction workers started chanting his name. 7. Lucky: 245 Every single elevator operator, receptionist and security guard wants to talk to him. He’s just very accessible and exuberant these days. 8. Glamour: 236 WWD: What’s the difference between working at Teen People 9. Marie Claire: 170 and working in TV? A.Z.: Both were start-ups, so there’s a similar sort of chaotic, 10. Allure: 143 high energy, working-long-hours vibe. The difference is TV is more sold as a commodity, whereas in the magazine business 11. Jane: 111 you’re selling more on a marketing concept and a brand. One of 12. Shop Etc.: 107 the things we’re trying to do is bring that whole brand concept here and adapt it to the TV world. — Jeff Bercovici

profile guests. (Bloomberg and Sharon Ludtke, most from pitching another magazine next year. “I houses the “ Rose” recently All You’s managing have a couple of ideas that are really studio, though the show is editor, becomes Budget blockbuster,” he said. “But that’s another MEMO PAD independently produced.) Living’s managing editor. As saga.” — S.J. In the old building on Park such, the magazine will now ROSE IN BLOOM: There have been some Avenue, the guest lounge was be a mélange of earnest THE CHIC SPEAK: How did Tommy Hilfiger get disgruntled rumblings coming out of the new protected by a hallway, which service, self-consciously edgy his start in fashion? “I started out in this Bloomberg headquarters on Lexington kept Bloomberg staffers from pop culture and bedroom- business with $150 and a dream,” he says in Avenue lately. For starters, cubicles are said ogling celebrities as they eyed photography, all aimed Mary Gehlhar’s new how-to book for aspiring to be “overcrowded.” And there aren’t waited to tape their segments. at Wal-Mart shoppers. (We fashion designers, “The Fashion Designer enough women’s rest rooms, or at least not In the new building, however, think.) — S.J. Survival Guide,” due out in September from as many on each floor as employees would famous authors, athletes, Dearborn Trade Publishing. Hilfiger, whose like. More recently, there has been some politicos and movie stars — HEAVY LIFTING: There are business hasn’t exactly been on a hot streak concern that the new “Charlie Rose” green like the recently featured Owen many fast tracks in the lately, dispenses sage advice along with: room is too exposed for the show’s high- Wilson and Vince Vaughn — hang out in publishing business, but the maintenance Donna Karan: “Never believe the good what’s essentially an oversized fishbowl. Not pipeline? press because that means you have to Charlie only is there no hallway, but the lounge’s walls Maintenance man Ahmed Pruitt was believe the bad.” Rose are made of glass. Which wouldn’t be such an recently promoted to the circulation Cynthia Rowley: “I very quickly learned issue except the green room is located smack department at Fairchild Publications, parent about the constant battle between art and in the middle of one of Bloomberg’s of WWD. The catalyst for his unusual career commerce and had to find the balance to “overcrowded” newsrooms. move was the hip-hop magazine he pitched survive.” While the new see-through set-up has had at the company’s annual Magazine Idea Day. Zac Posen: “Ask questions, and ask for many wondering how guests would react, “It was a little scary. I was a little nervous,” help.” “Charlie Rose” has been taping on Lexington Pruitt said of getting up in front of president John Bartlett: “Too many designers get for several weeks now, and so far, word is not and chief executive officer Mary Berner and caught up in doing a whole collection and a single guest has complained. Nevertheless, chairman and editorial director Patrick doing shows. Shows are for ego, product is as a precautionary measure, Bloomberg McCarthy, among others. “Maintenance was for survival.” building services arrived this week to install always just a way to get in to the company,” Diane von Furstenberg: “Have a big dream partial obstructions. Because it’s hard enough he said, adding that his magazine idea had and take small steps.” to prep for the cameras without several dozen been in development “for years.” Eva Dillon, Lest fashion’s neophytes get too dreamy, reporters staring you down. — Sara James currently the publisher of Cookie, set up a Gehlhar is there to ground them by sternly meeting with Pruitt after hearing about his reminding, “It takes more money than you LIVING WELL: Angela Matusik has made her pitch. Next thing you know, he’s working with think.…Business can be shady. People will first two hires as the newly installed editor in trade circulation director Wendy Frank, a job steal from you, stores won’t pay, and others chief of Budget Living. Scott Cohen, formerly he started last week. will copy your designs.” of Giant, will serve as her executive editor, The leap won’t, incidentally, keep Pruitt No wonder it’s so tough for Tommy. — S.J. PHOTO BY DIMITRIOS KAMBOURIS/WIREIMAGE WWD, FRIDAY, JULY 29, 2005 13 WWD.COM Taking on an Animated Alias A rectangular dish from Didier Elena.

NEW YORK — Scott Chambliss, the creative tornado behind the production of the ABC show “Alias,” is applying special effects to his first illustrated novel. With just a glance of the hot pink, cartoonish characters on the cover of “Maahvelous! Princess Puut and Dali Do Venice,” bookworms will get the picture that what lies ahead is not a run-of-the-mill read. Chambliss’ princess is a washed-up infomercial specialist whose designer-clad curvy bod is superimposed on Design panoramic photos of Venice. Her The cover sidekick, Dali, is a goateed man with of Scott sleek suits and futuristic rings. Chambliss’ Together they tear through Venice “Maahvelous!” dropping such gems as “Don’t you think that a young Venetian would be a perfect souvenir to take home?” Princess Puut is said to be based on a Hollywood diva, but Chambliss, whose latest role is production designer for the movie “Mission Impossible 3,” is not saying who. Dali, on the other hand, “is who I wish I were,” he said. He rounded up some of his famous friends to plug the book, which Glitterati will publish in October. Isabella Rossellini wrote the preface and Jennifer Garner scribbled some “kind words” on one of the pages. Rossellini wrote, “His fantasy gallops fast and far into a totally invented world. Incredibly enough, it’s a world that feels familiar to me.” Chambliss’ friend, Katrina Markoff, founder of Vosges Haut-Chocolat, provided the foreward and is now selling exotic caramels inspired by the book. Like many other fashion-minded types, Princess Puut is unabashed about her promotional shout-outs, spelling out the recipe for Vosges’ “love goddess cake.” Her personal packing tips are printed on another page, detailing such necessities as 12 cases of MAC lipstick lacquer, 62 pairs of Manolo Blahniks, a Coach weekend carryall and Soho cruiser, Pustefix bubble bears, “every piece of ” Dolce & Gabbana “I own” and other indulgences. Three Squares a Day As for his own collage-like splurge, Chambliss said: “I just wanted to do something that would make me happy.” — Rosemary Feitelberg PARIS — Restaurant design is moving beyond interior decoration, as chefs here try to create culinary experiences that engage the palate and the eye equally. Applying design to gastronomy has been in the air for a while. Consider Spanish chef Ferran Adrià, whose El Bulli restaurant is often hailed as the best in the world. He has worked with Swiss designer Luki Huber to concoct his creations for years. De Kwiatkowski Pulls Up a Chair But as more chefs consider how to extend design beyond their dining room and onto the plates, the trend is becoming more pronounced. LOS ANGELES — Fabric designer Lulu de Kwiatkowski, whose elaborate and whimsical In Paris, for instance, Italian industrial designer Claudio Colucci recently teamed textiles adorn the homes of clients like Diane von Furstenberg and Carolina Herrera, is with chef Stéphane Gaudard to create new recipes for his Delicabar restaurant at about to do for leather furniture what she has done for upholstery and cushion covers. the Bon Marché department store. In September, stores across the U.S. will be carrying the new Lulu DK for Elite “Gastronomy is a beautiful playground” Colucci said. Among the creations the line, a collaboration between New York-based de Kwiatkowski and Los Angeles designer concocted with Gaudard is a green tea and rose cake in the shape of a heart. leather furniture maker, Elite Leather. The collection was unveiled at the recent Didier Elena, the chef at High Point International Furniture show in North Carolina. Reims’ two-star Les Cray- “For me, it was about how to make leather different and fun,” said de eres, said he is enthralled Kwiatkowski, a Parsons School of Design grad who honed her design skills in Paris. with designed food. He is “Leather is often looked at as quite conservative or severe. I wanted to bring things exploring the idea of rectan- to it that you don’t usually see in leather.” gular cuisine. For example, There are 13 pieces in the leather collection, including screens, couches, side he cuts fish in rectangles and tables and coffee tables. Signature pieces include an all-white couch with multicol- then serves it with rectangu- ored buttons studded into the seat cushions and one with Oriental red lacquer legs. larly arranged vegetables There are also unexpected combinations like chocolate brown piped with pale blue. on rectangular plates. “They are not your average square, modern sofas in black and brown,” de Alain Passard, the chef Kwiatkowski said. “Everything has its own character. If a back is straight, then the at Paris’ critically accl- arm is curved. There are nuances throughout.” aimed restaurant Arpège, Gabrielle Galardo, vice president of marketing for Elite, said de Kwiatkowski was the said he loves making maca- perfect match for the company's first licensing project. roons square instead of “We had the same point of view when it came to design. She takes into account round. style, but also function and comfort and how a piece will apply to everyday life. So “With four angles, the many designers out there will design a unique and beautiful piece of furniture crunch is different,” he said. that’s not livable.” Meanwhile, Paris’ Lenôtre Galardo said the Lulu DK collection brought “a femininity” to leather furniture is offering its own square mac- that is otherwise hard to find. The collection will be sold at Bloomingdale’s, Marshall aroons. And Fauchon sells a Field’s in Chicago and independents like Foremost Furniture in New York. square collection of cheeses Jim Coia, vice president of furniture at Bloomingdale’s, and charcuteries. said the store’s leather furniture business was among its Marc Brétillot’s Chefs say the possibilities strongest. “It’s exactly the kind of sophisticated design mille feuille for are endless. that our customers will react to,” he said. Bon Marché. Marc Brétillot, a culinary With retail prices at about $2,000 for chairs, $3,000 designer who creates narrative scenes with for sofas and up to $4,000 for screens, the collection is food, is a good example. aimed at the high-end consumer, and one that is Earlier this year he staged a meal at the Metz Centre Pompidou on the theme, savvy about interior spaces. “How to eat in a museum?” His intent was to understand art better through food. “I love the feeling of walking into He also recently designed a mille feuille pastry for Bon Marché that stands on its a house and feeling absolutely com- end like a book. fortable in there,” said de And in June, Brétillot designed a three-course meal based on Alphonse Daudet’s Kwiatkowski. “It’s important to “Letters From My Windmill” at the Palais de Tokyo. The result was spectacular. The have a piece of furniture that doesn’t appetizer was fish served on a plate in which hot water was mixed with dry ice to cre- bore you. It’s what I try and achieve ate mysterious smoke. with fabrics, whether it’s a throw pil- While the French are still attached to their traditional cuisine, the new generation low or something just to smack on a of chefs and designers predict a tasty future for culinary design. wall. You need to be constantly happy “You’ll see, 15 years from now, when you’re dining in a restaurant, you’ll be think- A chair from with it, instead of exhausted.” ing, there is a designer behind this dish,” Brétillot said. Lulu DK for Elite. — Kavita Daswani — Chantal Goupil 14 WWD, FRIDAY, JULY 29, 2005 Gucci’s Lee Reveals Ambitio

Mark Lee By Alessandra Ilari — Mark Lee, Gucci’s new chief executive officer, has an aggressive agenda that includes boosting the brand’s sales as well as redesigning retail stores and ex- panding in emerging markets. In his first interview since taking charge of Gucci in November, Lee mapped out his strategy to double sales in seven years to more than $4 billion, a goal set by Robert Polet, president and ceo of parent Gucci Group, after the tumultuous departure of creative director and ceo Domenico De Sole. “Gucci’s transition is behind, the dust has settled,’’ Lee said in the minimalist gray, black and white offices of the brand’s headquarters here. “We’re moving very fast because we have so many things going on.” Seeking to grow the business in what he described as “a luxurious way,’’ Lee said Gucci also would focus on jewelry, eyewear and fragrances, increasing the ready- to-wear assortment and launching advertising cam- paigns for each of the product lineups. The plans have “thrown people off because it sounds like a staggering number,’’ Lee said. “In reality, it means a 10 percent annual growth. The first quarter of this year we grew 19 percent, which is double the pace we need and testifies to the brand’s strength.” Lee, a 42-year-old native of San Francisco who start- ed his career as an assistant buyer at Saks Fifth Avenue, became president and managing director of the brand in November. He moved from his spot as ceo of Gucci Group’s Yves Saint Laurent fashion house after the ouster of Giacomo Santucci. Lee was named ceo of the Gucci brand this month. He has overseen the promotion of Frida Giannini to creative director for women’s rtw and men’s and women’s accessories, which meant the departure of Alessandra Facchinetti two weeks after her second runway show in the post-Ford era. Lee said that in terms of retail expansion, Gucci is late compared with its rivals in tackling markets such as China, India, South America and Eastern Europe. At least 10 new stores are to open in China in three years to complement the existing seven, along with new units in New Delhi, Bombay and Ho Chi Minh City in Vietnam, by yearend. Mexico City is in the pipeline for February 2006 while a space in Macau, the Las Vegas-style gambling megacenter in eastern Asia, is to open in 2007. New Gucci stores also will crop up in the U.S, with openings slated this year for Westchester County, N.Y., and Chevy Chase, Md., in November and Naples, Fla., before Christmas. “Next year, we’ll open in San Diego, where we don’t have a store, though I believe it’s the sixth-largest city in America,’’ Lee said, adding that his team also is check- ing out Prague and Warsaw. “The U.S has been our most established market since the Fifties, though I wouldn’t say a saturated one….Our competitors are already in Mexico and India and are ahead in China, but we still have potential and PPR is very supportive.” Gucci will revamp existing stores in established mar- PPR 2nd-Qtr. Reven

By Robert Murphy PARIS — PPR, French tycoon François Pinault’s luxury and retail conglomerate, said on Thursday that double-digit gains at Gucci Group offset soft retail sales at home as second-quarter revenue rose 4 percent to 3.99 billion euros, or $5.03 billion based on average exchange rates. Luxury sales gained 12.5 percent to 639.3 million euros, or $805.7 million, while retail grew 2.5 percent to 3.35 billion euros, or $4.22 billion, PPR said in a statement. PPR chairman François-Henri Pinault said during a conference call he was “quite confident” for the remainder of the year, saying that retail momentum in July was “better” than June. He reported continued “strong activity” in luxury. Analysts applauded PPR’s luxury performance, the latest positive indication for the sector from Europe’s big firms, but some pointed out that retail came in weaker than expected. PPR stock on the Paris Bourse rallied late in the day to close up 0.36 percent to 84.30 euros, or $102. Pinault said sales at the Gucci brand increased 19 percent on a WWD, FRIDAY, JULY 29, 2005 15 WWD.COM ous Strategy to GrowBrand

kets to make sure store location and size are appropri- ly in Japan, so there’s a big opportunity to balance out design what they desire,’’ Lee explained. “That said, we ate, and invest in replacement stores in West Berlin, Europe and America,” Lee said. have meetings to discuss the brand, strategies and our Barcelona and , Germany, by the end of 2006. Giannini, a jewelry fanatic herself, is developing goals because they are very involved in understanding “One of Gucci’s great strengths is that it’s balanced styles to woo a more international clientele. White gold Gucci and the rules of the company.” geographically,” Lee said. “In terms of sales, we wit- and diamond chokers, rings and earrings featuring but- Referring to the exodus of managers in the post nessed double-digit growth across the board: Japan, terflies, dragonflies and horse bits and floral motifs Ford-De Sole period, Lee said: “There was a transition Asia, the Pacific, America and Europe.” crafted with yellow gold and precious stones were pre- and a lot happened in these past 18 months. People who Parallel to the retail rollout is the new store con- sented with the cruise collection. didn’t see themselves projected into the Gucci future cept that Lee is developing with Bill Sofield, a New Giannini will likely put jewelry on the runway in left, but at the same time others got promoted internally, York architect who spearheaded the first makeover in September when she makes her rtw fashion show debut. which always creates a great energy.” 1997 with Ford. The aim then was to give the stores the Jewelry also is getting a dedicated print ad campaign, Lee is unfazed by questions about the ability of same sense of must-have opulence that pervaded the set to break in November and featuring lavish gems shot Giannini and Ray to match Ford’s talent for generat- products. on a black backdrop. “We wanted to show abundance, ing media buzz. And asked about speculation that PPR “The existing store concept has been incredibly suc- richness and luxury,” Lee said. is vying to make Gucci more commercial, Lee rolled cessful, but I would also say unbelievably copied, so it’s And outsourcing or the massification of the brand his eyes. time for us to move on,” Lee said. “We want to show isn’t in the cards. “Whatever Frida puts on the runway, you can rest as- Gucci’s evolution with this state-of-the-art concept con- “Some competitors and some press have stirred up sured that it will be her vision, what she felt was right,’’ ceived for the next 10 years.” rumors that we’re going to massify or cheapen the he said. “There is no arm-twisting to push a specific Reluctant to disclose specifics or the company’s re- brand, change the distribution or do something stupid,” style or category on the runway. I don’t think a new tail investment, he described the blueprint as sexy and Lee said. “Well, we’re not. We’re not adding licenses or chapter of the Gucci rtw can be or will be written in one modern, but warmer, brighter, richer and more natural doing children’s wear because we’re looking to grow in show. We have faith in her because she is highly talent- in terms of materials. a luxurious way.” ed as is evidenced by the success of the accessories she designed over the last 18 months. She has a great under- standing of the brand and I’m confident she will apply We’re moving very fast because we have so many things her understanding to rtw.” He said Gucci’s best moments over the years were “going on. when the media hype and commercial clout coalesced. ” “I don’t think it’s either/or, but about balance,’’ Lee — Mark Lee, Gucci said. “In accessories, we go from limited editions and precious skins to canvas because we need them all. On the other hand, if we do $2 billion in sales that means “We’d like to incorporate natural light and to occa- Gucci is dedicated to a Made In Italy strategy and that there is a certain commerciality in running a busi- sionally find a way to leave a window open, because it’s everything is manufactured there with the exception of ness with 200 stores. I don’t think that is a bad thing.” nice when in Paris or New York to look out the window the Swiss watches. “That’s not going to change because He added that Ford’s blockbuster collection a decade and know where you are,” he said. it’s an intrinsic part of Gucci’s heritage to which we’re ago soared on iconic symbols such as the bamboo bags, The makeover will be unveiled in fall 2006, when completely committed,” Lee said. the bit and the double G logo. Gucci is to open a 10,000-square-foot flagship in Ginza, He cited the just-launched La Pelle Guccissima, the “I wouldn’t say that what Gucci stood for was a par- Tokyo, and a replacement store in central Hong Kong. labor-intensive line of accessories with special relief ticularly intellectual exercise or avant-garde and com- In the eight-story Ginza building, four floors will be sell- and embossing techniques, as being emblematic of plicated,’’ he said. “It was great fashion, appropriate for ing space and the rest will be events space, an art Gucci’s drive for quality. “We launched early in Japan, the brand.” gallery and a rotating photo archive from Milan. in mid-July, and the response has been great, totally on In terms of media plans, changes are in the works. “Ginza won’t be the largest store, but the goal is to target with our first-week sales projections,” he said. “We want to be more dynamic in terms of quantity of make it the most luxurious one,” Lee said. With a sophisticated eye for quality and a strong mar- campaigns and imagery, which is a big change from the Other major cities will be revamped in 2007 and keting sensibility, Lee seems to have taken the Gucci past when, going back a year, we really only had the 2008, a sensible move since 70 percent of Gucci’s rev- transition in his stride. main fall” collection, Lee said. enue comes from its 200 directly operated stores, while His career includes stints at Cidat USA, Giorgio Aside from a dedicated campaign for La Pelle the balance derives from exclusive doors such as Armani and Jil Sander America Inc. He joined Gucci in Guccissima and the jewelry, images with the fashion Neiman Marcus, Bergdorf Goodman and Saks Fifth 1996 and witnessed the brand’s comeback under Ford show, rtw and accessories will run in September and Avenue. and De Sole. October, while November and December will be focused Counterbalancing the cost of the retail plan is the His relationship with PPR appears even-keeled. on cruise, rtw and accessories. fact that Lee is convinced that Gucci has plenty of fer- “My main relationship is with Robert Polet,’’ Lee Shot in Los Angeles by Craig McDean, the fall cam- tile turf on which to keep blooming. said. “I don’t have day-to-day [contact with PPR chair- paigns have a reportage and lifestyle feel with models From a product standpoint, Lee noted that Gucci’s man] François-Henri Pinault, but I can say he is terribly interacting as in paparazzi shots. core business — leather goods and shoes — can contin- supportive as a shareholder and understands what “The last 10 years for Gucci have been an exciting ue to grow because it propelled first-quarter business as we’re doing.” and incredible time,’’ Lee observed. “It’s legend what the respective categories registered 31 and 26 percent For Lee, the big change is having full freedom to run happened to this company, to this brand, which grew so gains. “It’s quite remarkable because those are our most the company. fast and dynamically. We’re so big that people assume established and mature areas,” he said. And, unlike De Sole, Giannini and men’s wear de- that to grow more we have to destroy the brand also be- One segment poised to expand is fine jewelry. signer John Ray report to him. cause in the history of Gucci there were moments of ups “Jewelry has grown a lot in the past five years, especial- “Frida and John have total autonomy and freedom to and downs. But it’s just envy.” nue Increases 4 Percent With Boost From Gucci Group

comparable basis to 378.6 million euros or $477.1 million. Pinault said strides also were being made to bolster YSL’s The numbers were the most recent in the spate of figures from Sales of leather goods, which account for 55 percent of the ready-to-wear sales, which increased 5 percent in the three-month Europe’s big luxury players this week. brand’s sales, advanced 32.1 percent because of new handbag period ended June 31. He said a new knitwear collection was in On Monday, Bernard Arnault’s LVMH Moët Hennessy Louis lines such as Hasler, Pelham, Punch and Creole. the works and the shoe and coat categories were being broadened. Vuitton group said its second-half sales grew 9 percent, driven by Gucci’s sales increased across geographic zones, with He added that the house would continue to make efforts to create double-digit gains at its core Louis Vuitton brand. Also this week, comparable sales up 24.2 percent in North America, 28.9 clothes suited to all times of the day. Bulgari reported quarterly sales up 8.7 percent, and Tod’s percent in Asia, and 15.3 percent in Europe. The brand’s sales YSL Beauté sales rose by 3.3 percent. Sales of YSL-branded reported second-quarter growth of 8.4 percent. increased 10.6 percent in Japan. fragrances increased 6.2 percent thanks to strong sales of Cinema European retail is faring worse. PPR’s retail division, for example, Pinault said Gucci orders for the fall collection were and Pure Shine lipstick, Pinault said. continues to suffer from low consumer confidence in France. “extremely strong” and added that the brand had opportunities to PPR’s so-called “other brands” — Boucheron, Balenciaga, Most indicative of the trend was the 4.1 percent decline in grow in China and Russia. Stella McCartney and Alexander McQueen — added 64.9 million sales to 175.6 million euros, or $221.3 million, at PPR’s Pinault praised Bottega Veneta, saying comparable sales there euros in sales, or $81.8 million, up 45.8 percent, with the Printemps department store chain. grew 55.8 percent to 32.6 million euros, or $41.1 million, with strongest gains posted by Boucheron, Balenciaga and Alexander At its other retail activities, PPR said sales at Fnac, the music high double-digit growth across all geographical zones. McQueen. and book chain, grew 5.2 percent to 892.6 million euros or At the money-losing Yves Saint Laurent fashion house, Pinault Pinault said Balenciaga had a “spectacular” 300 percent $1.13 billion, while sales at the Conforama furniture stores said sales were “disappointing,” mostly because of the “lack of a increase in sales of leather goods and that McQueen’s new push inched up 0.2 percent to 655.2 percent. At the Redcats mail- best-selling bag this season.” He said steps had been taken to into leather goods via his Novak handbag was promising. order division, sales increased 1.1 percent to 1.14 billion euros, reverse the trend, noting that YSL recently hired accessories At the Boucheron jewelry business, Pinault said turnaround or $1.44 billion, and sales grew 7.5 percent to 499.4 million designer Raphaelle Hanley, formerly with rival Louis Vuitton, to efforts were proceeding ahead of schedule and that the brand had euros or $629.4 million at the CFAO African trading company. boost the important leather goods category. introduced more access price-point products. PPR is scheduled to report first-half earnings Sept. 8. 16 WWD, FRIDAY, JULY 29, 2005 WWD.COM Mullins and Ludlow: On Common Ground NEW YORK — Marcella Mullins and Lillian Ludlow met at Imitation of Christ, fash- ion’s house of quirky creativity that draws artists from a variety of disciplines, and it Marcella Mullins and wasn’t long before they decided to collaborate on a project. Lillian Ludlow with the “We would show up in the same outfits, admire the same authors and collect the exhibition they curated. same types of images,” said Ludlow, explaining their simpatico relationship. Ludlow, 35, is a painter. Mullins, 29, modeled after graduating from high school and found her way to Imitation of Christ in 2000 when Tara Subkoff was getting the label off the ground. She collects antique gar- den tools, which she incorporates into her art, and writes poetry. Both Arts women like to sew. They also like Blaise Cendrars, a Swiss novelist and poet who was part of the Montparnasse literary scene and a friend of Henry Miller and Ernest Hemingway. They have an abiding affection for linen. Somnus, their work-in-progress, which encompasses fashion, film & and art, began in 2004. More recently, Ludlow and Mullins curated a People group show at Canada, a gallery at 55 Chrystie Street here, that runs through Sunday. When searching for a title for the exhibition, Ludlow consulted Cendrars’ 1926 “Moravagine” and picked a sentence from the novel, “I Throw Herring to the Dog.” “I opened the book and randomly chose it,” said Ludlow. “It stuck out to me. I did the research and found that throwing the red herring is a diversion. The attempt of the show is to be a diversion from irony.” Several of the artists in the show have been associated with Imitation of Christ. PHOTO BY THOMAS IANNACCONE PHOTO BY PHOTO BY THOMAS IANNACCONE PHOTO BY Aurelio Valle, a singer and photographer, accompanied Mullins as a translator on an IOC trip to Mexico City. The collaged photos on transparencies he made for the show, outfits, are clustered on the wall. “Grace,” “Fundamental Tactics” and “Guerra Declarada” (2005), feature some of his For Mullins and Ludlow, everything comes back to Somnus. The collection was lyrics. “His singing is very heartfelt,” said Mullins. “He’s a very tender person.” modeled at Canada and a Somnus film was shown as part of the exhibition. Their Another IOC alum, Joshua Leffel, made three ink-on-paper pictures, “Untitled 1-3” next presentation will be in February. So far, Loveless, a Tokyo boutique, has bought (2005), which tell complex stories that touch on religion, mythology and patriotism, the line, which is available by special order at Canada. layered with Arab themes. Subkoff ’s brother, Daniel, who does the silk-screen designs “The clothing we make is very wearable,” said Mullins. “We use a lot of linen. for IOC T-shirts, is represented in the show by two ink-on-paper drawings, both unti- Several pieces can be worn different ways and it gets better with age. It’s all hand- tled, and a mixed media piece, “Have You Seen ‘The Great Escape?’” (2005). done. We won’t use a machine.” Benjamin Sturgill, a fashion editor for Purple magazine, wrestled with the theme of Ludlow, who painted on chiffon dresses for IOC’s show held in Paris during the good taste in two untitled magic marker-on-linen drawings. His other entry to the exhi- couture, paints shoes for Somnus. “Her hand is amazing,” said Subkoff. “Whatever bition consists of a black ship and heart-shaped anchor connected by rope to a bottle she touches is beautiful.” Mullins, meanwhile, incorporates her poems into clothes that says “I [Love] N.Y.” The best-known artist, Rita Ackerman, who is represented by and lacquers them onto footwear. Andrea Rosen Gallery, made two framed drawings and a mural for the exhibition. “I think Somnus is beautiful,” said Subkoff. “I really want Lily to paint because she’s Ludlow was working on a painting, but it wasn’t finished in time. Mullins’ small such a fantastic painter. They’re both really creative people and two of my best friends.” dolls, created from fabric and objects with intricate costumes that resemble Somnus — Sharon Edelson

on record [as] saying [in the past] that the event would be sold only if it was in the best Guess Earnings Rise on Sales Surge Fashion Scoop interests of the industry. At this stage, there is A SHRIMP ON THE BARBIE?: IMG appears to be no extension to the relationship other than NEW YORK — Booming sales and lower costs sent earnings soaring for Guess Inc. eyeing Mercedes Australian Fashion Week. those two points.” in the second quarter and first half. That’s the feeling within some fashion circles In the last few years, IMG has gotten itself The Los Angeles-based company easily exceeded Wall Street analysts’ expecta- in Sydney, in spite of flat denials by MAFW’s deeper into the fashion world, owning both tions, posting a 95.4 percent earnings gain to $4.2 million, or 9 cents a diluted owner, Sydney-based Australian Fashion the New York and Los Angeles Fashion Weeks, share, compared with $2.1 million, or 5 cents, in the year-ago period. Innovators, that Australia’s most high-profile as well as serving as as international Revenues surged 15.7 percent to $178.2 million from $154.1 million, driven by fashion trade event is even on the block. consultant to the Pakistan Fashion Week and strong product performance in North America and Europe. A spokesman for IMG, producer of the 7th Lakme India Fashion Week. In addition, 7th “We controlled expenses effectively and operated with leaner inventories in on Sixth runway shows in New York, said, “We on Sixth and the Greater Miami Convention & North America, which contributed to higher margins in our wholesale segment don’t have anything to announce at this time.” Visitors Bureau also sponsored the Miami and a better transition into the important back-to-school selling period,” said Founder and chief executive officer Simon swimwear shows billed as Sunglass Hut Swim Maurice Marciano, co-chairman and co-chief executive officer, in a statement. Lock was unavailable for comment at press Shows Miami Presented by Lycra. The new Marciano line of contemporary clothing also performed ahead of plan. time, but his 2IC marketing and Marketing insiders say that MAFW would Product sales rose 16.9 percent to $168.9 million from $144.5 million. Progress communications director, Graeme Lewsey, told be an attractive target for IMG. It’s well was more pronounced in results for the first six months, with earnings surging 327 WWD that AFI has been in talks with IMG established, having celebrated its 10th percent to $12.3 million, or 28 cents, from $2.9 million, or 6 cents. concerning two matters only: maximizing anniversary in May this year, and although Revenues rose 28.1 percent to $393.8 million from $307.4 million. Again, prod- sponsorship opportunities for the event and a 2005 figures are not yet in, according to two uct sales drove results, rising 30.1 percent to $373.1 million from $286.9 million. joint tender for the upcoming Australian Film independent monitoring companies, Media Industry Awards. Lewsey denied the event had Monitors and Rehame, the media profile of been sold. the event grew 40 percent from May 2002 to “It hasn’t been sold at this moment in May 2003, and a further 100 percent, to $27 Russell Profits Slide, Forecast Cut time,” he countered coyly. “Simon has been million, from May 2003 to May 2004. NEW YORK — Hit by higher costs and oper- stripped capacity in the second quarter. ational difficulties, Russell Corp. reported “In hindsight, we had planned our Thursday that profits plunged 54.1 percent production too tight to deal with such a Obituary in the second quarter and the company significant potential increase in busi- lowered its earnings guidance for the year. ness,” he said. Profits in the period ended July 3 fell To address these issues, Ward said the Sheila Block, Accessories Council President to $4.7 million, or 14 cents a share, from company has added contractors and re- $10.2 million, or 31 cents, in the year-ago vised its planning schedule for certain NEW YORK — Sheila Block, president of the Accessories Council, an industry organi- quarter, and were in line with revised ex- items. Russell also has a new production zation based here, died Thursday. Her age could not be learned. pectations. Russell warned earlier this facility in Honduras. The cause of death was leukemia, according to the council. month that earnings would fall below the Russell, based in Atlanta, said earnings A native New Yorker, Block began her career as a model and fashion director at average consensus target of 21 cents. for the year will likely be $1.40 to $1.48 a several companies. She went on to consult for Bally Shoes, Coca-Cola and Grey Sales gained 18 percent, to $342.1 mil- share, below earlier forecasts of $1.55 to Advertising. Through her work with the council, Block became an influential player lion from $289.8 million. They were driv- $1.65. The information caused the stock to in the industry and championed many local designers. She was tireless in her efforts en by Russell’s Artwear channel and drop 1.2 percent to $18.63 Thursday on the to bring awareness to the category and coordinated events such as the ACE awards gains in its acquired businesses, includ- New York Stock Exchange. The activewear and a mentoring program. She was a board member of Manhattan’s Laboratory ing Brooks Sports, the running gear com- giant said it is maintaining its forecast for Institute of Merchandising and Fashion Group International. pany Russell bought last year, as well as second-half sales growth of 4 to 6 percent Lavelle Olexa, senior vice president of fashion merchandising of Lord & Taylor, Moving Comfort. Mossy Oak and the core and estimated sales of $1.5 billion to $1.52 said, “Sheila was a dynamic force and strong advocate for the accessory industry. The Russell Athletic brand business both billion this fiscal year. Accessories Council achieved success because of Sheila.” posted lower profits and sales. For the six-month period, profits Block is survived by her life partner, Chuck Stroh; a daughter, Ellen, her mother, Jack Ward, chairman and chief execu- dropped 40 percent to $6.9 million, or 21 Faye Kravitz, and two grandchildren. tive officer, said on a conference call with cents, from $19.7 million, or 33 cents, a A memorial service is planned for Monday at 3:30 p.m., at the Frank E. Campbell analysts that after lowering prices on year ago, while sales grew 21 percent to Funeral Home in Manhattan. some products, Russell experienced high- $655.3 million from $541.6 million. — Sophia Chabbott er-than-expected demand, which out- — Melanie Kletter WWD, FRIDAY, JULY 29, 2005 17 WWD.COM

Weaving the Way A large apparel A large apparel factory in To CAFTA’s Passage Guatemala.

By Kristi Ellis and Evan Clark

WASHINGTON — House textile-state lawmakers cast the deciding votes in pushing the controversial Central American Free Trade Agreement over the finish line just past midnight on Thursday. With the Senate already approving the pact, President Bush needs only to sign the agreement into law, ending a long battle of arm-twisting and deal-making. It was also a major legislative victory for the President, who made a rare trip to Capitol Hill Wednesday to lobby for passage, and it boosted his credentials in the global trade arena. A defeat of CAFTA could have cost the U.S. credibility in the ongo- Rep. J. ing Doha round of World Trade Gresham Organization negotiations, which Barrett seeks to reduce global tariffs and (R.,(R., S.C.)S.C.) could ultimately have a major im- pact on trade. Passage of the agreement also could give a boost to the Free Trade Agreement of the Americas, which has been in the works for more state delegations — South and North than a decade, but stalled since Carolina, Alabama and Georgia — 17 2003. The FTAA would bring down lawmakers voted for the accord and 21 U.S. Working on WTO Talks trade barriers throughout the voted against it and one did not vote. GENEVA — Ministers and top officials on Thursday tried to Western Hemisphere — from Wilbur L. Ross, chairman of Inter- limit the damage in the Doha global trade talks that are Alaska down to Tierra del Fuego, national Textile Group, which includes stalled over farm-trade differences. with the exception of Cuba. Burlington Industries and Cone Mills, Rob Portman, U.S. trade representative, is to fly into While retailers and importers said he is firming up plans to build a Geneva today to assess the situation and show “the U.S. is hailed the agreement that, among its denim plant in the region now that committed to a successful outcome,” Peter Allgeier, U.S. provisions, reduces or eliminates CAFTA has passed. ambassador to the World Trade Organization, told reporters. PHOTO BY MARY ANN CHASTAIN/AP PHOTO MARY ANN CHASTAIN/AP PHOTO BY tariffs on goods flowing between the Ross said he is considering building The aim of the Doha talks, launched in Doha, Qatar, in U.S. and Costa Rica, El Salvador, Guatemala, Honduras, a factory in Nicaragua, and has not ruled out Guatemala November 2001, is to reach an accord by the end of next Nicaragua and the Dominican Republic, maintaining the and could build plants in both countries. He noted the dy- year to lower barriers to the international flow of goods — region now will become a more viable sourcing alterna- namic has changed due to one of the new side agreements including textiles, apparel, footwear and services — worth tive, textile executives were split over the accord’s poten- that calls for Nicaragua to buy one unit of U.S. fabric each almost $11 trillion a year. tial impact. time it buys a unit of fabric outside of the region for man- Allgeier said the U.S. wants to see the talks deliver “new The sharply divided House eked out passage of made fiber trouser fabric and cotton trouser fabric. and real market access opportunities in both agriculture, CAFTA on a 217-215 vote after Southern GOP loyalists “We supply a lot of denim to CAFTA countries now, goods and services.” He said the U.S. wants the top 12 to capitulated to 11th hour pressure from GOP leaders — particularly to Guatemala, and we already have good 15 developing economies, such as Brazil and India, to open coincidentally, the voting began at 11 p.m. customers down there and…we are just taking another their economies by lowering market barriers. GOP leaders strategically cut enough side deals, pri- look at the region to make sure we have the exact geog- Peter Mandelson, European Union trade commissioner, marily on textiles, leading up to the vote to overcome raphy correct,” Ross said. conceded that the talks are bogged down and said there is a strong opposition from textiles- and sugar-producing Vendors were almost universally supportive of the need for “a paradigm shift…one which allows us to move states’ representatives, as well as a large swath of agreement, which strengthens the appeal of nearby fast from standoff to trade-off.” Democrats opposed to the accord’s labor provisions. Central America as a sourcing region. — John Zarocostas The House vote reflected a polarized textile indus- “While it’s far from perfect, the passage of CAFTA is a try, divided between fabric producers that oppose the step toward more free trade, and that’s good for our indus- In one of the most defining moments of political deal- deal because of the allowance of foreign fabric, and try, our customers and our consumers,” said Paul Charron, making, one textile state lawmaker, who had already regis- yarn spinners and fiber producers that support it for chairman and chief executive officer of Liz Claiborne Inc. tered a “no” vote on the agreement, went back to the dais the export opportunities. Peter Boneparth, ceo of Jones Apparel Group, said, to change his vote at 11:30 Wednesday night after a last- Of the 39 House members from the four largest textile “CAFTA will encourage the buildup of a stronger sup- minute plea from House Speaker Dennis Hastert (R., Ill.). ply, sourcing and logistics network in the region that “[House leaders] had tried all of their sources and al- will allow us to partner with high-quality, reliable man- ternatives and had run out of options, so the Speaker ufacturers that can turn product, both fashion and came to me and said, ‘Look, we have to have your vote At a Glance basic, and deliver it to our customers very quickly.” to get this legislation passed. If you vote with us, we will The key provisions of the Central American Free Trade Nobody is under the impression that Central America give you what you want on textiles and jobs at home,’” Agreement, which will eliminate tariffs on qualifying goods that will dethrone China as the rising sourcing star. said Rep. Robin Hayes (R., N.C.) in a phone interview. flow between the U.S., Guatemala, Honduras, Nicaragua, El “They won’t become a powerhouse, but they could Hayes said he was in discussion with U.S. Trade Salvador, Costa Rica and the Dominican Republic, are: stay healthy,” said Wendy Wieland Martin, Kellwood Representative Rob Portman into the early hours of ■ Yarn-forward rule of origin: Apparel assembled in the Co.’s vice president of international trade. Thursday morning and is still hammering out the de- region must use U.S. or regional yarn and fabric to qualify for Had the agreement been passed sooner, more pro- tails of what he would like in exchange for his vote. duty-free treatment when it is exported back to the U.S. duction might have stayed in Central America, she said. Last-minute political maneuvering secured the votes ■ Cumulation: Preferential trading partners Mexico and “It will provide great market access,” said Helga of at least four Republican textile-state lawmakers, in- Canada are allowed to take part in the agreement, in a sense Ying, director of worldwide government affairs and cluding Reps. Bob Inglis (R., S.C.), J. Gresham Barrett folding in the North American Free Trade Agreement, with a trade policy at Levi Strauss & Co. “It promotes regional (R., S.C.), Michael Rogers (R., Ala.), and Spencer Bachus limited amount of woven apparel, denim apparel and wool growth. It drives demand for U.S. goods and services.” (R., Ala.), who committed to voting for CAFTA based on apparel made in the CAFTA countries from Mexican and Ying also stressed that the agreement would encour- three side deals dangled by the administration. Canadian fabric qualify for duty-free treatment in the U.S. age better enforcement of workers’ rights in the region. “I’m standing here tonight certain that CAFTA is a ■ Tariff Preference Level: An allowance for Nicaragua to use “It’s a bellwether on trade and whether or not this wise Western Hemispheric strategy,” said Inglis during 100 million square meters equivalent of foreign fabrics and yarn. country and this government are serious about keeping the two-hour floor debate. “I’m convinced… the best ■ Single transformation: Special rules for bras, boxers, free trade and opening markets,” said Kevin Burke, strategy available is to combine with our neighbors to pajamas and woven dresses that make them eligible for duty- president and ceo of the American Apparel & Footwear the south to compete with the Chinese.” free treatment in the U.S. if they are cut and sewn in the region Association. “The last thing we need is to be viewed by Barrett, who was one of the last members to come using U.S. or regional thread. Fabric may be sourced from the world as protectionist.” out in support of CAFTA before the vote, based his vote anywhere in the world. Textile opponents painted the passage of CAFTA in on the side deals and last-minute support from a major ■ Wool: CAFTA countries assembling wool apparel must use stark terms and said they would hold their representa- constituent, Avondale Mills. fabric made in the U.S. or the region, but can source yarn from tives accountable if the side deals are never realized. Barrett, who toured the Avondale plant earlier this anywhere in the world. “If they get the promises upheld, then we applaud week, said he was moved by an employee who has ■ Intellectual Property: Strengthens protections for U.S. them,” said Roger Chastain, president and chief operat- worked for the company for 31 years and is now a quali- patents, trademarks and . ing officer of Mount Vernon Mills, based in Mauldin, ty assurance inspector. ■ Labor: Designed to protect workers’ rights through S.C. “If they don’t, we’ll hold them responsible.” “Roosevelt Mims is the heart and soul of this whole programs that support the enforcement of domestic labor laws The drama on the House floor was intense as leaders debate — a textile worker in Graniteville, S.C.,” said and work to improve those laws. held open the 15-minute vote for more than an hour to Barrett on the floor of the House. “[He is] a textile work- lean on Republican lawmakers for support. er…that a good CAFTA is going to save.” 18 WWD, FRIDAY, JULY 29, 2005 WWD.COM Macy’s to Extend Reach by 330 May Stores

Continued from page one Macy’s New York flagship the company said. In addition, Terry Lundgren, Fed- in Herald Square. erated’s chairman, chief executive and president, said in an interview that five to 10 May stores may become Bloomingdale’s. Federated identified 68 duplicate locations [in 66 malls] to be divested starting next year. That includes 41 May stores operating in 12 states under various name- plates, and 27 Macy’s in 14 states. Dillard’s, Nordstrom and J.C. Penney are likely to be among the rival chains most interested in many of the sites. The company said stores to be shed represent $2 bil- lion in volume, which means the combined Federated- May empire will have about $28 billion in sales. Sears is considered the nation’s largest full-line department store chain with over $30 billion in sales; Macy’s be- comes the second largest. About 50 percent of the May sites are company owned; 50 percent are leased. Ever since Federated purchased Macy’s in 1994, res- cuing it from bankruptcy, management has sought to cat- apult the brand into a national chain that gives Macy’s greater buying clout and the ability to advertise national- ly, roll out private label brands such as INC and Charter Club, cut millions in expenses and have a wider web for luring talent. Among the challenges will be keeping the chain’s fashion edge and servicing the increased debt from the merger and integrating management and technologies. Lord & Taylor’s fate is unknown. “Being merchant-driven has been the mantra, but fast response and taking fashion risks doesn’t typically find a home in large and inevitably bureaucratic retail organizations,” Lundgren said. said Isaac Lagnado, president of The largest number of May-related divestitures are Tactical.org., a consulting firm. “How on the West Coast, where 16 Robinsons-May stores will do you keep creativity and experi- be shed. Nine Strawbridge’s locations, primarily in the mentation within the context of a Philadelphia area, also will be among those sold off. multibillion-dollar entity?” Two markets Macy’s still won’t be in are Omaha and Federated operates 450 depart- Jacksonville, Fla. It’s possible Federated would build ment stores. Last year, the retailer Macy’s stores there, but that has not been planned. had sales of more than $15.6 billion. Macy’s took a major step to become national in May had sales of $14.4 billion. March by changing several of Federated’s regional de- The merger, approved by share- partment store nameplates to Macy’s. Those former holders on July 13, is likely to close Federated regional nameplates were Rich’s, , in the third quarter and the plans Lazarus and Bon Marché. outlined Thursday are subject to The merger, while strengthening the Macy’s brand change. It is possible more locations and bolstering Federated’s clout over vendors, as well will be cut, officials acknowledged. as providing new talent to the organization, will force However, Lundgren said he is trying management to figure out how it tailors merchandise to to keep everyone up to speed on the local fashion preferences. However, Lundgren previous- integration process and reduce anxi- ly has said Macy’s will still operate with its regional eties among May staffers over their headquarters in Miami, Seattle, New York, Atlanta and futures. San Francisco to help regionalize the goods. “One of the things I have said to “Integration historically has been a big problem, but May Co. employees is that, as we get Federated is one of the better integrators, and they are to the point where we have made probably the best qualified at evaluating talent,” said firm decisions, I will try to communi- Tactical.org’s Lagnado. cate them broadly so they are not wondering what is consumers would view the name changes. While the Integrating systems is always a headache for retail- going to happen. We want to continue an open and hon- study isn’t complete, data obtained so far indicates that ers, but it is not the obstacle it was 10 years ago. “The est communication,” Lundgren said. the May regionals “are all great names, though clearly personnel is increasingly savvy and adaptive to these He promised that the management in the stores will viewed as regional names and not expandable beyond things,” Lagnado said. “The technology is good.” be retained, as well as the vast majority of May associ- their borders,’’ Lundgren said. “There is a positive re- Still, Federated’s “leviathan size and deep pockets ates. “You can do that through normal attrition, and we sponse to the Macy’s name.” and capital-raising power will allow Federated to take a think we can grow the store businesses, particularly by Conceding that employees are protective of their much longer view on certain programs and tolerate the adding private brands to the mix. If the stores perform store names, Lundgren maintained: “Why protect the kind of risk with launching new formats, which lesser better, the result is [that] we can hire more people.” status quo when the national idea is the best idea? Why players could not,’’ he said. No job cuts will occur before March, Lundgren said. not try something new and different?” “This move finally makes real the concept of ‘brand- Macy’s stores will include employees from the former He explained that decisions on store dispositions ing’ in traditional department store retailing,” Lagnado May stores. Lundgren has already met with many May stem from a desire not to have excess real estate in the continued. “The economies of scale of a single name- personnel from various divisions, in what one May exec- portfolio where Federated stores compete against them- plate like Macy’s are enormous and they apply to both utive called “meet-and-greets.” selves in the same shopping centers. The federal gov- the top line as well as the expense side of the ledger. The conversion of May units to Macy’s means just ernment has been examining the merger and potential Although it has long had clout, Macy’s private labels can about all of May’s regional nameplates, including restraint of trade issues, but has not yet issued any di- now approach or exceed many independent national Filene’s, Strawbridge’s, Hecht’s, Robinsons-May, Famous- rectives to Federated. Decisions made by Lundgren and brands in scope in five to seven years.” Barr, Foley’s, The Jones Store, Kaufmann’s and Meier- his team could help satisfy government concerns. Not everybody welcomed the changes. “It is the ho- Frank, will disappear. Lundgren said Federated is familiar with most May mogenization of retailing,” said Steve Gartner, presi- Lord & Taylor could be sold, liquidated or retained, stores, many of which are similar to Macy’s in square dent of Philadelphia-based Metro Commercial Real but might not be part of the Federated empire, long- footage and merchandise content. Estate, a real estate brokerage and advisory firm. “You term. Developers are said to have already begun show- “We know the business,” he said, though Lord & visit any great mall, whether it is Short Hills [N.J.], King ing an interest in the flagship on Fifth Avenue and 38th Taylor is an exception. “It’s very different in size and as- of Prussia [Pa.] or Tysons Corner [Va.], and the retail Street here. sortment from the rest of May, and we are restricted lineup is almost identical. There is no differentiation. Lundgren acknowledged that, should the Marshall from learning too much about their current business “The good news is that Macy’s emerges as the only na- Field’s nameplate be retained, there would be a big ge- strategies until the deal closes.” tional middle to upper full-line department store. That ographic hole in the grand plan to make Macy’s truly Both Field’s and L&T have been struggling. is cause for optimism and nobody will have that depth of national. “Marshall Field’s is a very good name. It’s “We respect that May Co.’s regional store names are geography, and they sit above Penney’s and Sears.” unique among other department stores. We want to deeply rooted in their communities, we appreciate the The next question is whether Federated will decide make sure we do the right thing. We will study the cus- heritage and traditions associated with those names, to drop its own corporate nameplate and call itself tomer and do the research.” and we expect to continue to play an important role in Macy’s. Asked if he was contemplating that, Lundgren Federated has been conducting research on how the communities where our customers live and work,” said, “No. Not really.” WWD, FRIDAY, JULY 29, 2005 19

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