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Wwd011411.Pdf 2 WWD, FRIDAY, JANUARY 14, 2011 WWD.COM Prada Opening Offices retail In Paris and Hong Kong Target Gets Northern Exposure By DAVID MOIN for Lord & Taylor in 2006. NRDC’s roots are By LUISA ZARGANI in real estate, so its recent acquisitions of re- Target is getting set to invade Canada, and in tailers have raised speculation that real es- MILAN — Prada is taking its design team east and west. a big way. tate owned by the retailers could be sold off. In a groundbreaking move, the luxury goods house said it plans to America’s trendy discounter will open 100 With many of its sites going to Target and open two new design and research offices in Paris and Hong Kong, the to 150 stores across Canada in 2013 and 2014, possibly other retailers, Zellers, currently first outside company headquarters here. The offices will be complemen- through a $1.84 billion deal to take over up to with 279 locations, will become a much- tary to and coordinated by the Milan base and are expected to be up and 220 Zellers leases. pared-down business, Baker noted. “We are running within the first half. Target’s entry into Canada marks the going to run all Zellers stores through 2011, The company said the openings are in line with international develop- chain’s first expansion outside the U.S. The then run many in 2012. By 2013, it will be a ment of its brands and will help it approach creativity in a new manner. deal may also open the way for other retailers small division,” he said. Zellers will sublease “Gruppo Prada believe that research must represent cultural integra- to enter Canada since Target Corp. could gain certain sites from Target. tion and the synthesis of a real intellectual collaboration between differ- control over many more leases than it plans to Baker said Target hasn’t made final de- ent worlds,” the firm said. “To obtain this, it is necessary to create a real convert to its own stores. In addition, Zellers terminations on which Zellers to convert to network from which to draw and acquire ideas, innovative cues and new could decide to give up leases that Target Targets. “We don’t know exactly where they resources in all fields, including that of technological advancement.” doesn’t take. are,” Baker said. “They haven’t selected the The offices will help stimulate and promote new international re- Kohl’s, J.C. Penney, Macy’s and Kmart are stores they want. They have a right to pick up sources, while also consolidating Prada’s presence in two important cit- among the American retailers with no stores to 220 stores, any stores they want.” ies at both the design and business levels, said the company. in Canada, with Kohl’s the most eager to ex- Asked if Target would compete with “This is a very intelligent and innovative way of thinking,” said a Milan- pand across borders, according to sources. Hudson’s Bay Trading Co., specifically The based luxury goods consultant, who requested anonymity. “Automakers Retailers already operating in Canada, in- Bay, Baker replied: “Maybe in some really and phone companies have research and design centers around the world, cluding Wal-Mart and Lowe’s, would be inter- small way,” explaining that Target’s prices why shouldn’t fashion? Also, it’s one thing to have a team living in Asia, for ested in additional locations, though Target are lower and that The Bay sells brands that example, with a different approach and way of thinking, and a totally dif- would not be interested in facilitating Wal- Target doesn’t stock. ferent thing to have employees based in Milan who travel to Asia.” Mart’s growth. Considering its popularity in the U.S. and The source also noted Prada has always invested heavily in its design its reputation for innovative team and in shaping new talent. Several designers flourished during their marketing, Target should go over time at the company and went on to succeed in the industry, including Target will take over well with Canadian consumers. Yves Saint Laurent creative director Stefano Pilati, who was Miuccia many Zellers locations. There’s also less retail competi- Prada’s assistant designer at Miu Miu; Neil Barrett, who today designs his tion in Canada than in the U.S. own line; Yvan Mispelaere, now creative director at However, it won’t be a slam Prada Diane von Furstenberg; Rodolfo Paglialunga, now dunk. Target will have to reno- on the creative director at Vionnet, and former Gucci and vate the Zellers stores and runway. Valentino creative director Alessandra Facchinetti. adapt its merchandising to the While the Hong Kong office “obviously signals smaller footprints. Zellers av- a strong attention to Asia,” said the source, the rea- erage 90,000 to 100,000 square son for a base in Paris is less transparent. “Either feet, while Target stores average [Miuccia Prada and her husband Patrizio 135,000 square feet. Target ex- Bertelli] found the right person to head the pects to spend more than 1 bil- team there, or, given that Miu Miu shows in lion Canadian dollars, or $1.03 Paris, they may want to further differentiate billion at current exchange, on it from the signature line,” he speculated. remodeling the sites. Armando Branchini, vice president of Asked if there would be much Milan-based consulting firm InterCorporate, difference between Target in also applauded the project. “It’s a very posi- the U.S. versus Canada, a Target tive move: it’s so important to have anten- spokesman said: “We expect to nae on the market,” he said. “These new The deal enables Zellers’ parent, Hudson’s offer a similar breadth and depth of merchan- design offices will allow Prada to be more Bay Trading Co., to eliminate its Canadian debt dise.” As far as Target adapting to the smaller in touch with local aesthetics and culture. and pour capital into its two department store sites, merchandising alterations would be Globalization does not mean homogeniza- chains, the 92-unit The Bay in Canada and the determined on a site-by-site basis. Target is tion, but the ability to take into account and 48-unit Lord & Taylor in the U.S. Hudson’s Bay developing a smaller prototype in the Seattle enhance cultural and aesthetic diversity.” Trading Co. also operates the 160-unit Field’s, area that will open before any stores open in The analyst also said the choice of Hong another discounter selling a range of products, Canada. It could contain features applicable Kong was a nod to the firm’s possible IPO. and the 69-unit Home Outfitters chain. to Canadian sites. Speculation has been mounting that “This is a spectacular transaction,” Target is also considering other countries Prada might be considering a listing in Richard Baker, chairman and chief execu- for expansion, such as Mexico. Hong Kong, as the Italian firm capitalizes tive officer of Hudson’s Bay Trading Co., According to the Minneapolis-based re- on growing revenues in the Asia-Pacific said Thursday when the deal was unveiled. tailer, the financial returns on the Canadian region. That market showed a 51 percent “It generates a huge amount of cash that we stores are expected to be in line with returns surge in sales in the first nine months of can now use to pay down our debt and invest on new Target stores in the U.S. There will be 2010. In particular, China is the area that in our operating companies going forward.” some dilution to earnings prior to store open- is developing at the quickest pace for The debt stems from NRDC Equity Partners’ ings, followed by accretion to earnings in the the company, which intends to open 17 acquisition of The Hudson’s Bay Co. in 2008, first full year of operation. stores there next year and another 11 in which was then transformed into Hudson Bay Target said its Canadian expansion will gen- 2012. As reported, Prada is planning a fashion show Trading Co., a holding company for the four erate thousands of jobs there through construc- in Beijing on Jan. 22 to make a statement in China. operating divisions. According to reports, tion projects and store operations. Typically, Maestri Regarding the timing of the IPO, Prada said in NRDC paid $1.1 billion for Hudson’s Bay, and Target has 150 to 200 employees per store. e D November that it will likely take place in the second remains acquisition minded. During the in- Target also said it intends to actively pursue Davi half of 2011, depending on market conditions. The com- terview, Baker did cite the possibility of using the sale of its credit card receivables portfolio, by pany canceled plans for a listing several times over the some of the cash from the Zellers deal for an which totaled $6.7 billion as of Oct. 30. First past few years. A location has not been confirmed. acquisition. NRDC also paid about $1 billion Annapolis has been hired to advise Target. photo To e-mail reporTers and ediTors aT WWd, The address is Daily Quote toDay on WWD.CoM [email protected], using The individual’s name. WWD IS A REGISTERED TRADEMARK OF ADVANCE MAGAZINE PUBLISHERS INC. AXXXXX still ■ PITTI: See more images and COPYRIGHT ©2011 FAIRCHILD FASHION GROUP. ALL RIGHTS RESERVED. PRINTED IN THE U.S.A. from VOLUME 201, NO. 10. WWD (ISSN 0149–5380) is published daily (except Saturdays, Sundays and holidays, with one additional When I say video of the Gareth Pugh collection, issue in May, June, November and December, two additional issues in February, March, April and August and three additional Gareth at WWD.com/menswear-news.
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