Sweet Talk

WWD

PHOTO BY THOMAS IANNACCONE; STYLED BY MAYTE ALLENDE

By RACHEL STRUGATZ

WAL-MART STORES INC. wants to sharpen its digital game through acquisition.

The retailer, which has become one of the most voracious dealmakers in tech, said Tuesday that it would buy social marketplace Luvocracy through its @WalmartLabs research and development arm.

The deal marks the unit’s 14th acquisition and another signal that the world’s largest retailer plans to use all the tools at its disposal to boost its market share. Already about 245 million customers visit Wal-Mart’s 10,900 stores and its 10 Web sites each week.

The Luvocracy purchase and the expertise it brings on board could be particularly useful for Wal-Mart as it tries to help that army of shoppers navi-gate its vast product offerings. Luvocracy specializes in connecting users with like-minded shoppers and helping them sift through a large number of products and fi nd what they want.

“Luvocracy was one of the fi rst companies to en-able the entire social shopping experience — from discovery to commerce — to occur within the four walls of its app,” said Ben Galbraith, vice president of global products for @WalmartLabs.

A spokesperson for Wal-Mart said Luvocracy’s technology won’t be integrated into walmart.com, but the team behind the startup will “enable us to inno-vate in design, product and discovery shopping.”

Luvocracy was founded in 2011 by Nathan Stoll and Roger Barnett and raised $11 million in funding last

SEE PAGE 9

AIMING TO BE BIGGEST

MW Outlines Strategy,Shares Decline 9.9%

Wal-Mart on the ProwlTo Boost Web Expertise

SEE PAGE 12

Pastels aren’t just for girly dresses. For resort, even suits got a dose of sweetener. Here, Osman’s cotton, nylon and elastane blazer and skirt and silk blouse. Alexis Bittar ring; Marni shoes.

WEDNESDAY, JULY 30, 2014 ■ $3.00 ■ WOMEN’S WEAR DAILY

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SNOOPY STYLETHE BELOVED “PEANUTS” BEAGLE AND HIS SISTER BELLE GET THE FASHION TREATMENT FROM THE

LIKES OF DRIES VAN NOTEN, ISABEL MARANT, DIANE VON FURSTENBERG AND MORE.

PAGES 4 AND 5

DIOR AND THE PRINCESS

GIGI’S GROUP PRINCESSPRINCESS

CHRISTIAN DIOR LINKS WITH THE

PRINCESS GRACE FOUNDATION-USA TO SPONSOR ITS

UPCOMING AWARD GALAS. PAGE 6

CATCHING UP WITH GIGI HADID ABOUT MODELING, HER FAMOUS FRIENDS AND LOVE. PAGE 10

By JEAN E. PALMIERI

THE MEN’S WEARHOUSE INC. has lofty ambitions — to become the largest seller of men’s apparel in the United States — but Wall Street has some doubts about the plan.

Currently at number three behind Macy’s Inc. and Kohl’s Corp., the retailer is projecting sales of $3.7 bil-lion by the end of 2017 as it works to absorb its former rival and latest conquest, Jos. A. Bank Clothiers Inc. Together, the companies had sales of $2.6 billion in 2013.

In an analysts’ presentation in New York City on Tuesday morning, Men’s Wearhouse management said that over the next three years the combined company will have earnings before interest and taxes of $500 mil-lion, an average comparable-store sales increase of 2 to 3 percent, and will open 30 full-line Men’s Wearhouse stores a year until it reaches its goal of 750 units, a num-ber the retailer expects to hit in 2016. Currently, there are 653 full-line Men’s Wearhouse stores.

Shares of the stock were hit hard Tuesday when investors appeared to be disappointed that the merg-er between the two companies won’t produce cost savings as soon as some had expected.

The stock dropped 9.9 percent to $51.66 with near-ly six million shares trading hands — well above the 651,000 daily average for the past three months.

Analyst Janet Kloppenburg of JJK Research said some investors were expecting the company to realize the full benefi t of the deal’s $100 million to $150 mil-lion synergies in 2016, but Men’s Wearhouse said those savings won’t be fully realized until the following year.

“It was just the semantics,” Kloppenburg said. “Expectations might have been a little bit higher. It’s still a great story and is going to be a very impactful integration in terms of cost savings.”

In “sharing our vision for the growth of Men’s Wearhouse,” Doug Ewert, president and chief execu-tive offi cer, said that after a rough 2012, all divisions

By KRISTI ELLIS

WASHINGTON — The National Labor Relations Board has ruled in favor of the Neiman Marcus Group Inc.’s Bergdorf Goodman in a case involving a union trying to organize two separate shoe de-partments within its women’s store in Manhattan.

The NLRB said in its decision that the petition brought by the Retail, Wholesale Department Store Union to organize a salon shoe department on the second floor of the Bergdorf store and a contempo-rary shoe department located on the fifth floor did not represent an “appropriate [bargaining] unit” because it “lacked a community of interest.”

Retailers have grown concerned over decisions handed down by the NLRB, most recently one in which it ruled against Macy’s Inc. and allowed a union to move forward with an organizing election involving employees in a cosmetics and fragrance department at one of its stores. The retail commu-nity argues that the Macy’s ruling will pave the way for separate union bargaining units within stores, which they say could fragment their business.

But the NLRB’s decision in the Bergdorf case

indicated that the board is taking decisions about union bargaining units within stores on a case-by-case basis.

The RWDSU petitioned the NLRB to cover 46 shoe sales associates in the two departments and an election was held in June 2012, but the ballots were impounded because of the pending case before the NLRB. In its decision posted late Monday, the NLRB dismissed the union’s petition, vacated the union election and remanded the case back to an NLRB regional director for “further appropriate action.”

Neiman Marcus declined to comment on the NLRB decision, but two retail trade and lobbying groups weighed in.

“It is certainly a win for Bergdorf without a question,” a spokesman for the Retail Industry Leaders Association said.

However, even with the decision in favor of Bergdorf, RILA and the National Retail Federation believe the NLRB will continue to push for the cre-ation of micro unions.

“This is a qualified victory for the retail industry, but significant challenges continue to confront the nation’s retail community,” including the concern about micro unions, an NRF spokesman said.

WWD.COMWWD WEDNESDAY, JULY 30, 20142

TO E-MAIL REPORTERS AND EDITORS AT WWD, THE ADDRESS IS FIRSTNAME_LASTNAME@FAIRCHILDFASHION.COM, USING THE INDIVIDUAL’S NAME. WWD IS A REGISTERED TRADEMARK OF ADVANCE MAGAZINE PUBLISHERS INC. COPYRIGHT ©2014 FAIRCHILD FASHION MEDIA. ALL RIGHTS RESERVED. PRINTED IN THE U.S.A.VOLUME 208, NO. 21. WEDNESDAY, JULY 30, 2014. WWD (ISSN 0149–5380) is published daily (except Saturdays, Sundays and holidays, with one additional issue in March, April, May, June, August, October, November and December, and two additional issues in February and September) by Fairchild Fashion Media, which is a division of Advance Magazine Publishers Inc. PRINCIPAL OFFICE: 750 Third Avenue, New York, NY 10017. Shared Services provided by Condé Nast: S.I. Newhouse, Jr., Chairman; Charles H. Townsend, Chief Executive Officer; Robert A. Sauerberg Jr., President; John W. Bellando, Chief Operating Officer & Chief Financial Officer; Jill Bright, Chief Administrative Officer. Periodicals postage paid at New York, NY, and at additional mailing offices. Canada Post Publications Mail Agreement No. 40644503. Canadian Goods and Services Tax Registration No. 886549096-RT0001. Canada Post: return undeliverable Canadian addresses to P.O. Box 503, RPO West Beaver Cre, Rich-Hill, ON L4B 4R6. POSTMASTER: SEND ADDRESS CHANGES TO WOMEN’S WEAR DAILY, P.O. Box 6356, Harlan, IA 51593. FOR SUBSCRIPTION, ADDRESS CHANGES, ADJUSTMENTS, OR BACK ISSUE INQUIRIES: Please write to WWD, P.O. Box 6356, Harlan, IA 51593, call 866-401-7801, or email customer service at wwdPrint@cdsfulfillment.com. Please include both new and old addresses as printed on most recent label. For New York Hand Delivery Service address changes or inquiries, please contact Mitchell’s NY at 1-800-662-2275, option 7. Subscribers: If the Post Office alerts us that your magazine is undeliverable, we have no further obligation unless we receive a corrected address within one year. If during your subscription term or up to one year after the magazine becomes undeliverable, you are ever dissatisfied with your subscription, let us know. You will receive a full refund on all unmailed issues. First copy of new subscription will be mailed within four weeks after receipt of order. Address all editorial, business, and production correspondence to WOMEN’S WEAR DAILY, 750 Third Avenue, New York, NY 10017. For permissions requests, please call 212-630-5656 or fax the request to 212-630-5883. For reprints, please e-mail reprints@condenast.com or call Wright’s Media 877-652-5295. For reuse permissions, please e-mail contentlicensing@condenast.com or call 800-897-8666. Visit us online at www.wwd.com. To subscribe to other Fairchild Fashion Media magazines on the World Wide Web, visit www.wwd.com/subscriptions. 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, please advise us at P.O. Box 6356, Harlan, IA 51593 or call 866-401-7801. WOMEN’S WEAR DAILY IS NOT RESPONSIBLE FOR THE RETURN OR LOSS OF, OR FOR DAMAGE OR ANY OTHER INJURY TO, UNSOLICITED MANUSCRIPTS, UNSOLICITED ART WORK (INCLUDING, BUT NOT LIMITED TO, DRAWINGS, PHOTOGRAPHS, AND TRANSPARENCIES), OR ANY OTHER UNSOLICITED MATERIALS. THOSE SUBMITTING MANUSCRIPTS, PHOTOGRAPHS, ART WORK, OR OTHER MATERIALS FOR CONSIDERATION SHOULD NOT SEND ORIGINALS, UNLESS SPECIFICALLY REQUESTED TO DO SO BY WOMEN’S WEAR DAILY IN WRITING. MANUSCRIPTS, PHOTOGRAPHS, AND OTHER MATERIALS SUBMITTED MUST BE ACCOMPANIED BY A SELF-ADDRESSED STAMPED ENVELOPE.

Puma Banking on Marketing Push

NLRB Sides With Bergdorf’s in Union Case

By PAULINA SZMYDKE

PARIS — Puma SE continues its rocky road to recovery. The German activewear firm, whose earnings

and sales continued to slide in the second quarter of 2014, said it was eager to launch the largest global marketing campaign in its history, hoping to finally turn around its fortunes.

“It’s a 360-degrees concept, including retail, social media, digital and print. The first TV spot will air on Aug. 7,” Björn Gulden, Puma’s chief executive officer, said during a conference call Tuesday.

“And it’s just the beginning,” he continued, adding the campaign, dubbed “Forever Faster,” was “a long-term project with continuous investment up to the Olympic Games in Rio de Janeiro in 2016.”

Although Gulden would not disclose the compa-ny’s marketing expenditures for this undertaking, he said they were going to be “considerable” and “much more” than what Puma had spent in the past.

Featuring a fleet of the brand’s top athletes and testimonials, including Usain Bolt, Mario Balotelli and Lexi Thompson, the campaign is slated to be launched in North and South America as well as the Asia-Pacific region first, before rolling out to Europe and the rest of the world.

“This has to do with the fact that the back-to-school season starts at different times in different regions,” the ceo explained.

Gulden said the cam-paign’s main message would be that Puma is back.

“We want to show that Puma has cool and good athletes. And we want to combine personality and attitude with products,” he explained.

In the immediate aftermath of the FIFA World Cup, Puma SE said second-quarter net profit was down 76.2 percent. The company, which is controlled by French group Kering, said the result was in line with expectations.

Negatively impacted by volatile currencies in sever-al key regions including Russia, Turkey, Japan and the Americas, net earnings stood at 4.2 million euros, or $5.8 million, in the three months ended June 30, versus 17.5 million euros, or $22.8 million, in the year-ago period.

Total sales for the quarter were down 5.8 per-cent to 652.2 million euros, or $894.6 million. Dollar figures are calculated at average exchange for the period to which they refer.

“I have said all along: We know that the reposi-tioning of Puma and the turnaround of the business will take time. However, I feel we are making prog-ress on all our key strategic priorities and we have initiated the right projects to make 2014 the start of the turnaround,” Gulden assured.

He said both the brand’s dual-colored Tricks football boots and its national team jerseys with ACTV technology have had “excellent” sell-through and exceeded expectations.

“They almost sold out everywhere. It’s what we call a fast design,” he said. “In addition, we celebrated a successful Arsenal launch in July, followed by very

good initial sales at retail of Arsenal replica jerseys.”However, only apparel showed a significant sign

of improvement in the second quarter, growing 12.8 percent thanks to World Cup-related sales. By con-trast, footwear dropped 9.1 percent, while acces-sories, hindered by declining golf equipment sales, were up 3.4 percent, which is less than in the same quarter last year.

Gulden maintained he felt “comfortable in con-firming our guidance,” which projects flat full-year currency-adjusted net sales and a 3 percent in-crease in net earnings.

The “Forever Faster” offensive is also expected to boost confidence among retailers, who have been re-luctant to give retail space to Puma, favoring Adidas and Nike over the struggling activewear firm.

Gulden said the company is channeling its ef-forts toward improving distribution by teaming up with key retailers to develop joint products and marketing programs, citing Foot Locker as an ex-ample where it worked.

He said business with Foot Locker had been de-clining until Puma launched the “Puma Lab” ini-tiative in February, increasing its presence to 126

doors in the U.S. and gener-ating “a positive spillover ef-fect” to other key retailers in the U.S.

Consequently, second-quarter sales in the Americas improved 4.6 percent, while in the EMEA (Europe, Middle East and Asia) region they dropped by 1.4 percent due to declining wholesale revenues in France and Scandinavia.

Following the Foot Locker example, Gulden said he was

hoping to initiate the same “U-turn” with France’s largest sports retailer Decathlon, which lost its con-fidence in Puma, according to the ceo.

“It’s about trust. We need to convince them with a new positioning and new products that they need Puma,” he argued.

Puma appointed Lars Soerensen as its chief op-erating officer. Soerensen, who joined the company from Bestseller in November 2013 after holding other managerial positions at Esprit, Adidas and Lego, will succeed Andy Koehler. Considered a key figure in rebuilding the company, Koehler is said to be leaving Puma for personal reasons, effective Thursday, just a year after taking up the post.

Gulden neither confirmed nor denied German newspaper reports that Puma is looking to diversify its business model and take a stake in Borussia Dortmund, Germany’s only publicly traded football club.

“Because it’s publicly traded, we can buy shares at any given time, and if we buy a bigger amount, we will talk about it. We do not hold any shares at the moment, but I cannot tell you what will happen tomorrow or the day after,” Gulden said, fielding re-curring questions on the matter.

He added: “The sports industry is evolving. When big football clubs offer their shares, you have to look at it strategically, and that’s we are doing.”

Puma SE’s own shares closed at 202.45 euros ($271.49), up 1.9 percent, on Tuesday, reflecting the company’s optimism about its future progress.

ON WWD.COM

THE BRIEFING BOXIN TODAY’S WWD

Men’s Wearhouse is gunning to become the largest men’s apparel retailer in the U.S. PAGE 1 Wal-Mart Stores Inc. said Tuesday it would buy social marketplace Luvocracy. PAGE 1 Snoopy and his sister Belle will once again be given a makeover with the reprisal of the “Snoopy in Fashion” project. PAGE 4 Christian Dior will be the sole presenting sponsor at upcoming Princess Grace Foundation-USA award galas. PAGE 6 BaubleBar has raised $10 million in a Series B financing, led by J. Christopher Burch’s Burch Creative Capital. PAGE 6 Buyers and manufacturers at the Berlin trade shows have become more optimistic about the denim market. PAGE 7 The unofficial slogan at the upcoming Outdoor Retailer trade show might be: Let’s get physical — and fashionable. PAGE 8 Flash-sale site Rue La La has hired J.P. Morgan to help it find some investors. PAGE 9 Lisa Perry is unveiling a one-day collaboration with Dominique Ansel of Cronut fame on Saturday. PAGE 11 Ireland Baldwin, the daughter of Alec Baldwin and Kim Basinger, will be the face of Rampage’s fall campaign. PAGE 11 Twitter’s stock jumped 29 percent as the company’s ad business pushed up its sales. PAGE 12 Kendra Scott has linked with Norwest Venture Partners to bolster its brick-and-mortar and online growth. PAGE 12

Gigi Hadid at the Guess event during New York Fashion Week. For more on the model, see page 10 and WWD.com.

MODEL CALL: WWD recently caught up with NYU sophomore Gigi Hadid in between takes on the annual Pirelli Calendar photo shoot. For more, see WWD.com.

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REWRITING THE RULES

A VISION FOR CHANGE

WHAT IS THE NEXT BIG THING ?

WHO DEFINES STYLE ? THE FUTURE OF RETAIL: BRICKS vs. CLICKS

Glen SenkFRONT ROW PARTNERS

John W. SpelichALIBABA GROUP

Steve Holmes INTEL

Yancey StricklerKICKSTARTER

Ron FraschCASTANEA PARTNERS

By JESSICA IREDALE

SNOOPY, the beloved com-panion of Charlie Brown, has always been more of an accessories type than a true fashion hound — er, beagle. As imagined by “Peanuts” creator Charles Schulz, Snoopy was ren-dered mainly in a slim black collar and nothing else, though he dabbled in thematic ensembles such as a flight cap and goggles as the World War I Flying Ace, and sunglasses as Joe Cool.

Then in 1984, in what could be dubbed comics-meet-couture, the beagle and his kid sister Belle got the Cinderella treatment courtesy of an impressive list of design-ers, including Giorgio Armani, Gucci, Gianni Versace, Thierry Mugler, Jean Paul Gaultier and Karl Lagerfeld, all of whom cre-ated custom outfits for the duo based on the fashions of the time. The resulting collection of Snoopy and Belle dolls went on to exhibit at the Louvre, the Natural History Museum of Los Angeles County and throughout Europe and Asia. The whole thing was a silly stroke of mar-keting genius.

“It allowed artists who liked the characters to take them out of the comic page and make them — I don’t know whether you’d call them sassy or just funny,” said Schulz’s widow, Jean. “Everything about Snoopy is funny — the costumes are funny, they make you laugh.”

Now the project is being re-prised for the “Peanuts” comic strip’s 65th anniversary, which falls on the 30th anniversary of the original “Snoopy in Fashion,” and roughly a year before the first major “Peanuts” motion picture hits the screen, to be released in 100 countries and 40 languages.

“It’s this huge, amazing tidal wave of marketing and enthusi-asm,” said Leigh Anne Brodsky, managing director of Peanuts Worldwide. “Our timing is re-ally working well with the mo-mentum and also with these huge milestones.”

Among the designers and labels outfitting Snoopy and Belle this time are Dries Van Noten, Calvin Klein Collection,

Isabel Marant, Rodarte, as well as Betsey Johnson and Diane von Furstenberg, both of whom participated in the first go-round of “Snoopy in Fashion.” (Here, sketches and mock-ups of the looks.)

“We are so excited to cel-ebrate again 30 years later with Snoopy and Belle in fashion,” said von Furstenberg. “We de-signed some pajamas for Snoopy and a wrap dress for Belle, both in our signature chain link.”

Asked if Schulz, who died in 2000, thought about fashion, Jean replied, “No, not at all! We always say he was a boy from the Midwest. Although, I have to say, he loved his sweaters and he had the most

beautiful selection of sweat-ers.…It was flattering to him that the designers, who were attracting attention of royalty and stars and so forth, would want to join in the project. I think he pointed out that it’s just fun. It brings people to-gether on a level that really sort of transcends their snooti-ness, if you want.”

The 2014 iteration of “Snoopy and Belle in Fashion,” which features vinyl beagle dolls wearing the designer looks, will launch Sept. 8 at the New Museum during New York Fashion Week. From there, the exhibition will travel to the Palais de Tokyo in Paris, Moscow and Milan.

4 WWD WEDNESDAY, JULY 30, 2014

Good Grief!

Flashback to Fabulous:

Snoopy and Belle in the

Eighties

Snoopy and Belle by Calvin Klein Collection.

Dsquared2

Opening Ceremony

J.Mendel

Diane von Furstenberg Jean Paul Gaultier Emanuel Ungaro Missoni Thierry Mugler

WWD.COM5WWD WEDNESDAY, JULY 30, 2014

Iconix Brand Group owns 80 percent of Peanuts Worldwide, with the Schulz family retain-ing the other 20 percent. This confluence of marketing initia-tives, along with the forthcom-ing film, seeks to introduce “Peanuts” to a new generation.

“The next 12 months are pret-ty critical for the brand, with this major motion picture coming

out with 20th Century Fox,” said Neil Cole, ceo of Iconix. “One of our big goals is elevating the fashion part of the business.”

There is a significant “Peanuts” apparel business, with approximately $300 million to $400 million in sales volume, which Iconix plans to grown to

over $500 million in the next year. “Peanuts” merchandise is available in 100 countries — Europe and Asia, particularly Japan (go figure) are the biggest markets. There are 500 Snoopy Time shops-in-shop in Asia, as well as Charlie Brown cafés.

“Snoopy in Fashion” isn’t the only haute moment for “Peanuts.” There was a recent

collaboration with Colette in Paris; a Woodstock-centric collection with the Italian label Fay is launching for fall; Lladro is creating Charlie Brown and Snoopy figurines to launch in early 2015. As Jean Schulz put it, “We’re taking it beyond the T-shirt.”

Dogs in Designer Duds!

Isabel Marant

Betsey Johnson

Versace Karl Lagerfeld Gucci Betsey Johnson Carolina Herrera

6 WWD WEDNESDAY, JULY 30, 2014

By LAUREN MCCARTHY

NEW YORK — BaubleBar’s future just got a bit brighter.

On Tuesday morning, the online jewelry retailer disclosed that it had raised $10 million in a Series B financing. The leader of the invest-ment: J. Christopher Burch’s Burch Creative Capital. Other investors in-clude Aspect Ventures, Triplepoint Ventures and Comcast Ventures, as well as existing investors Accel Partners and Greycroft Partners.

Burch first came to know BaubleBar through a friend’s daugh-ter, who happened to be one of the company’s first employees. “I was a big fan of their SoHo pop-up [in Manhattan] last summer and I want-ed to learn more,” Burch told WWD in an exclusive interview. Since shut-tering the pop-up in August 2013, BaubleBar has since developed re-tail partnerships with Nordstrom and Anthropologie, the former of which launched in April with 35 doors and has since increased to 117. Such part-nerships were a large contribution to Burch’s decision to invest.

“I was incredibly impressed by BaubleBar’s growth and their move into traditional retail,” said Burch. “I thought this would be the perfect time to not only invest but mentor them as they continue to grow the business and distribution. The girls have an incredible passion for what they are doing and their success so far in setting up a vertically integrated business driven by data analytics re-ally blew me away. Their passion and drive reminds me a little bit of myself building Eagle’s Eye at that age.”

Burch Creative Capital’s in-vestment portfolio includes fash-ion companies Tory Burch and Trademark, chain discount store Five Below and fashion commerce and social media app Trendabl, among others. Burch’s investment in BaubleBar comes on the heels of several accessories acquisitions, including yoga accessories line Outdoor Voices and Hamptons, N.Y.-based beachwear company Solid and Striped, both in late 2013. Most recently, Burch made a small investment in Soludos, a footwear

company specializing in espadrilles. “Given the increasing popularity of minimalist fashion, women will con-tinue to use accessories to follow trends,” Burch said of his recent interest in accessories. “I have seen the strength of the accessories mar-ket play out in other recent invest-ments, like Soludos, Outdoor Voices and Solid & Striped. [And] I loved the BaubleBar thesis that the mod-ern women experiments with fash-ion through jewelry.”

With his new stake in the com-pany, Burch disclosed plans to con-tribute more to BaubleBar than just financial aid. “This is not just an in-

vestment for me,” he said. “I feel so strongly about BaubleBar’s growth potential and the team. I wanted to make sure [founders] Amy [Jain] and Daniella [Yacobovsky] knew that I would always be there for them as their partner. With this investment and my experience in merchandis-ing, sourcing, branding and distri-bution, I know that BaubleBar will continue to explode its direct-to-con-sumer and wholesale businesses.”

BaubleBar was officially launched in January 2011, with Jain and Yacobovsky working out of Jain’s apartment. The company initially raised a $1.1 million seed round, led by Accel in December 2010, and a $4.5 million Series A, led by Accel and Greycroft, in June 2012. BaubleBar now boasts about 160 full-time employees. The site features 850 to 1,000 stockkeeping units live on its site at all times, with 100 to 150 new styles introduced every week.

In addition to its signature collec-tion of necklaces, earrings, bracelets and rings, the site features a “Guest Bartender” series that periodical-ly features existing and exclusive baubles chosen by various influenc-ers, such as model Coco Rocha, ac-tress Ashley Madekwe and blogger Courtney Kerr.

Yacobovsky credited the com-pany’s success in part to the current state of the jewelry business, par-ticularly in the lower-price segment (BaubleBar’s average prices hover around the $20 to $40 mark). “We tend not to be an ‘It’ item business,” she said. “When you look at bags or shoes, there is always an ‘It’ item, but we find that there are broader trends in jewelry with which people get ex-cited about and then shop for their own personal style within that trend.”

With this latest round of invest-ment, the company plans to expand its current retail partnership initia-tive, in addition to experimenting with digital marketing channels and updating existing technology. “It’s important for us to control the customer experience from end to end, so we ship in-house,” said Yacobovsky. “This creates a lot of complexity, especially when you consider that we are a fast-fashion business and we turn inventory in-credibly quickly. While that is great for us from a working capital man-agement standpoint, it means that we need even more sophisticated software and systems. We’re going to be investing up front in a lot of mass infrastructure in some of the resources that build our off-line and retail partners.”

Asked about a five-year plan, Yacobovsky cited the company’s core mission. “We started with a very simple thesis: We wanted to provide a one-stop shop for fashion jewelry,” she said. “We want to keep reinventing and innovating every-thing from partnerships to how we reach the customer. But that core thesis still stands.

Added Burch, “The girls talk about ‘global Bauble domination.’ I think they will be a global brand with tremendous distribution around the world and the best retail partners in the industry.”

By JOELLE DIDERICH

PARIS — The Princess Grace Foundation-USA has unveiled a three-year partnership with Christian Dior under which the French luxury firm will become the sole presenting sponsor for the foundation’s upcoming award galas in Los Angeles, Monaco and New York.

The events are due to be held in Beverly Hills this year, Monte Carlo in 2015 and New York City in 2016.

The gala on Oct. 8, to be attended by Prince Albert and Princess Charlene of Monaco, will mark the foundation’s re-turn to Los Angeles after almost three decades to recognize this year’s Princess Grace Award winners and Prince Rainier III honoree, who have yet to be revealed.

Dior’s links to Monaco date back to 1956, when actress Grace Kelly wore a white satin Dior gown at a ball celebrat-ing her engagement to Prince Rainier III of Monaco. As Princess Grace of Monaco, she would go on to wear Dior on count-less occasions.

Dior wrote a new chapter in its re-lationship with the tiny principality by staging its resort show there last year in the presence of Prince Albert and Princess Charlene, who also hosted a re-

sort display this year for Louis Vuitton. Both brands belong to luxury giant LVMH Moët Hennessy Louis Vuitton.

Sidney Toledano, chief executive of-ficer of Dior, will be a cochair of the Los Angeles gala alongside his wife, Katia.

“Our partnership with the Princess Grace Foundation-USA is deeply rooted in history and mutual admiration be-tween the princely family of Monaco and the house of Dior. We both share the same pursuit of artistic excellence and are honored to be a part of recogniz-ing the artistry of Princess Grace Award winners in theater, dance and film,” Toledano said.

The other cochairs are Robert Iger, chairman and ceo of The Walt Disney Co., and his wife, Bloomberg Television correspondent Willow Bay, in addition to television producer Dick Wolf and his wife, philanthropist Noelle Wolf.

Supporters of the host commit-tee include Denzel Washington and his wife, Pauletta Washington; Reese Witherspoon and her husband, Jim Toth; Mikhail Baryshnikov; Ron Burkle; Mandy Patinkin, and Cicely Tyson.

The Princess Grace Foundation-USA is a charity headquartered in New York City that was established by Prince Rainier after the death of Princess Grace in 1982 to honor her memory. It aims to identify and assist emerging tal-ent in theater, dance and film by award-ing grants in the form of scholarships, apprenticeships and fellowships. The Princess Grace Foundation-USA has be-

stowed awards totaling more than $10 million on close to 700 recipients.

Past winners include director Cary Fukunaga, playwright Tony Kushner and ballet dancer Gillian Murphy.

Dior Links With Princess Grace Foundation-USA

Iconix’s Foreign BentChris Burch Talks BaubleBar InvestmentBy VICKI M. YOUNG

FOR ICONIX BRAND GROUP, the focus is inter-national — whether acquisitions or initial public offerings.

International comprises about 40 percent of the firm’s revenues.

In a conference call to Wall Street analysts fol-lowing the company’s report of second-quarter results on Tuesday, chairman and chief executive officer Neil Cole said, “I see [international] con-tinuing to grow.”

Cole noted the firm’s Peanuts franchise around the world, including its upcoming 2015 computer-animated 3-D film, contributing to revenues. He also cautioned that the growth could depend too on the “types of acquisitions we have going forward. The last three acquisitions were international brands in Umbro, Lee Cooper and Buffalo,” adding that there’s no way to predict the types of deals going forward.

Cole emphasized that the pipeline remains strong and that the company has a strong balance sheet. “We have over $500 million available to us be-tween cash and our current facilities. That’s without even using the securitization warehouse vehicle we have as we continue to buy more properties.”

He also said that while the company is hoping for the initial public offering of a brand under the Iconix China joint venture to occur in the third quarter, “we’re not sure we’re definitely going to be a seller and we’re considering possibly that moneti-zation might happen in early 2015 because it’s based on a multiple of how we perform this year. And our performance is pretty strong this year.”

There was speculation earlier this year that the brand headed for a Chinese IPO is Iconix’s Candie’s operation. Other brand investments under the Iconix China umbrella include Rampage, Badgley Mischka, Royal Velvet, Ed Hardy and Material Girl. China Outfitters Holdings Ltd., a men’s wear retailer that was the London Fog partner in China, was the first of the brands to go public in December 2011. The IPO saw private equity firm KKR & Co. take a $60 million stake in the offering. Iconix elect-ed to cash out half of its investment in the business and leave half in the public firm.

For the second quarter ended June 30, Iconix saw a slide in profits despite record revenue gains.

For the three months, net income fell 8.8 percent to $35.3 million, or 60 cents a diluted share, from $38.7 million, or 66 cents, a year ago. Earnings be-fore interest, taxes, depreciation and amortization rose 8 percent to $78.2 million from $72.7 million last year. Free cash flow was $60 million, compared with $60.8 million last year. Total revenues rose 3.3 percent to $118.9 million from $115.1 million.

For the six months, net income shot up 30.4 per-cent to $95.1 million, or $1.63 a diluted share, on a 6.8 percent revenue gain to $235.1 million.

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Prince Albert with Princess Charlene of Monaco in Dior.

’’’’

I was incredibly impressed by

BaubleBar’s growth and their move into

traditional retail.— J. CHRISTOPHER BURCH,BURCH CREATIVE CAPITAL

WWD.COM7WWD WEDNESDAY, JULY 30, 2014

By QUYNH TRAN

BERLIN — Indigo is on the comeback trail for spring 2015.

After a tough 2013 and a mod-est start in 2014, buyers and man-ufacturers at Berlin’s Bread & Butter, Premium and Seek trade shows are becoming more opti-mistic about the denim market, with stabilization and innovation bolstering their confidence.

At the three fairs earlier this month, skinny fits remained predominant for most compa-nies, although some offered revised boyfriend fits or other models emphasizing comfort. Alternative ideas in jeans con-tinued to emerge, as did new concepts for denim shirts, dress-es, jackets and even accessories.

Non-denim interpretations of denim techniques like indigo dye and jeans weaving for cot-ton and linen also boosted the more traditional blues.

At Bread & Butter, non-denim specialists such as Joop, Tiger of Sweden and Marc O’Polo visibly increased the share of denim in their apparel collections.

“It’s definitely getting bluer,” said Nele Obst, senior denim de-signer for women’s wear at Marc O’Polo. Next year’s look will lean toward “clean vintage,” with a Seventies blue tone star-ring in more destroyed finishes and mid- to high-rise skinny fits, one boyfriend fit, denim dresses, shirts and jackets. The urban lifestyle brand’s new denim sig-nature for spring will be a softer and more fluid Tencel blend as denim assumes a bigger role in the Marc O’Polo collection.

The Mustang brand is going back to its roots, as well. “There will be a lot of blue. Rather than trying to be a casual brand, we’re working on becoming a denim brand again,” said chief product officer Hans-Bernd Cartsberg. Mustang’s women’s wear denim designer Jasmin Ersümer pointed to next sea-son’s “more fashion” jeans with skinnier fits and new signature washings. According to Cartsberg, Mustang’s new direction got “pos-

itive feedback from customers in the German-speaking market and we’re now looking at Russia.”

Buyers from Kolm, an Austrian chain with eight units, agreed denim is again on the rise, adding that “customers are looking for new optics.”

“What’s the definition of a contemporary denim brand? People want newness but they still like the traditional look,” commented Andreas Åhrman, international sales and market-ing director of Nudie Jeans. “Our bestsellers at a price range of 99 to 149 euros [$136 to $205 at cur-rent exchange] are still the slim and tight fits, but there’s a ten-dency towards more comfortable regular fits coming up slowly, and black and gray are receding in favor of more blue.”

Like Nudie, which uses or-ganic cotton throughout its as-sortment, G-Star Raw is also turning toward more sustainabil-ity and presented the Raw for the Oceans collection in collabo-ration with the Vortex Project and Pharrell Williams’ company Bionic Yarn. The range will be launched in August.

“Twenty-seven percent of our clothes are produced according to sustainability guidelines, and we’re planning to increase this share,” said Axel Wittmann, a German sales representative for the firm, adding that the com-pany plans to disclose sustain-

ability data beginning next year. Organic cotton and a “triple-

R philosophy” of “recycling, re-pairing, reusing” are also at the core of Amsterdam-based Kings of Indigo, or K.O.I. “The con-sumers in fashion are becom-ing more aware of the product. They are looking for something individual with a story,” accord-ing to founder and chief execu-tive officer Tony Tonnaer. While he noted price sensitivity, “it’s more about price-performance ratio. People are willing to spend if the product is good.”

Vivian Hartog-Holla, rep-resentative of Denham the Jeanmaker, concurred. “The literacy of denim connoisseurs has increased considerably. If you sell quality, price is less im-portant.” The Dutch company

opened its first permanent store in Berlin this month, and is set to expand in Germany with jeans in the mid and premium range from 129 to 500 euros, or $177 to $688, with the segment between 165 to 185 euros, or $227 to $255, selling best. The focus markets are Germany, the Netherlands, the U.K. and Japan, with South Korea and Australia becoming more important.

Indigo is branching out be-yond jeanswear as well. At the Ethical Fashion Showroom and Bread & Butter, traditional indi-go-dyed scarves from resources such as Living Blue and Indigo People, as well as indigo-dyed linen, popped up as blue spots besides the jeans.

Indigo and linen also come together in the denim collec-

tion of London-based Universal Works. “Indigo is simple, natu-ral and honest; it lives and changes with the wearer and its instability holds a beauty of imperfection that people grow to appreciate more and more,” founder David Keyte re-marked at Seek. The brand has a presence in the U.K., U.S. and Japan, but the German market is “becoming a business, too,” Keyte said.

Silvana Renck, a buyer from Geli’s near Hamburg, told WWD, “Denim is very strong. There was an increasing price sensitiv-ity last year, but it’s more about the quality-for-price value — the customers want to know what they get and are more conscious about the story of product.”

“Denim is definitely taking a bigger share,” said Håkan Ström, chief operating officer of Cheap Monday, at Seek. “Our denim orders have almost dou-bled for spring-summer 2015. We started with skinny jeans 10 years ago, and tight is still driv-ing the market,” he continued.

Cheap Monday introduced the “Spray-On,” very tight jeans in the rock ’n’ roll mode, for fall and will further develop the model for spring 2015.

With denim showing signs of a comeback, it’s appearing in categories other than jeans. Cheap Monday is now offer-ing denim shoes, accessories, jackets and sweaters, while at Premium, Liebeskind’s accesso-ries and apparel range included denim bags with a leather look for spring. After expanding suc-cessfully throughout the U.K., Northern Europe, Germany and the U.S., Asia and Australia are becoming more important mar-kets, according to the company.

All in all, the Asian presence has grown at the fairs, with a great-er turnout of exhibitors and buyers from Japan and South Korea.

Jin Cha, a South Korean mer-chandiser scouting for Central Post, a concept store in Seoul, said: “We are looking for lifestyle concepts and niche brands with an individual touch in denim and in fashion in general.”

New Paths for Denim Seen at Berlin Fairs

The Denham the Jeanmaker booth at the Bread & Butter Berlin fair.

By KRISTI ELLIS

WASHINGTON — U.S. Trade Representative Michael Froman called for a “compact” with sub-Saharan Africa on Tuesday, as the U.S. considers ways to upgrade and expand the African Growth & Opportunity Act.

This includes “sufficiently” extending an apparel pro-vision that helps retailers and brands, further reducing remaining tariffs and moving toward more bilateral or re-gional arrangements with some of the African countries. Froman, in a speech at the Brookings Institution, said the changing global trade paradigm is forcing the U.S. to con-sider new relationships with sub-Saharan Africa.

The Obama administration has undergone a year-long review of AGOA and is in consultation with Congress over renewing and updating the preference program that ex-pires Sept. 30, 2015. Under the program, 40 of 49 sub-Saha-ran African countries are eligible to receive duty benefits.

“Given that Africa is home to the world’s fastest-growing middle class and six out of the top 10 fastest-growing economies in 2014, it’s easy to see why global companies like GE, Caterpillar and Procter & Gamble increasingly view engaging with Africa not as a choice, but as a necessity,” Froman said.

He said imports from AGOA countries to the U.S. have tripled, while U.S. exports to sub-Saharan Africa have in-creased “fourfold” to $24 billion from $6 billion in 2000.

One of the options the U.S. is considering for expand-ing AGOA is renewal of the third-country fabric provi-

sion for a “sufficient period of time to encourage mean-ingful investment and sourcing,” Froman said.

Industry officials are keeping a close eye on AGOA be-cause Congress must renew the program and past delays have disrupted business. AGOA contains a stipulation known as the “third-country fabric provision” that helps companies producing in 27 least-developed countries that are part of the pact to use fabrics outside of the re-gion and still receive duty-free benefits when shipping to the U.S. Apparel and textile imports from the 49 eligible countries hit 260.9 million square meter equivalents, val-ued at $983.8 million, for the year ending April.

Froman also noted that the U.S. is considering “ex-panding AGOA’s coverage while taking into account sensi-tivities here at home.” He said 97.5 percent of all tariffs on imported products from AGOA countries are already duty free and the U.S. is considering opening up the remaining tariffs in place. He said there are 316 tariff lines remain-ing on imported products, covering primarily “sensitive” agriculture and textile imports from sub-Saharan Africa.

Froman said the U.S. “does not intend to open up” tariffs on “extremely sensitive” imported products from Africa, such as certain products in the agriculture and textile areas, “but I think it bears some work to look line by line to see whether there are lines that could be opened up without violating sensitivities.”

But Froman stressed that tariff preferences alone are “not enough” for sub-Saharan Africa, which he said must also address a host of issues, ranging from infrastructure development to trade capacity building,

training and support for young entrepreneurs and trade facilitation such as single border crossings consistent with customs procedures.

The Obama administration is considering moving larger African countries, such as South Africa, out of the preference program and developing bilateral relation-ships with them, Froman said.

William McRaith, chief supply chain officer at PVH Corp., made the case for Congress to extend AGOA and the third-country fabric provision, arguing that several major apparel and textile companies see a great poten-tial for investment opportunity in Africa.

“In April of this year, PVH, together with several of the largest apparel companies and textile manufactur-ers, conducted an exploratory business mission to this region,” McRaith told lawmakers on the House Ways & Means trade subcommittee. “Many companies that went with us were skeptics, they were cynics, they re-ally did not believe it was ready for this type of invest-ment. After vising sites, looking at infrastructure, and meeting with ministries from different countries, our business delegation came to the realization that some African countries had already laid the foundations nec-essary to attract significant foreign investment and were prepared to undertake the commitments necessary to secure socially responsible investors.”

McRaith added: “There is great excitement among the apparel business community about this very near growth opportunity in Africa,” ranging from cotton growing and yarn spinning to weaving and apparel production, but it hinges on a clear commitment from Congress to renew AGOA for a lengthy period of time to spur the investment.

USTR Calls for Expansion of AGOA

Visitors at the Bread & Butter Berlin fair.

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8 WWD WEDNESDAY, JULY 30, 2014

By KHANH T.L. TRAN

LOS ANGELES — At the up-coming Outdoor Retailer trade show, the unofficial slogan for exhibitors might be: Let’s get physical — and fashionable.

As consumers adopt an athlet-ic look in their sportswear and designers infuse more fashion into activewear, the ath-leisure crossover leads to opportunities for increasing revenue. Thus, Outdoor Retailer’s spring show, which kicks off its four-day run on Aug. 6 in Salt Lake City, is ex-pected to get a boost over its pre-vious summer show that drew some 5,000 attendees and more than 1,400 exhibiting brands. In fact, 1,569 exhibitors are project-ed for this year’s market.

Buyers at the show will be greeted by bright colors and vivid prints in clothing collec-tions. Coral and green are popu-lar hues for women, while blue and tan are the top tints for men. Designers have turned to a vari-ety of prints, from herringbone and geometric shapes to flowers and palm trees, and borrowed ready-to-wear techniques like cutouts. Contrasting color blocks with print panels also are adding vibrancy to pieces, whether worn to surf a wave or salute the sun.

“We always like to inject color and our customers ex-pect it from us,” said Helena Barbour, business unit direc-tor at Ventura, Calif.-based Patagonia Inc., which has cur-rent sales of $600 million and has posted strong growth every year for the past three years.

Sales of outdoor sportswear for men, women and children are climbing, according to The NPD Group Inc., a mar-ket research firm based in Port Washington, N.Y. Continuing an upward trend, year-to-date sales have grown almost 5 percent to $395.1 million from $376.4 million. Sales rose 7.6 per-cent to $992.4 million last year from $922.3 million a year ago. Compared to figures for 2011, last year’s outdoor sportswear sales showed a surge of more than 21 percent.

According to Yoga Journal, which sponsors Outdoor Retailer’s increasing-ly popular zone for yoga-related exhibi-tors, the number of people who prac-ticed yoga grew fourfold to 16.3 million in 2012 from 4 mil-lion in 2001. Moreover, the number of yoga buy-ers at Outdoor Retailer’s July 2013 fair spiked 123 percent from a year ago.

Be Up Activewear benefits from the boom at Outdoor Retailer. Since the Miami-based company began showing in Yoga Zone at the expo, it’s seen business at its booth steadily rise. In the first year that it displayed its women’s activewear that combines fashion and function in the yoga-specific section, the traffic and orders grew 10 percent from the previous year, when it sat on the main floor.

“Last year, I saw a 20 percent increase from the year before,” said Amy Wind, vice president of sales at the 10-person com-pany whose annual sales are less than $20 million. “I’ve seen everyone from Sports Authority and REI to off-price people and

online sites.”When retailers

strive to build a lifestyle around activewear based

on technical ma-terials, design-ers and brands

must figure out how to help them. The ap-

proach taken by New York-based Threads

for Thought was to hire a

women’s design director from VF Corp.’s knits brand, Splendid. Ashley Irey has joined Threads for Thought, overseeing the lifestyle-centric business, activewear and acces-sories license. She assumes full control of the design direction with the fall 2015 collection.

Activewear in particular is an avenue for growth for Threads for Thought, which said its total sales are up 30

percent from a year ago but declined to disclose specific figures. Introduced last fall, ac-tivewear now makes up as much as 15 percent of total sales.

“Overall in the next two years, it’ll probably represent 30 percent to 35 percent of the business,” said Eric Fleet, co-founder of Threads for Thought, which also operates offices in Los Angeles and Kansas City, Mo. “The product we do for the fashion market has crossed over to the outdoor lifestyle market.”

Also jumping into wom-en’s activewear is Body Glove International. The Redondo Beach, Calif.-based company is highlighting its new brand, Breathe by Body Glove, at Outdoor Retailer with 35 pieces, including sports bras, racer-back tanks, hoodies and leggings, in its debut spring collection. Retail prices range from $10 to $60. As part of Breathe, it is also offering a trio of so-called hy-brid pieces that segue between its swim line and activewear, ideally for athletes like paddle surfers who stand exposed to the sun. The hybrid styles include a long-sleeve leotard, capris and cropped rash guard.

The activewear appealed to Swim ’N Sport, a 33-store chain that ordered the line. To attract

more retailers, the 61-year-old surf and swimwear company is using its name recognition to stand out in the crowded active-wear market.

“Not all of the [activewear] manufacturers have well-known names,” said Luke Hopkins, Body Glove’s outdoor division manager. “It’s something the consumer can connect with right off.”

To differentiate itself from the competition in the outdoor mar-ket, Seattle-based Filson is fol-lowing a strategy to rank its prod-ucts as good, better and best. For the last category, it’s offering C.C. Filson, a men’s subbrand launch-ing this fall with Nigel Cabourn at the design helm. Though the Brit heads his own namesake line that specializes in outer-wear, Cabourn whipped up eight lightweight jackets that retail from $500 to $700, or 25 percent more than Filson’s main line, for spring. Among his creations are hooded, zippered jackets, washed shirt jackets cut out of a herringbone-patterned cot-ton from Japan and vests made of a tightly woven canvas. While the inaugural collection for C.C. Filson will be available in Japan, the U.K., Germany and in the U.S. at Filson’s own stores and on its e-commerce site, the com-

pany is talking to retailers like Barneys New York to pick up the spring array.

Filson isn’t bringing its wom-en’s products to Outdoor Retailer because it’s no longer wholesal-ing them. Sold only on its Web site, the women’s business may return to wholesale in fall 2015.

Instead, Filson is offering unisex bags, dubbed the Black Collection, to women’s buyers at Outdoor Retailer. The classic shapes, including a duffel, tote and computer bag, are crafted from rugged black twill with bridle leather accents in Filson’s Seattle factories. Retailing from $275 to $425, the Black Collection is expected to add to the compa-ny’s sales, which are 10 percent higher this year than last year.

“We really continue to go down the path of believing our product should be made in the U.S.,” said Filson chief execu-tive officer Alan Kirk. “In previ-ous years, before 2012, a number of Filson products were taken overseas. Our customers in some cases got quite angry. The quality wasn’t the same.”

The company brought all its production back to the U.S. in 2012.

For outdoor giant Patagonia, quality is viewed through an en-vironmental lens. In its spring initiative known as Responsible Essentials, the maker is only offer-ing sportswear that can be respon-sibly and sustainably made. That’s why it eliminated its sole rain jacket; it couldn’t find a recycled fabric that met its new criteria. Some new sportswear it’s bring-ing to Outdoor Retailer includes nylon-cotton shorts for men and fair-trade yoga pieces for women.

“We only take products that are the best, but also have a so-cially responsible story, which is a big deal for us,” said Barbour. “We kind of put our money where our mouth was.”

Outside of Responsible Essentials, Patagonia is also unveiling women’s swimwear made of recycled materials, boardshorts and warm-water wet suits that are color-blocked in pink, black and gray.

“The market is very saturat-ed with products and brands,” Barbour said. “I’m not just talk-ing about the outdoor market. There are a lot of disposable brands. The challenge is differ-entiating oneself and bringing value to the customer.”

OUTDOOR RETAILER PREVIEW

Yoga, Ath-leisure Set to Pace Outdoor Sector

Year-to-date sales of outdoor sportswear are up almost

5 percent, to $395.1 million, according to The NPD Group Inc.

Breathe by Body Glove

A duffel bag from Filson’s Black Collection.

Be Up Activewear

Threads for Thought’s activewear for women.

A color-blocked women’s surf vest from Patagonia.

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WWD.COM9WWD WEDNESDAY, JULY 30, 2014

By VICKI M. YOUNG

FLASH-SALE SITE Rue La La has hired J.P. Morgan to help find investors.

According to a spokeswoman, “Rue La La has experienced tremendous growth since being purchased by Kynetic in 2011. To more fully pursue expan-sion opportunities, the company is working with J.P. Morgan to identify potential investors for a round of growth capital.”

Over the years, since its launch in 2008, the Boston-based company has seen a number of changes in its corporate struc-ture. The company in January 2012 said in a regulatory filing that it had issued $22 million in equity and options as part of its equity plan, contrary to some speculation at the time that it had gone through a round of fund-raising. The company doesn’t seem to have done any fund-rais-ing in the last two years.

Rue targets high-net-worth shoppers. It was launched by Retail Convergence, which also

acquired SmartBargains, an off-price e-commerce shopping site, in 2008. Ben Fischman, who joined Retail Convergence in 2001, led the launch of Rue and the acquisition of SmartBargains.

Retail Convergence was ac-quired by GSI Commerce in November 2009 for $350 mil-lion in cash and stock. GSI was acquired in 2011 by eBay Inc. for $2.4 billion. Michael Rubin, founder of GSI, bought back a 70 percent stake in Rue, which is now under the Kynetic umbrel-la, Rubin’s new firm. EBay still has a minority interest in Rue.

Rue also is expanding on multiple fronts as it continues to push ahead in its niche in the marketplace.

Lisa Rhodes joined Rue as president and chief mer-chandising officer earlier this month, reporting directly to Steve Davis, who became chief executive officer after Fischman left in April 2013. Also on the team is Robin Domeniconi, who became chief marketing officer in September. She also reports to Davis, and

previously held the same title at Vente-Privée USA.

In addition to its human resource changes in the last 15 months, in May the com-pany added themes to its DressingRoom series to allow Rue members to identify items within a look — think preppy, boho or contemporary — from fashion to home decor in one area of the site.

In an interview earlier this year, Davis said the site had re-cord growth last year, with mo-bile representing more than 60 percent of sales on certain days. The company is said to be ap-proaching $500 million in annu-al volume, according to sources.

Reuters first reported Monday that a sale of the company could have a valuation of $400 million, and that its online competitor Gilt Groupe might be interested.

Michelle Peluso, Gilt’s ceo, declined comment.

A Gilt spokeswoman ac-knowledged that Gilt’s chief marketing officer Elizabeth Francis is stepping down, which Forbes, citing sources, said on Thursday would happen. Her

stepping down reportedly oc-curred as the company laid off several employees in a staff re-organization, Forbes said.

On speculation about an initial public offering by yearend, Peluso said: “We’ve never said we were doing an IPO. We’re not in a rush and we don’t need the cash. We will do it when it makes sense.”

Peluso noted that the compa-ny last year “turned the corner on being profitable on an ad-justed EBITDA [earnings before interest, taxes, depreciation and amortization] basis.”

While an acquisition of Rue could possibly help Gilt’s IPO road show when there is one, there also has been continued questions about the flash-sale model. Users have told WWD that Gilt typically runs out of small sizes quickly. Sources fa-miliar with inventory levels said the site has had issues securing product and mixed results with private brands.

Peluso said, “The company unequivocally has never had a problem securing inventory. This year we had more than we can take because, as you know, some retailers have not been doing well.” On small sizes, “We have a growing international audience

in Asia, in Hong Kong, Seoul and China. Some small and ex-tra-small sizes, such as zeroes, probably do sell out faster. Our buyers will make the [appropri-ate] adjustments,” Peluso said.

The ceo said “private label sales and return rates are slightly lower than our name brands. The main focus is on our brand partners.”

Inventory is said to be a struggle for some flash-sale sites but observers said flash-sale site HauteLook solved that problem in 2011 when it was acquired by Nordstrom for $180 million in stock, giving it a firm-er connection with the higher-end fashion brands that its par-ent already had.

But even firms that have those connections don’t always fare well. Sources said Vente-Privée USA, a joint venture between American Express and France’s Vente-Privée, is doing just OK — despite the French firm’s network of 1,450 European brands and American Express’ market-ing expertise — as it finds that consumers aren’t as partial to some of the unfamiliar brand names despite discounts of up to 70 percent off.

are on the rebound. For the fiscal second quarter to date, comparable sales are up 3.6 percent at Men’s Wearhouse, 2.4 percent at Jos. A. Bank and 8.3 percent at Moores, the company’s Canadian divi-sion. Even the beleaguered K&G division, which has been under strategic review since last year, is running 5.1 percent ahead for the period.

Ewert said that since the $1.8 billion acquisition of Jos. A. Bank was completed last month, the company has been work-ing to integrate the two men’s wear chains, which will remain separate. Among the findings is that there is “very little cus-tomer overlap” between the two busi-nesses, with only 7 percent of customers shopping both retailers over the past four years. And even though 65 percent of Jos. A. Bank’s stores are within five miles of a Men’s Wearhouse unit, he added, “We have observed very little cannibalization.”

The Men’s Wearhouse customer is generally 25 to 55 years old, style-con-scious and contemporary, he said, with an average household income of $75,000 a year. Jos. A. Bank, in contrast, appeals to a shopper aged 35 to 59 years old who is traditional and conservative and makes $100,000 to $125,000 a year.

Ewert believes there are major oppor-tunities to increase sales at Jos. A. Bank by growing tuxedo rentals, Made in the USA suits, made-to-measure merchan-dise, updated traditional merchandise offerings and the percentage of national brands. At the same time, the company will work to grow the sportswear pen-etration — especially sweater sales — at Men’s Wearhouse stores, a category where Jos. A. Bank has an advantage.

Overall, Men’s Wearhouse expects to achieve $100 million to $150 million in synergies from the combination of the two firms, executives said.

Specifically, this breaks down to $46 mil-lion in general and administrative savings; $30 million in cost of goods; $14 million in store savings; $8 million in e-commerce, and $6 million in advertising and marketing, said Jon Kimmins, chief financial officer.

Kimmins said that while 30 new Jos. A. Bank stores will be added this year, the expansion will then be put on hold until Men’s Wearhouse has a better chance to review the operation of the chain. Although he said the company believes there is “some opportunity” to grow” the

Jos. A. Bank store count, currently at 586, the decision on how and when to add stores will be made in the future.

Tuxedo rentals, a cash cow for Men’s Wearhouse and a business that accounts for 17 percent of its revenue, or $430 mil-lion, is seen as a growth opportunity for Jos. A. Bank. Currently, Jos. A. Bank’s tux-edo rental business is significantly smaller and the firm contracts with an outside company to fulfill orders. Men’s Wearhouse owns its tuxedo inventory and has an in-house dry-cleaning service to clean the gar-ments. Moving Jos. A. Bank to that system will save $3 million, the company said.

The Jos. A. Bank stores average 4,581 square feet compared to 5,710 square feet at Men’s Wearhouse, raising questions on how to service the tuxedo customer in a smaller footprint.

Outside of tuxedos, Mary Beth Blake, executive vice president and chief mer-chandising officer, said Men’s Wearhouse sells 51 percent fashion merchandise and 42 replenishment merchandise, while Jos. A. Bank sells 20 percent fashion and 47 percent replenishment. Slim suits represent 45 percent of sales at Men’s Wearhouse and only 13 percent at Jos. A.Bank, “so we see an opportunity to grow slim-fit at Bank,” she said.

The same for big and tall. At Men’s Wearhouse, the category accounts for 24.5 percent of sales, but only 11.1 percent at Jos. A. Bank.

Even so, both chains will “remain

brand specific” with a “clear and dis-tinct voice for each,” she said. And for the time being, the aggressive buy-one-get-two-or-three-free promotions at Jos. A. Bank will continue. Although Men’s Wearhouse prefers a buy-one-get-one-free stance, Jos. A. Bank’s eye-popping sales are popular with customers and allow the company to clear inventory. But long-term, the firm will “wean off the most margin-erosive events,” she said.

She said the merchandise turn at Men’s Wearhouse is 25 percent faster than at Jos. A. Bank, but the company ex-pects that by improving systems at Jos. A. Bank, inventories can be reduced by $40 million to $60 million.

Blake said 98 percent of the merchan-dise at Jos. A. Bank is exclusive, as is 56 percent at Men’s Wearhouse. This gives the company over $700 million in buying power, she said, noting that the company is targeting $30 million in cost savings from combined merchandising and sourcing.

Although the Joseph Abboud brand of apparel is not going to be added to Jos. A. Bank stores, Joseph Abboud, the com-pany’s creative director, will have some input into Jos. A. Bank’s merchandise of-ferings. He hopes to infuse the stores’ tra-ditionally skewed merchandise with more fashion. He said classic men’s wear does not have to be “stodgy. Traditional doesn’t have to be boring.” By updating the look, he said, Jos. A. Bank can better compete with “the Brooks Brothers and Ralph

Laurens of the world. We should take a leadership role at Jos. A. Bank that we stand for modern and traditional.”

Men’s Wearhouse, in contrast, will be “a little more irreverent.”

Abboud also revealed that the young-er-skewed Joe brand, formerly exclusive to J.C. Penney, would make an entrance into the Men’s Wearhouse stores this fall.

Since being introduced into Men’s Wearhouse and Moores stores this spring, the Joseph Abboud branded merchandise now accounts for 13 percent and 9 percent of sales, respectively, according to Blake. The label is currently in all Canadian stores and will be rolled out to all Men’s Wearhouse stores by the end of October. “The early results have exceeded our ex-pectations,” Ewert said, noting that the brand is bringing in new customers and has resulted in higher average ticket sales.

A typical Joseph Abboud suit, made in the company’s New Bedford, Mass., factory, sells for $495, down from the $795 to $1,000 retail that it was last season when it was a wholesale brand. At Men’s Wearhouse, made-to-measure suits can be ordered for $100 more and are available in three weeks.

One thing that Men’s Wearhouse is em-bracing from Jos. A. Bank is its tailoring system. Men’s Wearhouse employs an aver-age of 2.5 tailors per store with a seven-day turnaround, while Jos. A. Bank only has one tailor on staff and uses outside seamstresses and tailors to complete orders. “That model is more profitable,” said Mark Neutze, ex-ecutive vice president of store operations, noting that $3.5 million in savings can be re-alized if $25 million of Men’s Wearhouse tai-loring orders are transferred to that system.

The company is also hoping to boost its business in the fourth quarter when Jos. A. Bank has traditionally posted better results.

Because Jos. A. Bank already oper-ates 42 outlets, the company will put the brakes on its plan to add to its eight Men’s Wearhouse outlet stores. Although it had originally planned to open as many as 100 outlets, inheriting the Jos. A. Bank out-lets brings the company “way down that road,” said Kimmins.

During a question-and-answer period at the end of the briefing, Ewert said he hoped to soon provide an update on the planned “disposal” of the K&G division. And while its corporate apparel division is performing well, he said it did not fit into the company’s “long-term goal to be the largest men’s apparel retailer in the U.S.”

MW Aims to Be U.S.’ Top Men’s Wear Retailer{Continued from page one}

Rue La La Seeking Investors

The Joseph Abboud brand is now in all of Men’s Wearhouse’s Canadian stores.

10 WWD WEDNESDAY, JULY 30, 2014

“IS THIS kid’s life real? I mean, it’s crazy.” Gigi Hadid is talking about Romy, the already-famous granddaughter of Carine Roitfeld — specifically the scene in 2013’s “Mademoiselle C,” when Karl Lagerfeld takes the newborn for a spin in a slick Cadillac of a black stroller. “The kid’s life is nothing short of amazing,” says Hadid.

Funny coming from the mouth of this 19-year-old, whose own life has been pretty amazing as of late. The IMG-repped Hadid is a newly minted Sports Illustrated swimsuit-issue model, appears in Tom Ford’s fall ad campaign and is Roitfeld’s latest fave, having featured on the cover of CR Fashion Book’s fourth issue. As for her personal life, that’s not too shabby either. Hadid’s on-again-off-again beau is Aussie singer Cody Simpson, and she counts Justin Bieber and the Kardashians as

close friends. (On a side note, Hadid’s mother, Yolanda Foster, is a former model and stars on Bravo’s “The Real Housewives of Beverly Hills.”)

WWD recently caught up with the New York University sophomore in between takes on the annual Pirelli Calendar

photo shoot. Dressed down in a white T-shirt, dark jeans and a Heidi braid, she talked about dating a heartthrob in the limelight (read: dealing with haters), being the only girl on Bieber’s tour bus and modeling since infancy. — DAVID YI

WWD: Is it true that you’ve been modeling since you were an infant?Gigi Hadid: I was always in front of the camera. My mom was really passionate about

photography — I have pictures of my whole life. I’ve always just been in front of my mom’s camera and it’s always comfortable to me. The first two years I was

always on set with my mom. When I was young, I did Baby Guess and Guess Kids — Paul Marciano saw me when I was a baby and decided I was going to be his next whatever. After Guess Kids, my mom made me stop. She would not let me sign

with an agency until I was 17 because she wanted me to be a normal kid and accept myself for who I was. She knew the industry was going to judge me.

WWD: How did the CR Fashion Book cover shoot with Carine Roitfeld come about?G.H.: Stephen Gan asked IMG who he should meet for the shoot — and if he was meeting with one, who that person should be and [they] said me. Stephen was shooting and he had me meet Carine and that was it. Now, I feel like I meet with Carine every week because I feel like I have a shoot with her all the time. She really pushes me, she believes in me and we connect really well. Hopefully, my work ethic and stuff keeps me around her. I’m so grateful to have her.

WWD: What’s the best advice she’s ever given you?G.H.: The one thing she told me that was the biggest in my mind was our third shoot together. She asked me, “Are you happy today?” and I said, “Yeah, of course, I’m so excited to be here.” She said, “OK, in this job you have to be happy all the time. You have to love what you’re doing.” I was already happy on set but it made me want to make everyone else on set happy. It really changed how I work. I’ve

been OK with becoming a happy, goofy weirdo on set. I don’t know, I just, I go to set every day trying to make other people happy because of her.

WWD: You’ve worked with major photographers including Steven Meisel and Bruce Weber. What

are you like on set with them?G.H.: I try to be more goofy when I’m on set now that I’m more comfortable. In real life, I’m so goofy and super weird. I’m never mean but people don’t see the weird side of me. Like, I’ll be dancing around. My best friends will always say that they wish others saw that side of me, when I’m doing a weird dance, or weird faces or voices. I can do the best Kourtney Kardashian voice ever [changes the pitch of her voice]. “Literally, Scott you’re so disgusting, that’s psychotic. But, literally, Scott you can’t call yourself a Lord because that’s so disrespectful. My mom is part of the Catholic Church and not everyone has white Lamborghinis.” I’m friends with Kendall and Kylie and sometimes I’ll almost slip and say, “Literally Scott,” just because I always say it. WWD: Who’s part of your inner crew these days in New York City?G.H.: I have my hometown friends, but I have my industry friends and I have some who are in the middle, like Ireland Baldwin, which is great because she is genuinely one of my best friends. When we’re in L.A. we go to movies and hang out, but when she’s here it’s fashion week and we go to all the events together. Those are the friends I am closest with because they understand both sides of me and that’s what I really cherish in people. I keep my hometown friends close.

WWD: How did you become close with the Kardashians? Do you all hang out often?G.H.: It’s funny because Kylie dated my ex-boyfriend. Before that, in L.A. we grew up knowing about each other but never met. Kendall and Kylie and I became friends the week before this year’s Met gala. I went to Rihanna’s party and stuff afterwards but didn’t go [to the gala]. WWD: Your social presence is growing, partly due to the fact that you’re constantly in the headlines, once even with Justin Bieber. G.H.: Justin’s a good friend of mine, he’s awesome. I met him in Cannes. Wait, that’s a lie. We know each other through my ex-boyfriend [note: they’re now on again], who is also signed to Scooter Braun and they toured together. That’s Cody Simpson.

I was on the Bieber tour for two weeks. It was crazy but so fun. I’m like one of the guys on tour, on a bus with 10 dudes. It’s gross. You have to get used to not showering. They’re like, “How do you look so glam?” I’m like, “Dry shampoo.” So I met [Bieber] a couple of times but we’re friends and everything with my ex-boyfriend is cool, and him and Justin are really close. So it’s all good. You run into all your friends at Cannes

and you end up at the same parties. In that case you just end up both watching the Grand Prix race from the same boat. That’s how we ended up together. WWD: How do you deal with social media and the many messages you receive?G.H.: I want to go off on people

on Twitter so much. There’s this one picture of a girl hugging Justin and everyone says it’s me but it’s not me — she has brown hair and she’s wearing bracelets. I wasn’t wearing any accessories. Then they go off on me. Then there are Web sites that are saying, “Justin Flirts with Gigi Topless” and then you click on the picture and it’s me and Justin sitting on opposite sides of the boat. I’m looking one way and he’s looking another and he

doesn’t have a shirt on because we’re on a boat. And flirting? What part of that picture says we’re flirting? Show me one sign that we are flirting. I think you have to pick your battles. WWD: When was the last time you picked your battle?G.H.: Like, last week or two weeks ago. Someone tried to claim that I never loved my ex-boyfriend because I broke up with him [because I was in] Sports Illustrated. So I just said [on Twitter] that you only see just 1 percent of paparazzi shots when we’re at dinner or out — that’s 1 percent of our relationship. Like no one saw, you know, anything that’s real. I love Cody to death and he loves me. And he needed his time to focus on his music and he’s the one who broke up with me. We’re still best friends and I’ll always respect him and support his career. But it’s really hurtful when people try to do that. The most hurtful thing to me is when people try to put assumptions on me and my relationship because that is not OK. Love is something that’s really serious and private that you can’t try to claim or know.

Backstage at the Pirelli Calendar shoot.

The cover of CR Fashion Book’s Issue 4.

Hadid and Patrick Schwarzenegger for Tom Ford’s fall ad campaign.

’’

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I was on the Bieber tour for two weeks. It’s gross. You have to get

used to not showering.— GIGI HADID

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Hadid on the street during

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in February.

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WWD.COM11WWD WEDNESDAY, JULY 30, 2014

ON A RAMPAGE: Ireland Baldwin, the 18-year-old daughter of Alec Baldwin and Kim Basinger, will appear as the face of Rampage’s fall campaign, following in the footsteps of Petra Nemcova, Bar Refaeli, Gisele Bündchen and Irina Shayk.

This is the first solo campaign for Baldwin, who is signed with IMG Models.

In the ads, Baldwin models Rampage’s dresses, feminine tops and fitted outerwear. She pays homage to Basinger’s role in the movie “9 1/2 Weeks,” sexily posing behind window blinds and eating strawberries. The ads were shot by Nino Muñoz in New York.

The campaign will break in September issues of such magazines as Cosmopolitan, Marie Claire and

People Stylewatch and will appear outdoor, online, on Rampage.com and in store. The company declined to reveal the ad budget, but said the spend is up 25 percent due to an increase in print and digital.

— LISA LOCKWOOD

CLEANING HOUSE: In an effort to amp up the fashion quota (and presumably advertisers), Good Housekeeping

editor in chief Jane Francisco has recruited Lori Bergamotto as style director and Kristen Mascia as features editor.

They are among four new hires at GH, but their roles are newly created posts. Bergamotto was most recently contributing style editor at Lucky where she routinely talked trends on national TV shows. Mascia’s last run was as Parade’s articles editor, a role that involved editing cover packages, personal

essays and pieces, as well as excerpting books for print and the Web.

Another new hire is fashion director Kristen Saladino, who spent the last seven years as senior fashion editor at Self. Saladino succeeds Jasmine Chang. One of her new office mates in the Hearst Tower is April Franzino, a former GH-er who is now back, this time as beauty director. She succeeds Nina Judar.

— ROSEMARY FEITELBERG

POP UP PARTNERS: Talk about a sweet situation. Lisa Perry is unveiling a one-day collaboration with Dominique Ansel of Cronut fame this Saturday, when she and the pastry chef will provide a mobile truck offering Pop It! Ice Cream Sundae in a Can in front of Perry’s boutique at 67 Main Street in East Hampton, N.Y.

Inspired by the root beer float, the sundae includes a mix of root beer and vanilla-chocolate chip ice cream, mascarpone semifreddo, macerated cherries, mini marshmallows and a meringue kiss — served in a chocolate-lined soup can that nods to Andy Warhol’s famed Campbell’s Soup artwork. The sundaes — really big enough for two — sell for $15 each, and 20 percent of proceeds will go to City Harvest. They’re available from noon until supplies last.

“Dominique was a perfect match for this collaboration, as both of our brands celebrate art, pop culture and fun,” said Perry. “He infuses each of his confections with creativity and imagination and the end result is always a treat in more ways than one.”

— MARC KARIMZADEH

HIGH NOTE: Sixty years after Italy’s first expedition to the Himalayan peak K2, Moncler has again supplied the technical equipment to the team re-creating that climb. The attire of the climbers, who reached the mountain’s peak on Saturday, was inspired by the Moncler Lionel Terray Collection, on sale at the brand’s boutiques starting in October and comprising six high-protection jackets. In 1954, when Italians Lino Lacedelli and Achille Compagnoni conquered the world’s second-highest mountain, they wore Moncler down jackets that had been fitted for the climb by Lionel Terray,

the French mountaineer who has been a key figure in the brand’s history.

The “K2 2014 — 60 Years Later” expedition is backed by Ev-K2-CNR, a nonprofit association that promotes scientific and technological research in mountain areas and, together with the Italian Development Cooperation and the Pakistani authorities, has helped to create the K2 national park. To promote the Central Karakorum

National Park project, Moncler has joined forces with Ev-K2-CNR and the Pakistani team and will also be taking part in the Keep Karakorum Clean campaign.

— LUISA ZARGANI

EXPANDING UNIVERSE: Cynthia Rowley has inked a licensing deal with Highline United for a collection of contemporary handbags. Set to make their debut this spring, there will be a bevy of styles to coordinate with the designer’s various

looks. Sporty backpacks will be geared for fitness pieces and sportswear, and minaudières and delicate

evening bags will complement her dress collection.

Totes and satchels will also be part of the mix with retail prices starting at $175 and going up to $350. In addition to the designer’s 60 freestanding stores worldwide, the handbags will be sold in department, specialty and online stores worldwide. Kenny Horowitz, president of Highline United said, “We wanted Cynthia Rowley as our first handbag license because of the exciting prints and innovative materials she uses in her women’s ready-to-wear collection.”

— ROSEMARY FEITELBERG

RUN LIKE CLOCKWORK: Michael Saiger of accessories brand Miansai has unveiled two styles that will become the new main staple of watches in his line.

MEMO PAD

FASHION SCOOPS

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“Watches are a key accessory for both men and women and as an accessory brand it was a natural evolution for us to expand into this category,” he said. “This isn’t our first time doing watches, but these newer styles really feel more like us. They offer a more modern clean aesthetic that better reflects the brand now.”

Saiger said that the entire process to create newer watches that better match his aesthetic took months. The result is two styles that were completely designed in-house — from the casing to the color of the numbers — and include the M12 Swiss and the M24 Japanese styles.

The Swiss, retailing for $495, is made in Switzerland and includes a Swiss-made quartz movement and either an Italian leather strap or one with rock-climbing webbing. The Japanese style will include a one-handed Japanese quartz movement that will display time without a second hand. The time will be marked off in five increments. The face will come in gray, white and blue, with either an Italian leather strap, which will retail for $205, or a rock-climbing webbing, which will retail for $185. — DAVID YI

G-SHOCK GOES FEMME: On the heels of its 30th anniversary, G-Shock is looking to the future with its first collection for women.

The G-Shock S Series marks the brand’s only line designed exclusively for women. “The size, color and design are geared towards a fashion-forward female that is looking for an accessory to complement her modern and active lifestyle,” said David Johnson, president of Casio North America. “The collection gives us a new look and new consumer to build upon in the future.”

To appeal to a female customer, Casio has reduced the size of its classic G-Shock watch, and will offer new colors and prints. The collection will consist of two styles: the GMA-S110 and GMD-S6900. The GMA-S110 features an auto LED backlight, five daily alarms, a stopwatch, timer and word clock, and is available in six colorways.

The GMD-S6900 comes equipped with an EL backlight, three alarms, a countdown timer and 48-city world time, and is available in nine colorways.

To promote the collection, Casio has enlisted Victoria’s Secret model Josephine Skriver for the upcoming campaign, lensed by Maciek Kobielski. Skriver will also appear in a short film for the brand, by creative

director Magnus Berger. The S Series will be

available in September at select fashion boutiques and jewelry stores, as well as G-Shock’s

store in Manhattan’s SoHo, and online. Prices range from $99 to $130.

— LAUREN MCCARTHY

WHIFF OF FREEDOM: Luxury perfumer Caron is marking its 110th anniversary with a new fragrance called Lady Caron. Inspired by the Statue of Liberty,

the scent is a tribute to the French company’s founder, perfumer Ernest

Daltroff, who left Paris during World War II for the safety of New York. The scent features notes of magnolia, rose, jasmine, raspberry and peaches with an oak moss base and is based on Caron’s perfume creator Richard Fraysse’s namesake fragrance from 2000.

The perfume is priced at 105 pounds, or $179 at current exchange, and will be sold starting in the fall at stores including Fortnum & Mason, Harrods and Les Senteurs in London.

“It is an homage to the Caron’s founder Ernest Daltroff, who fled Paris and the Nazis for New York,” Fraysse told WWD. “Lady Liberty was the inspiration behind Lady Caron, an elegant floral chypre with notes of magnolia, rose, jasmine and a fruity punch of raspberry and peaches.”

Founded in 1904 by Daltroff, Caron produces men’s and women’s fragrances, powders and accessories and has three boutiques in Paris and one in New York.

— LORELEI MARFIL

FOR MORE SCOOPS, SEE

WWD.com.

The Pop It! Ice Cream Sundae in a Can.

Josephine Skriver models a G-Shock S Series watch.

Ireland Baldwin for Rampage, photographed by Nino Muñoz.

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w30a011a.indd 11 7/29/14 8:03 PM07292014200503

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year from Kleiner Perkins Caufield & Byers, Google Ventures, Marissa Mayer and others. The online shop-ping community’s 16 employees will join Wal-Mart’s team.

Pinterest has dominated the social discovery category since it came onto the scene in 2009 — it has over $762 million in funding under its belt — but social com-merce is still up for grabs. Earlier this month, Facebook said it was homing in on its commerce efforts, testing a “buy” button.

Although experts are skeptical whether the social network will ever build a meaningful retail busi-ness, Facebook is just one of the many tech companies looking to build a toehold in Wal-Mart’s back yard. Wal-Mart, in turn, has been extremely busy in tech. Just last month, the company bought Stylr, a fashion app that helps users search for apparel in nearby stores. Like Luvocracy, that deal brought on key talent and seems aimed at per-fecting tools to help consumers find what they want.

All these deals come against a background of some serious chang-es at Wal-Mart.

Doug McMillon took the helm as president and chief executive offi-cer this year and last week named Greg Foran ceo of the U.S. division.

Tackling the online space is key to the company’s future. In addition to focusing on e-commerce and mo-bile strategies, Wal-Mart’s purchase of startups like Luvocracy signals that the retailer wants to transform into a formidable online power-house. Using the technologies it’s acquired — from predictive intelli-gence platform Inkiru to e-receipts solution Grabble — it looks like Wal-Mart’s readying for more of a battle with the likes of Amazon and eBay.

Wal-Mart’s global e-commerce department — comprised of walmart.com and @WalmartLabs — has about 2,500 employees that work out of headquarters in San Bruno and Sunnyvale, Calif.

“There are some teams with hard-core engineers who focus on how we can scale up our search en-gine to handle all of the queries to our Web site. They’re obsessed with understanding the customer and the industry,” Galbraith said in an interview earlier this year, calling @WalmartLabs an “Internet com-pany within a retail company.”

By EVAN CLARK

INVESTORS drove shares of Twitter Inc. up 29 percent in after-hours trading Tuesday after the company showed that it was gain-ing ground as an advertising plat-form with second-quarter sales that easily outpaced expectations.

Twitter’s revenues for the quarter shot up 124 percent to $312.2 million — well ahead of the $283 million analysts project-ed. Advertising revenues made up more than 88 percent of the total top line.

The 140-character messag-ing service has been working to prove to Wall Street that it can compete against larger rivals, particularly Facebook.

Dick Costolo, chief executive of-ficer of Twitter, called out the com-pany’s trajectory in the ad business to analysts on a conference call.

“That growth is primarily driv-en by higher engagement, which translates into improved [return on investment] for our marketers,” he said.

The company said its average monthly active users rose 24 per-cent versus a year earlier to 271 million, a slight drop off from year-over-year growth of 25 percent in the first quarter.

Still, Twitter still has some work to do when it comes to getting that consumer attention and the associ-ated advertising clout to reverber-ate on its bottom line.

The tech company said its net losses for the quarter ended June 30 widened to $144.6 million, or 24 cents, from $42.2 million, or 32 cents, a year earlier. On an adjusted basis, the company logged earnings of 2 cents a share, better than the 1 cent loss Wall Street predicted.

Shares of the company gained $11.26 in after-hours trading to $49.85.

By MARCY MEDINA

FASHION JEWELRY brand Kendra Scott has linked with Norwest Venture Partners, the Palo Alto, Calif.-based investment firm, to bolster its growth in both the brick-and-mortar and online arenas.

Founded in 2002 by Scott, the Austin-based company has doubled its year-over-year sales for the last four years to $50 million in 2014, making it a ripe candidate for investors. Norwest declined to specify the amount of its minority stake, but general partner Sonya Brown described it as “significant.”

“The fashion jewelry space didn’t have a lot of branded players. It’s wonderful to have a genuine brand and personality like Kendra,” said Brown, adding, “She has 12 boutiques cur-rently and by November she will have 17, with plans to total 30-plus by the end of next year.”

In addition to Scott’s stores, which launched in 2010, the brand is distributed in 1,000 whole-sale doors nationwide including Nordstrom, Neiman Marcus and Bloomingdale’s. The ac-cessible collection, made with mixed metals and colorful semiprecious stones, retails for between $45 and $900 and is known for its sig-nature faceted cuts and filigree.

Its customizable concept, called Color Bar, first launched at Henri Bendel in 2010 before

going online then rolling out as a retail store feature. “With retail and e-commerce today you have to find ways to engage your custom-er. We’ve followed the personalization trend closely and believe there’s a lot of opportu-nity,” said Brown.

For her part, Scott, who will remain chief executive officer, said, “We waited nearly 13 years to find a partner. Now we have the op-portunity to accelerate our growth even more and go into new product categories.”

Norwest, a multistage venture and growth equity investment firm, has funded companies across the tech, information and financial services, consumer products and health-care sectors, and has made investments in fashion retail and e-tail companies such as Bailey 44, ModCloth, Gilt Group, Gemvara and beauty companies PCA Skin and Madison Reed.

Wal-Mart Continues Digital Push

Kao 1st-Half Profits Up 73.3%

Uniqlo Opening Chicago Flagship

Ad Sales Drive Twitter Revenues

{Continued from page one}

By KELLY WETHERILLE

TOKYO — Kao Corp. said Tuesday that its first-half net profit grew by 73.3 percent on a low comparative base resulting from an extraordi-nary loss it booked in the same pe-riod a year earlier.

Kao’s net profit for the six months ended June 30 totaled 31.65 billion yen, or $308.9 million at average exchange rates for the period. Last year’s extraordinary losses were related to the volun-tary recall of more than 50 Kanebo brightening products, which were shown to leave white spots on the skin of some users.

Operating income increased by 14.9 percent to 49.35 billion yen, or $481.7 million.

Net sales for the period grew 6.6 percent to 665.94 billion yen, or $6.5 billion. In its beauty care seg-ment, which includes brands such as Jergens, Bioré and Kanebo, sales grew 1.8 percent to 283.5 billion yen, or $2.77 billion. Excluding the effects of currency translation, sales

in this category would have slipped by 0.2 percent.

The company said that while sales of cosmetics decreased com-pared with the same period a year earlier, sales of skin-care products increased and hair-care product sales were flat.

Geographically, Kao saw in-creased sales in every area in which it operates. Its biggest growth came from Asia, excluding Japan, where net sales rose 22.2 percent to 116.9 billion yen, or $1.14 billion.

The company also lifted its net sales guidance for the current fiscal year, ending Dec. 31. The company now expects sales to grow 5.7 per-cent to 1.39 trillion yen, or $13.65 billion at current exchange. This is up from a previous forecast of 1.37 trillion yen, or $13.45 billion.

Kao left unchanged its full-year net and operating profit guidance. It predicts net income will increase by 15.8 percent to 75 billion yen, or $736.51 million. It expects operating income to grow 4.3 percent to 130 billion yen, or $1.28 billion.

Norwest Takes Kendra Scott Stake

Kendra Scott

Earrings from the Kendra Scott line.

By SHARON EDELSON

UNIQLO isn’t entering the Midwest quietly.Its first store in the region will be a

60,000-square-foot flagship at 830 North Michigan Avenue in Chicago, the Japanese retailer’s second largest store in the U.S. The Chicago unit is set to open in fall 2015 in the heart of the city’s downtown and part of the Magnificent Mile, where neighbors will in-clude Topshop and H&M.

Only Uniqlo’s global flagship on Manhattan’s Fifth Avenue surpasses the Chicago store in size with 90,000 square feet of space. Uniqlo stores range from 30,000 square feet to 40,000 square feet on main streets in midsize cities and 10,000 square feet to 40,000 square feet in regional and super regional malls.

“Chicago is a global city that’s home to some of the finest cultural and sports insti-tutions in the world, and we are [pleased] to join the city’s rich landscape,” said Larry Meyer, ceo of Uniqlo USA. “We look forward to bringing our innovative, high-quality ap-parel, world-class customer service and modern, bright store aesthetic to the people of Chicago.”

With only 21 stores in the Northeast and San Francisco, Uniqlo will nearly double its fleet in the fall when it launches 18 units in eight weeks. That’s a more aggressive sched-ule than last fall’s 10 store openings.

On Aug. 29, Uniqlo will unveil six stores, including a flagship in Boston, followed by units in Philadelphia and Southern California, including South Coast Plaza in Costa Mesa, Calif., and Beverly Center in Los Angeles.

“Those 18 stores include some in exist-

ing markets such as Northern California and metro New York,” said Meyer, citing Walnut Creek, Calif., Willowbrook Mall in Wayne, N.J., and Roosevelt Field Mall in Garden City, N.Y.

Last month during a speech at the Japan Society, Meyer said the retailer wants to be-come dominant in the U.S. For that to hap-pen, the American business will have to generate meaningful numbers, Meyer said, adding that the U.S. must contribute sig-nificantly to the company’s $11.6 billion in worldwide sales. Uniqlo, he pointed out, does $7 billion in its home market of Japan, which has a smaller population than the U.S.

“We will become a multibillion-dollar company in the U.S.,” he predicted.

“We hired a lot of people in the last year,” Meyer said. “We will now fill out [the ranks] below them. I want to stay away from looking at specialty retail. I want e-commerce people and big-box people, where the volumes tend to be higher. We built [a team] for the entire U.S. rollout of the first 100 stores.”

Staffing up the company has been a prior-ity for Meyer, who said, “It’s important that we continue to build out the teams to oper-ate our stores. Because of our dedication to high standards of customer service, it takes a lot of time to train people and we do that as we expand. It takes time to build out those ranks. We need to be recruiting all the time.”

Meyer said the Chicago store will incor-porate all or most of the product categories sold in the Fifth Avenue flagship. All of the new fall stores have 100 percent eco-friend-ly store design with LED lighting, greener materials and high-efficiency elements throughout. Women’s and children’s prod-ucts will be presented as specialty shop-in-shop environments.