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sDAILY EDITION 12 AUGUST 2016 1

Fashion. Beauty. Business.

Shifting SitesTom Ford is moving his New York flagship farther down Madison. PAGE 7

Men’s wear continues to evolve slowly in color, and this season, designers struck a softer note with dusty tones and sun-faded pastels, making pale pink a standout among a range of hues. Here, clockwise from top left, Vans for Opening Ceremony’s sneaker, Visvim’s jacket, Den Im’s shorts and Rideau’s T-shirt. For more, see pages 5 and 6.

CONTINUED ON PG. 9

● The retailer is battling reduced mall traffic and competition from the Internet.

BY DAVID MOIN

Macy’s is shrinking to grow.That’s the message from the retailer’s

management, which on Thursday said it would close 100 full-line stores, most by early 2017, on top of the 41 shuttered last year.

It’s the single biggest round of store closings for the 728-unit department store chain, which has long been regarded as having too many stores with weak presen-tations or stuck in sluggish markets, in large part stemming from its acquisition of May Co. in 2005, which doubled the size of the business. Declining mall traffic, changing consumer shopping preferences and needs, and competition from Amazon and other online players, fast-fashion and offpricers has compounded the issue.

The 100 store closings will result in an estimated $1 billion reduction in volume, bringing Macy’s down to about $26 billion

RETAIL

Under PressureFrom Online,Macy’s to Close 100 Stores

● The flag-bearer jacket is a Made in America test involving wearable tech.

BY VICKI M. YOUNG

NEW YORK — Ralph Lauren Corp. is a big believer in Made in America.

“When it comes to products Made in America, it is an area we are exploring. We are doing tests,” said the company’s chief executive officer Stefan Larsson at the annual shareholders’ meeting Thursday morning at the St. Regis Hotel here.

Larsson noted that the jacket Olympic gold medal swimmer Michael Phelps wore as flag bearer in the Opening Ceremony has illumi-nating capabilities and how the company has been working with a wearable-tech firm from America. The basic jacket was made in Roch-ester, N.Y., at the Hickey Freeman factory and then sent to a Flex facility in Texas to add the electroluminescent panels on the front and back.

The disclosure that Lauren was exploring more Made in America product came after Larsson’s presentation to the attendees and

BUSINESS

Lauren, LarssonTalk Changes at Annual Meeting

CONTINUED ON PG. 8

Leaving ToryBrigitte Kleine will step down as president of Tory Burch at the end of September after 12 years. PAGE 3

FASHION

Men in Pink

Looking UpNordstrom raised its full-year outlook after a better-than-expected second quarter. PAGE 4

http://www.peonyandme.com/

12 AUGUST 2016 3

● Revenue growth beat expectations and represents an acceleration from the fourth quarter.

BY AMANDA KAISER AND CASEY HALL

SHANGHAI — Alibaba held its full fiscal year growth forecast at 48 percent during its first-quar-ter earnings announcement Thursday.

First-quarter net profit slid 75 percent as the company reported one-off gains in the same period a year earlier. Meanwhile, revenue growth for the quarter ending June 30 of 59 percent beat market expectations, coming despite a broader economic slowdown in China and weaker consumer indicators over the first half of 2016, and surpassing the 39 percent revenue growth recorded in the previous quarter.

This growth was attributed partly to an increase in core commerce customers, with annual active users rising to 434 million from 423 million last quarter. Alibaba said these customers drove GMV [gross merchandise value] up 24 percent to $126 billion.

Another major factor driving growth is mobile,

with mobile GMV accounting for 75 percent of the total GMV and mobile monetization overtaking the value of PC for the first time.

“I still remember during the IPO roadshow everyone wanted to know if it was possible for mobile take rate to exceed PCs, so today I am happy to report the mobile take rate has exceeded PCs, which is an important milestone. We have completed a successful mobile transition,” said chief financial officer Maggie Wu.

Data driven personalization and in the inclusion of social elements and content such as live-stream video into Alibaba’s Taobao app saw it draw more customers and keep them coming back, with the average active user accessing the app seven times every day.

“If people come more, they discover more and this gives a higher likelihood of final sales. This is one of the main reasons for the continued acceler-ation of GMV growth,” said Daniel Zhang, Alibaba’s chief executive officer.

“We are capturing the imagination of today’s generation of young consumers. Seventy-five percent of users on the Taobao app are below 35 years of age,” added Alibaba Group executive vice chairman Joe Tsai.

Management revealed that Alibaba would con-tinue its focus on rural and global expansion.

“Even for the core marketplace business we have great potential, if you look at the global, as well as rural expansion and the growth of FMCG and supermarket segments,” Wu said.

As well as its cross-border activity, which Tsai describes as a “very big part” of Alibaba’s global efforts, this quarter Alibaba acquired a controlling interest in Southeast Asia e-commerce company Lazada. “That’s going to be a very important potential market for us, a market with more than 500 million potential consumers. We have started to integrate that business this past quarter and that integration is going very well,” Tsai added.

Other future areas of focus are digital entertain-ment — spearheaded by Alibaba’s Youku acquisi-tion — as well as the company’s cloud computing arm, which saw revenue growth of 156 percent on the year, driven by the increase in paying cus-tomers to 577,000. The division is coming close to breaking even, according to Wu.

“The entire IT sector in China is a $200 billion opportunity, including hardware and software. If we say 20 percent of that sector will eventually be on the cloud, that’s $40 billion but that’s way into the future,” Tsai explained.

“We are at a stage were we have generated $187 million in cloud computing this quarter and that’s still very small in relation to the size of the market. We are in it for the very, very long game. In the last quarter we launched 319 products in cloud and that is a pace no one can match,” he added.

Despite strong growth for the quarter ending June 30, recent news hasn’t all been positive for Alibaba. Late last week Zhang Mao, the head of China’s State Administration for Industry and Commerce [SAIC], said in a television interview with a Hong Kong-based network that Alibaba, and specifically the company’s founder Jack Ma, should be doing more to crackdown on counterfeit products on the company’s platforms.

“I’ve repeatedly told Jack Ma that he is not in the land of outlaws and he should take the primary responsibility,” Zhang said on TV.

In May, it emerged that the U.S. Securities and Exchange Commission is investigating Alibaba’s accounting practices, including how the com-pany accounts for its investment into the logistics provider Cainiao Network and how it reports operating data from Singles Day.

RETAIL

Alibaba Aims for 48% Full-Year Growth

● She will leave at the end of September.

BY LISA LOCKWOOD

Brigitte Kleine, president of Tory Burch Inc., will be leaving the company at the end of September.

Kleine has been with Burch for nearly 12 years, spearheading the growth of the ready-to-wear and accessories business into an operation that report-edly generates over $1 billion in sales. Her plans aren’t known yet.

“After nearly 12 years of the most exhilarating professional and personal journey, I have decided that it is time for me to begin a new chapter in my life,” said Kleine. “In 12 short years, Tory and the Tory Burch lifestyle not only inspire each of us every single day, but Tory Burch, the person and the brand now inspires women all around the world.”

She added that she is grateful to have played a role in building “this magnificent company and for the opportunity to work with Tory and the incredi-ble team of talented people that make up the global population of Tory Burch.”

Further, she added, “I believe this is still the beginning of this company’s brilliant future, and I am very confident that Tory, Roger, Robert and the exceptional leadership team will thoughtfully lead the company into its next phase of growth.”

Burch, who serves as chairman and co-chief executive officer, said, “Brigitte and I have been working together for more than 12 years. She has been an incredible partner, adviser and friend. She’s been integral to the growth of the company, her achievements and contributions are too numerous

to capture here. We could not have imagined build-ing this incredible global company without her.”

In September 2014, Roger Farah, the former vice chairman of Ralph Lauren Corp., joined Burch as co-ceo. He is often credited with helping to transform Lauren into a global powerhouse. About Kleine, he said, “Brigitte’s impact to our organization can be felt far and wide. She’s helped lead and build this organization into the global lifestyle brand it is today, ensuring it is customer-focused and techno-logically current. It was an absolute pleasure to have the opportunity to work with her.”

When Farah came on board, the company created an executive director’s office that consisted

of Burch, Farah, Kleine and Burch’s brother, Robert Isen, president of corporate development and chief legal officer.

As president, Kleine was involved in every major development at the company, ranging from getting distribution in stores such as Bergdorf Goodman, Neiman Marcus, Saks Fifth Avenue, Nordstrom and Bloomingdale’s, to opening their own freestanding stores, overseas retail expansion in cities such as São Paulo, Bahrain, Beirut, Dubai, Kuwait, Rio de Janeiro, Munich, Istanbul, Mexico City, Shanghai and Beijing, and setting up various licensing deals for products such as watches and beauty, the launch of the Tory Sport division and the development of the company’s e-commerce business.

But the company has always grown in a con-trolled way. For example, in a 2012 interview, Kleine told WWD that it takes about 18 months to get a location ready for a retail introduction. “We want to make sure we have the right talent and the right infrastructure,” said Kleine. When Burch entered a new region — even after wholesaling at stores within a territory — the company would open several stores at a time. “If you’re investing in infrastructure and the time, you want to make sure the market is viable for several stores,” said Kleine, who joined Burch a year after the company was launched at the design-er’s kitchen table in 2004.

Before joining Burch, Kleine held executive lead-ership roles at various fashion brands, and was most recently president of Women’s Collection at Michael Kors. Earlier, she was U.S. president for Alexander McQueen. She was with Donna Karan International for nine years, and served as president of interna-tional and licensing.

THE MARKETS

Brigitte Kleine to Step Down at Tory Burch

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Ronda Rousey Shows Off Curves in Buffalo David Bitton Fall 2016 Ads ● Iconix’s denim brand aims to grow its women’s business with the UFC star, who not only models its new line of Hope jeans but also hosts a social media sweepstake.

● They Are Wearing: Lollapalooza 2016

● Amid Declining Sales, Macy’s to Shutter 100 Stores

● Swarvoski¹s Fall Campaign Features Individuals of Art, Design and Style

● They Are Wearing: Paris Couture Week

Global Stock TrackerAs of close August 11, 2016

ADVANCERS

DECLINERS

Macy’s Inc. +17.09%

Kohl’s Corp. +16.17%

The Bon-Ton Stoers Inc. +8.80%

J.C. Penney Company, Inc. +8.63%

Kate Spade & Co. +8.26%

Shangai Metersbonwe -1.84%

Trinity Ltd. 1.69%

Youngor Group Co. Ltd. -0.86%

Li & Fung Ltd. -0.79%

Debenhams Plc -0.70%

TOP 5TRENDINGON WWD.COM

The TMall site.

Brigitte Kleine

4 12 AUGUST 2016

● The retailer benefited from another strong anniversary sale event.

BY DAVID MOIN

Nordstrom Inc., buoyed by its strong anni-versary sale amid an otherwise sluggish sales climate, as well as inventory and expense reductions, beat profit expectations, posting earnings per share of 67 cents in the second quarter, compared with predictions of 56 cents.

Based on its better-than-expected per-formance, the company lifted its full-year profit forecast to $2.60 to $2.75 a share, from $2.50 to $2.70 previously. Wall Street liked the results, boosting the stock 10.7 percent in after hours trading to $52.65.

Earlier in the day, Macy’s Inc. and Kohl’s Corp. also saw a lift in their stock prices, based on better-than-expected results, as well. The news that Macy’s would shutter 100 stores, primarily in the beginning of next year, also was well-received.

Nordstrom’s second-quarter earnings before interest and taxes, or EBIT, were $221 million, or 6.1 percent of net sales, compared with $377 million, or 10.5 percent of net sales, during the same period in fiscal 2015. Net earnings were $117 million compared with $211 million in the year-ago period.

Total sales were practically flat at $3.6 billion while comparable sales decreased 1.2 percent. Nordstrom full-line, nordstrom.com and Trunk Club sales on a combined basis decreased 0.4 percent on a total basis, and were down 2.3 percent on a comparable basis.

Combined sales at Nordstrom Rack, nord-stromrack.com and HauteLook increased 11.2 percent, while comparable sales gained 5.3 percent.

Overall, the top-performing merchandise categories were beauty and shoes. The younger customer-focused departments in women’s apparel “continued to outperform, reflecting strength in denim and collabora-tions with new and emerging brands that have limited distribution,” Blake Nordstrom, copresident, said.

“Over the past several quarters, our team has been actively addressing our inventory, expense and capital, and in the second quar-ter, made substantial progress by bringing down inventory in line with sales,” said Nordstrom. “Those efforts, along with the strength of our anniversary sale and a great response from customers to that event, drove better-than-expected results for the second quarter.”

During a conference call, Nordstrom said the during the past several quarters, the team has been “actively addressing” inventories and capital expenditures so they are in line with sales trends.

“We are in one of the best inventory positions we have been in many years,” said Blake Nordstrom. He characterized the last anniversary sale as generating an all-time high sales volume, driving better than expected results in the quarter. The anniversary sale offers new merchandise at marked-down prices and, according to Nordstrom execu-tives, primarily attracts customers looking for fashion newness, rather than discounted goods. When the sale ends, the merchandise is marked back up. Nordstrom typically adjusts the timing of the sale, and this year, one week of the event extended into the third quarter.

Nordstrom is also gaining some traction from its recently expanded loyalty program, so that all customers can earn points regard-less of how they choose to pay. Previously, only Nordstrom customers using the Nord-strom credit card could get points.

In Canada, Nordstrom has a store open-ing Sept. 16 inside Toronto’s Eaton Centre, another slated to open Oct. 21 in Yorkdale and one more to bow in Sherway Gardens, bring-ing the total operating in the country to six.

Fifteen Rack stores are seen ultimately operating in Canada, with the first expected to open in 2018.

In 2017, volumes generated by the six Nord-strom stores in Canada will start to mitigate costs to get them up and running, according to the company.

Nordstrom is also opening in Austin, Tex.,

on Sept. 30. Nordstrom’s Manhattan flagship under construction on 57th Street is expected to open in 2019 and management is hopeful it will open in time for the holiday season.

In addition, 15 Nordstrom Rack units will open in the U.S. in the fall. About 15 percent of the merchandise at Rack stores comes from the Nordstrom full-line stores; the rest is from top vendor closeouts.

Mike Koppel, executive vice president and chief financial officer, said, “Merchant and planning teams are making continuous adjustments, inventories are well positioned, current and in line with sales trends.”

Nordstrom has a “modest” reduction to its Rack expansion to just under 300 stores by 2020, whereas before, it was set to hit the 300 mark.

Commenting on merchandise perfor-mance, Pete Nordstrom, copresident, said, “We experienced some good success. Beauty and shoes in particular.” He singled out boots, denim and sweaters.

“We are happy about the sales but we are very cautious to not over invest,” he said. “We are still taking a cautious approach [for] the second half.”

Aside from the anniversary sale during the quarter, “We did get some lift from the enhancement of our rewards program,” noted Erik Nordstrom, copresident. He added that those who don’t use the Nordstrom card receive one point per dollar spent, while Nordstrom cardholders get two points.

RETAIL

Nordstrom Ups Full-Year Outlook

● The retailer said it’s making progress on its Greatness Agenda, a set of initiatives designed to win market share.

BY SHARON EDELSON

Shares of Kohl’s Corp. climbed on Thursday as the Menomonee Falls, Wisc.-based retailer reported earnings per share in the second quarter of 77 a share, a 17 percent increase over 66 cents a share in last year’s quarter and beating Wall Street estimates of 66 cents a share. Kohl’s stock rose more than 16 percent to $44.19 in early trading, retreating 0.09 cents or 0.20 percent to $44.10, after hours on the New York Stock Exchange.

Sales declined 1.8 percent to $4.18 billion, versus an increase of 0.1 percent to $4.27 billion in 2015’s second quarter.

Net income in the quarter ended July 30 rose 7.7 percent to $140 million from $130 mil-lion in last year’s second quarter. Same-store sales declined 1.8 percent.

Kohl’s chairman and chief executive officer Kevin Mansell said the retailer made progress in inventory management, reducing inven-tory per store by 6 percent. He said Kohl’s was also successful in managing expenses “in a tougher sales environment.” Selling, general and administrative expenses declined 2 percent in the second quarter to $986 million from $1 billion in the 2015 quarter.

The company updated full-year earnings-per-share guidance to $3.12 to $3.32 per diluted share. Excluding impairments, store closings and other costs, full year EPS is

expected to be $3.80 to $4, compared to the retailer’s prior guidance of $4.05 to $4.25.

Transactions were down 4.8 percent in the quarter; but the average transaction size increased 300 basis points. Men’s, including the relaunched Sonoma brand, was the stron-gest category and home was the weakest.

Business was strongest in the Southeast, Midwest, and West, while the Northeast and mid-Atlantic region performed below the company average.

Kohl’s incurred $129 million in expenses related to store closures, lease terminations, IT costs and severance, including $119 million

in costs for future store closures. Mansell said he doesn’t foresee closing any stores during the third quarter.

Updating Kohl’s progress on the Greatness Agenda’s key initiatives, Mansell said the retailer is making progress in shortening the production cycle by 40 percent for women’s apparel and 25 percent for other categories. “One big initiative we need to take with our private and exclusive brands is improve our speed to market,” he said.

Kohl’s during the second quarter launched Stride-Rite children’s shoes and relaunched New Balance in the active area, achieving a 9 percent comp-store sales increase in the quarter.

National brands’ sales rose in low-single digits. “Nike continues to be very strong,” Mansell said, adding that the brand saw increases in the low double-digits in terms of comp-store sales. “Active and wellness now accounts for 18 percent of total sales. National brand penetration is 18 percent.

“We’re excited to add Under Armour in 2017,” Mansell added, noting that the brand will be offered in men’s women’s and health and wellness. “We have a strong leadership in activewear and wellness. Adding one of most sought-after brands [in the category] will allow us to project that more strongly. Adding Under Armour will accelerate our rate of growth and attract a new customer.”

Kohl’s at the end of the second quarter operated 1,150 stores, down from 1,164 a year ago. Two Fila outlets opened during the quarter. The retailer opened two Off Aisle stores in March.

“We’ll open six smaller-format stores in the third quarter, adding to the two we opened in first quarter,” Mansell said. “We’ve seen [good] results from the flexibility and localized offerings. In 2017, we’ll look for a small number of these smaller stores to open in more populated markets to possibly use as a tool to trade in areas where our [traditional stores] are too big.”

RETAIL

Kohl’s Dazzles Wall Street

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The relaunched Sonoma performed well in the quarter.

12 AUGUST 2016 5

● Designers channel their softer sides with dusty pinks.BY LUIS CAMPUZANO

FASHION

Soft Nostalgia

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Clockwise from top left: Sacai’s coat, Tomas Maier’s sunglasses,

Thomas Pink’s pocket square, Paul Smith’s

belt and socks and Katama’s swim trunks.

6 12 AUGUST 2016

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Clockwise from top: Deveaux’s

jacket, Zachary Prell’s tank top,

Stüssy’s cap and Palmiers du Mal’s

turtleneck.

12 AUGUST 2016 7

● The marketing firm worked with Betabrand and Rent the Runway on a service that pinpoints ideal customers.

BY MAGHAN MCDOWELL While one might not know what to wear to work tomorrow, some compa-nies are increasingly able to predict who is likely to buy a pair of corduroy pants in the coming month.

That’s the conclusion from marketing firm Sailthru, which helps companies personalize digital communications with existing customers on e-mail, mobile apps, web sites and social media. Sailthru has begun testing of a program that uses similar technology to help its clients acquire new customers.

Ten companies participated in the pilot program, including Rent the Runway, Betabrand and SheKnows Media, using retention data to pinpoint and market to ideal potential customers on Facebook; the technology is able to determine which people are more like to become long-term, repeat customers.

In the world of data and analytics,

often the goal among merchants is not about finding new customers but about linking with the right customers at the right time — and making that connection feel personal. It’s an old concept, said Betabrand chief marketing officer Aaron Magness, but it can be challenging, and expensive, to nail down.

According to Magness, Betabrand, which had been an existing Sailthru client for more than a year, experienced a 21 percent increase in projected revenue per customer with the new program. “We are a very analytics-driven company, and this allows us to get even more intelligent,” Magness said. “For marketers, we used to say, ‘I need customers,’ then ‘I need female customers,’ and now it’s ‘I need female customers who do this or that.’”

The technology works by building models based on existing customers, and connecting data from different channels such as e-mail and web sites, to find other people who behave similarly; this allows brands to market toward an “intelligent” audience.

This practice isn’t unique to Sailthru, but Magness said this pilot program is significant in that it combines the existing insights that the company powers across channels. “We didn’t have to staple together third-party tools,” he said. “It’s important to have a single partner that can take on what so many companies do without having to cobble it together.”

Soon, Magness said, Betabrand, which relies heavily on crowdsourcing and cus-tomer feedback, will begin customizing its web site homepage to accommodate the customer.

By marketing to the most lucrative customers, companies are able to be more efficient with their ad spend, Mag-ness said. Rent the Runway reported a 40 percent reduction in mobile sub-scriber acquisition costs and a 53 percent increase in expected lifetime value of new customers, according to Sailthru. Since participating in the pilot, it has tripled its acquisition test spend.

“Improving the quality of acquisition programs is traditionally very labor inten-sive,” said Rent the Runway’s Josh Gray, who is director of acquisition marketing. “With this program, we’ve expanded our audience reach and the results have exceeded our top performing customers segment.”

The decrease in acquisition costs for mobile customers specifically is compel-ling, said Jason Grunberg, who is senior director of marketing at Sailthru, as desk-top often still “rules the roost.”

The average contract value to use Sailthru is $100,000 to $150,000 a year, depending on the number of users and a company’s e-mail volume, he said; from there, a company can add on the predic-tive acquisition program.

A representative for Sailthru, which began with e-mail marketing in 2008, said that clients from both the U.S. and the U.K. would be signing on to begin testing. The firm currently works with 400 retail and media companies.

“E-mail has become commoditized, so using web site, mobile and in-store data to personalize e-mail marketing is a tre-mendous differentiator,” Grunberg said. “Prediction is another element of that.”

RETAIL

Sailthru Facebook Pilot Predicts Long-term Customers

● The German e-tailer continues its vigorous growth in sales, earnings and customer base.

BY MELISSA DRIER

BERLIN — German online giant Zalando posted boisterous gains in second-quarter earnings and sales, riding on a growing customer base, increased average orders, stepped-up app usage, improved fulfill-ment capabilities and cost efficiency in operations.

In final figures released on Thursday, the Berlin-based e-tailer reported net earnings soared 121 percent to 50.9 mil-lion euros, or $57.5 million. Dollar figures are converted at average exchange for the period to which they prefer.

Adjusted earnings before interest and taxes leapt 167.8 percent leap to 80.9 million euros, or $91.4 million, com-pared to 30.2 million euros, or $33.4 million, for the same quarter last year. This corresponded to an adjusted EBIT margin of 8.8 percent, versus 4.4 percent previously.

Group sales reached 916.4 million, or $1.03 billion, a gain of 25 percent.

Both sales and operative earnings for

the quarter came in at the higher end of preliminary ranges released in July. As reported, Zalando increased its full-year earnings guidance, which now calls for a full-year adjusted EBIT margin of 4.0 percent to 5.5 percent, and sales growth at the upper end of a range of 20 percent to 25 percent.

In the first six months of the year, Zalando posted net earnings of 55.5 mil-lion euros, or $62.7 million, a gain of 17.3 percent. Adjusted group EBIT surged 70.9 percent to 101.2 million euros, or $114.3 million, while group sales rose 24.4 per-cent to 1.71 billion euros, or $1.93 billion.

In a conference call on Thursday, Zalando board member Rubin Ritter said the eight-year-old company’s growth dynamic was primarily fueled by the ongoing increase in the number of active customers, which rose about 15 percent to 18.8 million users at the end of the second quarter. These now make 3.3 purchases a year with an average basket of 66 euros, for an annual spend of about 220 euros, a gain of 13 percent.

Ritter noted that Zalando has been growing faster in lower price points, and while this could have an effect on the average basket size, “it also means the customer likes the product and is shop-ping more frequently,” which supports overall growth.

“We have successfully added to our

brand assortment,” he said, pointing to the joint campaign with Ivy Park by Beyoncé, which garnered 260 million social media posts, or new additions like Fenty by Rihanna, Club Monaco, Ivyrevel and Kate Spade. At the first Bread & But-ter by Zalando in September, the e-tailer will debut two new collaborations: Tommy Hilfiger’s ‘Tommy x Gigi’ with Gigi Hadid and a footwear collaboration with Marni, further details of which were not available.

By mid-2016, Zalando had roughly doubled the number of app downloads in the past 12 months and almost doubled app orders, Ritter said. Service has been improved, be it via a second delivery partner in Germany, Italy’s new satellite warehouse, or the first deliveries out of a new logistics hub in Lahr.

Investments have continued apace, with employees growing to 10,639 from 9,079 since last June. The Zalando tech team numbers 1,340 in seven locations.

Zalando is active in 15 European coun-tries, with the DACH region of Germany, Austria and Switzerland contributing more than half of sales, though the rest of Europe has been catching up. In the second quarter, sales outside of Ger-man-speaking Europe rose 34.3 percent.

Asked about future growth, he said there were opportunities in Zalando’s current core business, from brands selling directly in brand shops on the site, and across the existing markets, though younger markets like Poland have made visible gains. He mentioned an “upside in potential new categories like fashion lifestyle. The fashion world is moving so quickly,” he summed up, “that there are tons of opportunities to grow.”

BUSINESS

Zalando Net Profit Soars 121% in Second Quarter

● The designer was attracted to the building’s limestone and brick exterior and original Art Deco details.

BY SHARON EDELSON

NEW YORK — After more than a decade, Tom Ford is moving his Manhattan flagship, but he won’t be traveling far.

The designer in 2017 will relocate from 845 Madison Avenue at 70th Street to 680 Madison Avenue, which is nine blocks south near 61st Street.

Ford’s new two-level, 12,300-square-foot store will be located in the 16-story building that was previously home to the Carlton House Hotel and will be slightly smaller than the 14,000-square-foot unit he occupies now.

The new building, which is one block east of Central Park, has recently been converted to 68 luxury condominiums, which are owned by Excell Development. Thor Equities controls the retail space.

“The Manhattan store, opened in 2007, was the first Tom Ford store, and it took something quite special to inspire a move,” the designer said. “This new location, with its combination of historic elegance and light-filled interior spaces, is unique to the city. The Carlton House will offer an exceptional home for Tom Ford.”

The designer praised the building’s lime-stone and brick exterior, which was restored to its original appearance, original Art Deco details and expansive windows.

The new flagship will house the complete women’s and men’s apparel and accessories collections. A series of salons on the ground floor will feature an expanded handbag collection, women’s ready-to-wear, shoes, jewelry and the Tom Ford beauty collection of fragrances and cosmetics. The upper level will be devoted to men, with suiting, shirting, accessories, luggage, shoe and sportswear areas. The second floor will also offer a made-to-measure salon. The new store design was described by the company as “an environment of soft modernism and timeless luxury that is the signature of Tom Ford stores worldwide.”

Ford unveiled the existing flagship at 845 Madison Avenue in 2007 with men’s wear and accessories collections. Women’s was introduced in 2010 at the store.

There are 121 freestanding Tom Ford stores and shops-in-shop.

The retail at 680 Madison Avenue got off to a rocky start. Qela, a Qatari-based luxury brand, leased 6,200 square feet of space. Quela never occupied the store and eventu-ally defaulted, leaving Thor to reclaim the square footage.

RETAIL

Tom Ford Flagship Moving South

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Betabrand tested a

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Tom Ford Fragrances will be among the products to be sold at the new flagship on Madison Avenue in New York.

8 12 AUGUST 2016

in annual revenue, from $27.1 billion in 2015. None of the 38 Bloomingdale’s stores is closing.

“Decisions like this which impact people are very hard for all of us, but in effect it is preserving the jobs of hundreds of thousands of others,” said Terry Lundgren, Macy’s Inc. chair-man and chief executive officer, in an interview.

He said Macy’s would disclose which stores are being closed at a later date, and that there was currently no estimate on the number of people who would lose their jobs.

“The reason we announce it now is to make sure our merchants and planning organization are buying to a smaller number of stores.” He also said that Macy’s would give people notice well in advance of their store closings and “do our best to transfer people to other Macy’s stores or find other job opportu-nities for them.”

“Obviously, the impact on associates and managers weighs very heavily on Terry and I and the decision-makers in this company,” said Jeff Gennette, Macy’s president, who is designated to succeed Lundgren as ceo in the first quarter of 2017.

But the store count reduction, Gen-nette stressed, will enable the company to “grow more aggressively in the stores that remain,” and grow the digital mobile, and app aspects of the business. “There are big opportunities...You can look forward to a company that expe-dites decision-making, moves faster, and is bolder in its approach to the cus-tomer,” Gennette said.

The executives last year indicated plans to focus more resources on the top 150 Macy’s stores that generate the most profits and sales, in effect indi-cating that there was plenty of room to trim its portfolio. On Thursday, Lund-gren and Gennette said the company will continue to have a strong presence in 49 of the nation’s top 50 markets, despite the store closings. Jacksonville, Fla., is that one major market where Macy’s would like to operate a store but has yet to find the appropriate setting.

Along with store closings, Macy’s reported its results for the second quarter ended July 30. While the num-bers were still down, they were better than expected and were improved over a year ago, leading to no change in the guidance for the year. Macy’s Inc. expects 2016 comparable sales to decrease in the range of 3 percent to 4 percent, and earnings per diluted share (excluding asset impairment charges and retirement settlement charges) to range from $3.15 to $3.40.

The news overall went over well with retail analysts and Wall Street, which lifted the Macy’s stock up 17 percent to $40 by midday.

“This is transformational and the beginning of more focus on destination stores in major malls and key downtown stores,” said retail analyst Walter Loeb. “Some of the smaller stores are going to go by the wayside. Probably some more stores will close” beyond the 100. “Lundgren wants to leave Gennette with

a more profitable operation in good shape. He still has this year and the beginning of next year to really clean up things for Gennette.”

“In any industry, if the ground under you changes, you can either make incre-mental changes, or get act decisively to get ahead of the problem. After several years of lagging behind the curve, in one swell swoop Terry has put Macy’s ahead of the curve,” said Craig Johnson, president of Customer Growth Partners.

“He is leaving Jeff with a slightly smaller but much healthier enterprise, and will be exiting a proud retailer on a high note.”

Sales in the second quarter were down 3.9 percent to $5.87 billion from $6.1 billion in the year ago period, but strengthened month-by-month through the quarter. Comparable sales were down 2 percent, compared to a 5.6 per-cent drop in the first quarter. Macy’s net income fell to $9 million from $217 mil-lion, largely impacted by asset impair-ments and charges from upcoming store closings and retirement plan settlement charges. Excluding the charges, operat-ing income came to $372 million versus $436 million a year ago.

Sales trends were positively impacted by more normal weather during the quarter, compared to earlier in the year; a smaller decrease in tourist spending, and stronger promotions including a new “Black Friday in July” event.

“We also are pleased that a num-ber of sales-driving initiatives put in place in recent months are beginning to gain traction. These include addi-tional investments in store staffing and visual presentation, the rollout of our enhanced fine jewelry departments, athletic/active apparel intensification, home store improvements and Last Act clearance strategy,” Lundgren said.

Macy’s has been battling against declining sales and profits for the last several quarters as consumers have switched much of their spending to the multitude of websites that now sell apparel, and have generally cut back on buying fashion and accessories in favor of spending on cars, eating out and vacations.

But last quarter, there was a sales lift in apparel at Macy’s, according to

Lundgren, who told WWD that apparel trends were best in the denim, juniors, dresses, and athletic areas.

In other news, Macy’s is in negoti-ations to sell its 250,000-square-foot men’s store on Union Square in San Francisco for redevelopment. If a deal is struck, the men’s store will close and men’s wear will be sold at the 925,000-square-foot Macy’s flagship, across the street also on Union Square.

The company continues to explore opportunities for the Herald Square, State Street in Chicago, and Minneapolis flagships. Macy’s wants to capitalize on situations where the development or redevelopment of all or a portion of a real estate holding exceeds the value of its existing use. This will occur through sales of assets or portions of real estate, including some properties included in the 100 stores to be closed. Macy’s owns just over 50 percent of its stores, and leases the rest.

In downtown Brooklyn, the Macy’s flagship will be downsized and remod-eled through a deal with Tishman Speyer. As reported, Macy’s will con-tinue to own and operate the first four floors and lower level of its nine-story Fulton Street flagship. Tishman Speyer purchased the rest of the store and cre-ate office space over 10 floors.

Getting reflective on the mercurial nature of the retail industry, Lundgren observed that in recent history, “Every five to seven years there has been major setback or major disruption in our industry. Each time we had to respond.” He cited the onset of a retail downturn in 2015, the Great Recession beginning in 2008; the terrorist attacks on the World Trade Center in 2001, and 1994 when Macy’s was taken out of bank-ruptcy and taken over by Federated Department Stores. The company later changed its name to Macy’s Inc.

He pointed out that in 2008, Macy’s closed eight buying offices to consoli-date into one in New York. “That was a very hard change,” Lundgren noted. “Gut-wrenching. It impacted a lot of people, but it was followed by the five best years in our company’s history.”

In a conference call, Karen Hoguet, chief financial officer, said the company was pleased with the sales trend last

quarter, which was “much improved from the first quarter and sets us up well for the remainder of the year.”

“Both Macy’s and Bloomingdale’s experienced improvement in the second quarter,” with apparel across the board improving, with a few exceptions such as handbags and watches.

She said Macy’s new Backstage off-price stores, which are both freestand-ing and set inside the full-line stores are “doing well in total, although perfor-mance by door is mixed as you would expect from a new business.”

Blue Mercury had a string of “terrific new store openings, including Tribeca and Columbus Circle in Manhattan and in East Hampton, N.Y. “We are opti-mistic Blue Mercury will contribute significantly to our beauty offering,” both inside Macy’s stores and with the freestanding Blue Mercury units. Macy’s bought Blue Mercury last year.

She also the company was pleased with its joint venture in China, with Ali-baba’s T Mall, though it was “too early to judge” performance.

Last Act, Macy’s new clearance format inside the stores, has recently expanded beyond apparel to include handbags and will add shoes to the format at the end of this year

Hoguet said that despite the massive wave of store closings, “Macy’s will not lose representation in any top markets.” She added that “some of the sales will be retained by other [Macy] stores and macys.com.”

Putting more resources in Macy’s top 150 doors “gives us confidence we can accelerate growth in these strategic loca-tions.” They will benefit with “improved assortments, better service, improved technology, and more events,” Hoguet said.

Macy’s has a prototype in Easton Town Center in Ohio, emphasizing new concepts for the active, wellness, bridal and beauty categories, which will be rolled out, though it’s too early to be specific on the degree of the rollout, Hoguet said.

“Almost throughout the store, we are looking for ways to improve the assort-ment, to attract not only Millennials but older customers as well. You will see a lot of experimentation.”

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● Fung Global Retail & Technology projects that money spent will reach high levels as consumers quit saving and start shopping.

BY DEBRA BORCHARDT

Fung Global Retail & Technology projects that back-to-school spending will reach near-record levels as consumers quit saving and start spending.

Fung’s managing director Deborah Weinswig said that the macroeconomic backdrop was the reason behind the positive outlook. She noted that gas is cheaper than

last year, inflation is moderate, unemploy-ment is healthy and wage growth has picked up. She pointed out that housing prices have gained and the savings rate has dropped.

Weinswig said that bts spending is expected to rise 2 to 3 percent versus last year’s increase of 0.4 percent. Millennials are now becoming parents of school-age children and beginning to enter the school shopping picture. She also said that the National Retail Federation found when that figure is com-bined with back-to college the total could rise 11.5 percent to $75.8 billion. Plus, the average total bts spend per family is expected to be $673.57, nearing 2012’s $688.

She said that 95 percent plan to buy clothing and accessories and will spend $235 on average. That’s an increase of 8.1 percent.

The hot items are expected to be jewelry and handbags. Fashion trends for bts include the puffer vest, longline vest, cotton joggers, faux-leather joggers, military jackets and bomber jackets.

There are three things that retailers are doing that are also helping to boost spending, said Weinswig. Merchandise tie-ins like “Find-ing Dory,” the discounts where customers spend in order to save and new mannequin displays are motivating consumers to spend. She described displays that pull together entire looks and then provide all the products right beside the display are leading to more sales.

Consumers are also expected to begin shopping earlier this year. Weinswig said that increased social media campaigns are driving shoppers to start to picking up items now instead of waiting until school starts.

The Fung research showed that 26.1 percent plan to shop at least 2 months before school starts versus last year’s 19.9 percent. Conversely, only 33.8 percent will shop three weeks prior to school starting versus last year’s 42.8 percent.

Weather is always a factor for shoppers and

this year will be no exception. Planalytics, which analyzes weather patterns for retailers, said that August is warmer in the Northeast this year, but cooler on the West Coast. Sarah Levenson, a client services manager at Plana-lytics said to expect better numbers from out West for August. The heat in the Northeast will cause challenges to bts apparel shopping.

Last September was the warmest since 2012 and this year is expected to be much bet-ter. Levenson said she expects a cooler trend and when people have a hint of cool weather, they tend to want to start shopping.

Weinswig said that last year’s shopping was characterized by people trying to make do. They scoured the house for supplies and managed with the clothes on hand. This year, people are feeling better about their economic picture. She also noted that with kids growing, parents can only put off clothes shopping for so long.

Shoppers will be headed to discount stores and department stores as they begin spending. If the earnings from Macy’s Inc. and Kohl’s Corp. are any indication of what’s to come, it does look like retail may get good grades for this year’s back-to-school spending.

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a shareholder during the question-and-an-swer session commented about doing more production in the U.S.

Ralph Lauren, chairman and chief creative officer, opened the annual meeting by saying simply, “Hi. I’m Ralph Lauren.” After introducing board members and leaving some time for routine business matters, the chairman made it clear through the introduc-tion of Larsson that the meeting represented the next new chapter in the history of the company the designer founded 50 years ago.

“Stefan Larsson is one of the most unique people that I have met in the business,” Lau-ren said, noting that he has a “new partner in the business.”

As for relinquishing the reins as ceo, Lau-ren said it’s been “interesting in giving up the ceo” post, adding that the company has been “my baby.” He explained to shareholders that having a new partner and a new ceo is all “about the future.”

Looking ahead at that future and at the challenges at retail, Lauren said, “I see big changes….I think it’s a lot more complicated, a lot more interesting.”

In introducing Larsson, 41, Lauren also said of their first meeting that he wondered, “Why am I interviewing this guy, who I know is from another company that’s not at all like my company?” That was last year, and after work-ing together for nine months, Lauren told shareholders that he’s concluded Larsson, who joined from Old Navy and previously was at H&M, is a “great guy.”

Larsson, who said it felt a “little unreal still that I’m [here] with Ralph Lauren,” explained to shareholders that his role as ceo and Ralph’s partner is to lead the team on executing on Ralph’s vision. Noting that in the current retail backdrop how it’s never been more important to be a strong brand, Larsson emphasized that the Ralph Lauren brand has what few others have been able to build — a combination of being unique and iconic.

Before going into the changes and initia-tives called for under the Way Forward Plan, disclosed in June to Wall Street analysts, Larsson showed a few black-and-white photos of Ralph with his wife Ricky and

their then young children, David, Dylan and Andrew. The ceo said whenever he sees the photos, he thinks of the words “style” and “timelessness.”

“I can’t tell which summer this was taken. Last summer? Fifteen years ago, 20 years ago?” Larsson said, honing on his point that the photos are classic family pictures that could represent any time period for any American family. Another one made him think of a family “dreaming of a better life, a life of style,” the ceo said, noting it was analo-gous to his wishes for his own family: “I have three small kids myself. This is relatable to my life and what I dream about [for my family].”

For Larsson, the photos he showed represent a “back to the future” look at the company the chairman founded based on an aspirational lifestyle, and why the brand is still a strong one that resonates with consumers: “Ralph created a dream that is relatable.”

Larsson said in the past year, the company had 150 covers in the best magazines globally. The company also had 3,000 nonpaid editori-als online and off-line, which in turn resulted in 28 billion media impressions. “That trans-lated to a paid media value of a half-a-billion” dollars, Larsson said.

He emphasized to shareholders that as the company embarks on the still-early stages of the restructuring to reflect the changing marketplace, “some things won’t change. The dream of a better life won’t change, but how you access that will change.”

In a compressed version of the Investor Day presentation made to analysts in June, Larsson said the Way Forward Plan in its “most simplest term is building the business to match the strength of the brand, and in doing that to grow the brand.” He said the two keys are a refocus on the core — the

Ralph Lauren and Polo Ralph Lauren brands — and evolve the operating model. For the first part, that revolves around “doing more of what is our core DNA and more of what the consumer likes.” He spoke about cutting lead times, and testing product — “Is it a cash cow?” — plus adding an eight-week pipeline parallel to the cut in lead times. For the oper-ating model, the focus is on creating the best product while balancing cost efficiencies, as well as increasing flexibility and speed.

“We are extra strong in America, [with] more to be done in Europe, and even more to be done in Asia [and] more to do to expand in the rest of the world,” Larsson said.

As for the company’s push to get back to the entrepreneurial mindset, Larsson said, “Our goal is to work like a small company.” He spoke of cutting layers to empower the “doers” and said the whole plan creates a virtuous cycle of building brand strength.” From a shareholder perspective, the ceo said the company “has a commitment to return excess cash.”

He also showed a clip of a commercial that the company is running on television “for the first time in a long time” in 10 cities that includes select Olympians and reflects the

company’s support as the official outfitter for the U.S. Olympic team.

In the Q&A session, Larsson said, “I’m a big believer in the department store. A well-run department store solves a big consumer challenge,” noting that the consumer is time-challenged and having many things in one place can be a benefit. He also added that the company is analyzing what its mix should be between wholesale, e-commerce and com-pany-owned stores, which comes as brands from Coach to Michael Kors cut back on their wholesale distribution.

He was asked how often he asks Lauren for his advice and noted that the two have a relationship where “it’s less about advice, but an ongoing conversation. It’s about where we’re going. What I’m good at is knowing what I don’t know.”

Lauren, emphasizing how the two really are working as partners, told the shareholder, “What you don’t know is how often I go into his office.”

Zeroing in on his message about the future prospects of the company, Lauren said, “The changes are about moving to where we have to go. The energy Stefan brings is new. It’s all new.…It’s very exciting.”

Lauren, LarssonTalk Changes at Annual Meeting CONTINUED FROM PAGE 1

Stefan Larsson

Michael Phelps and the U.S. Olympic

team at the Opening Ceremony in Rio.

● The candidate called Trump out again for his signature suit and tie collection reportedly being made abroad.

BY KRISTI ELLIS

Democratic Presidential candidate Hillary Clinton, under pressure from the progressive wing of her party, reiterated her opposition to the 12-nation Trans-Pacific Partnership trade deal on Thursday and vowed to continue opposing it after the November election.

Clinton, who delivered a key economic policy speech outside of Detroit on Thursday, sought to draw sharp distinctions between her prescriptions for the economy and that of Republican candidate Donald Trump, who outlined his tax and trade proposals in a speech in Detroit on Monday.

She portrayed herself as the champion of the middle and working class and charged that Trump would only support policies, such as the tax proposals he laid out, that help his own business interests and those of the wealthy in general.

“If I am fortunate enough to be your presi-dent, I will have your back every single day,” Clinton said.

The antitrade rhetoric on the campaign trail has dimmed the prospects of the TPP, which includes the U.S., Australia, Japan, Mexico, Canada, Vietnam, Malaysia, Peru, Singapore, Chile, Brunei and New Zealand and would encompass nearly 40 percent of the world’s gross domestic product.

Clinton supported TPP while she was working as Secretary of State under President Obama, but she reversed her position once she became a presidential candidate and has repeatedly said she opposes the trade deal as it is written. She was pushed in large part by her primary challenger Sen. Bernie Sanders, who vigorously opposed TPP, claiming bad trade deals have led to too many job losses in the country.

Some liberal groups have called on Clinton to publicly state she opposes a lame-duck vote in Congress on the controversial trade deal.

“My message to every worker in Michigan and across America is this — I will stop any trade deal that kills jobs or holds down wages, including the Trans-Pacific Partnership,” Clinton told a crowd at the Futuramic Tool & Engineering plant in Warren, Mich. “I oppose it now, I will oppose it after the election and I will oppose it as president.

“It is true that too often, past trade deals have been sold to the American people with rosy scenarios that did not pan out,” Clinton said. “Those promises now ring hollow in many communities across Michigan and our country that have seen factories close and jobs disappear.”

She said companies have lobbied for trade deals to sell products abroad, but in turn also moved production abroad to make those products and ship them back to the U.S.

“American workers in communities have paid the price,” Clinton declared. “But the answer is not to rant and rave or cut ourselves off from the world. That ends up killing even more jobs. The answer is to finally make trade work for us, not against us.”

Clinton touted her plan for creating “good-paying jobs,” although she did not

appear to offer any new economic proposals in her speech. She said a big part of her eco-nomic plan will be “unleashing the power of the private sector” to create more high-paying jobs.

“That means for us creating an infra-structure bank to get private funding off of the sidelines to complement [government investment] — $25 billion in government seed funding could unlock more than $250 billion and really get our country moving on infrastructure plans,” Clinton said. “We are going to invest $10 billion in what we call ‘Make It in America’ partnerships to support American manufacturing and recommit the scientific research that can create entire new industries.”

Trump said in an interview on CNBC’s “Squawk Box” on Thursday morning before Clinton’s afternoon speech that he is not an isolationist.

“I’m a free trader. I want free trade, but it’s got to be fair trade. It’s got to be good deals for the United States,” Trump said, as he called the North American Free Trade agreement a “great disaster” and reiterated that he will renegotiate it. He has also said he will with-draw the U.S. from TPP.

Clinton sharpened her criticism against Trump’s “Make America Great Again” theme on Thursday, calling the Republican candidate out again for reportedly making a portion of his signature suit and tie collection abroad at the same time he promises to create more manufacturing jobs in the U.S.

“Before he tweets about how he’s really the one who will put America first in trade, let’s remember where Trump makes many of his own products because it’s sure not in Amer-ica,” Clinton said. “He has made Trump ties in China and Trump suits in Mexico, instead of here in Michigan. He keeps saying it’s not possible to make these things here in America and that’s just wrong.”

Clinton pointed to a “Made in America buyer’s guide” for Trump that her cam-paign released last week, claiming to find

100 manufacturers in America that could make Trump’s signature suits, ties and other products.

“One positive thing Trump could do to make America great again is actually make things in America again,” Clinton said in her speech Thursday.

The Trump campaign did not respond to a request for comment on Clinton’s remarks about the Republican standard-bearer’s sig-nature collection and her campaign’s buyer’s guide.

Clinton again called for tough enforcement against China and undervalued currency poli-cies that are known as currency manipulation.

“As a senator from New York, I fought to defend New York’s manufacturers and steel makers from unfair Chinese trading practices,” she said. “I opposed the only multilateral trade deal [the Central American Free Trade Agreement] that came before the Senate while I was there because it didn’t’ meet my high bar.”

She said if elected, she will “stand up to China” and made a new proposal to triple the number of trade enforcement officers in her administration, in addition to reiterating her vow to appoint a chief trade prosecutor.

“Mr. Trump may talk a big game on trade, but his approach is based on fear, not strength — fear that we can’t compete with the rest of the world even when the rules are fair, fear that our country has no choice but to hide behind walls,” she said.

She even used an Olympics analogy. She said if Team USA were as fearful as Trump, Olympic athletes and gold medal winners Michael Phelps and Simone Biles would be “cowering in the locker room afraid to come out and compete.”

“Instead, they are winning gold medals,” Clinton said. “America isn’t afraid to compete. Right now, thousands of Michigan companies are exporting billions of dollars of products around the world. We want them to sell even more and create even more jobs here at home.”

BUSINESS

Hillary Clinton Restates Opposition to TPP

● The first two shows will be men’s only and be held in March and October 2017.

BY JEAN E. PALMIERI The trade show business is about to get a new upstart entrant.

Industry veterans Arnold and Bruce Zimberg have teamed with Messe Frank-furt, the third largest trade-show organiz-ers in the world and operators of Texworld USA, to create a new luxury off-price show.

Boulevard Pret-a-Sale will host its first edition in New York at the Jacob K. Javits Convention Center in March. It will be men’s only, but women’s is expected to be added by the time of the second show in October.

What makes Boulevard different from the other traditional apparel trade shows as well as the Offprice Show is its focus on high-end goods, the organizers said.

Two years ago, Arnold Zimberg said he and his brother took a hard look at the trade show landscape and “saw a total drop in ROI [return on investment]” for exhibitors. Large stores are challenged by

sluggish sales and many specialty stores are saddled with “credit issues,” making retailers reluctant to place orders for full-price merchandise at the shows.

The only area that was growing, they said, was the off-price arena.

“So we said, why isn’t there a show that focuses on where the industry is growing: better, premium off-price.”

Although the Zimbergs were involved in the creation of shows such as NAMSB and the Designers Collective over the course of their 40-year career, they knew they needed a partner.

“We are manufacturers, not trade show operators,” he said. “So we’re partnering with a professional show organization.”

Dennis Smith, president of Messe Frank-furt USA Inc., said the Zimberg brothers “gave us insight into what is happening [in the apparel industry].”

Off-price shoppers account for 75 per-cent of apparel purchases across all retail channels, according to The NPD Group’s receipt mining service Checkout Tracking.

“Off-price retailers are resonating with fashion and cost-conscious consumers alike and are stealing department store business for good reason,” said Marshal

Cohen, chief industry analyst of NPD. “Off-price is second only to the online channel in terms of growth rate.”

With retailers such as Saks Fifth Avenue, Neiman Marcus and Nordstrom expanding their off-price divisions at a much faster clip than their full-line stores, the time is right for a trade show dedicated to their buyers, they believe.

“You can’t sell off-price at a normal trade show,” Bruce Zimberg said. “You’re not free to talk comfortably and you can’t bring leftovers into the same booth where you’re showing your current line. So we need a platform where bigger retailers worldwide can meet comfortably.”

Boulevard will look as upscale as The Tents at Project, Capsule or Coterie, they said. The Zimbergs created a mood board for the show concept and it is centered around the cool, gritty tone of TriBeCa in New York. The booths will be prefabri-cated and designed by Zimberg and there will be trend areas.

Smith said Messe Frankfurt, which is 25 years old, operates eight events in North America and more than 130 worldwide. “This will provide a niche-oriented event that will enable off-price buyers to have their own platform,” he said.

The shows don’t need to be tied to a par-ticular market period, they said, since their intent is to sell off excess merchandise. They will be invitation-only events, they said, and they’re expecting 150 exhibitors

for the first edition in 14 categories of apparel, accessories and footwear. At this point, no brands have committed to showing, but the group is just now starting to have conversations with potential exhibitors.

Some industry heavyweights privy to the project believe it will be a success.

Burt Tansky, the former president and chief executive officer of Neiman Marcus Group, said: “The concept of the Bou-levard trade show is an excellent idea bringing vendors and retailers together to present a wide range of value merchan-dise. It is exactly what the industry needs. It will create an efficient platform for the two parties to be able to do business effi-ciently and effectively.”

Elyse Kroll, founder of ENK Interna-tional, agreed: “While fashion has always been about change, the business of fashion is now undergoing a massive change itself. With eyes wide open and a depth of expe-rience behind them, Arnold and Bruce Zimberg have highlighted the burgeoning sector of value-minded retail and the brands that are now ready to embrace that business.”

Smith said Messe Frankfurt is committed to Boulevard beyond next year. “When we go into a project, we go in long-term,” he said. “We’re looking to create a sustainable event and partnership.”

In fact, he said that if Boulevard is a suc-cess, it could be expanded beyond apparel into home furnishings and textiles as well.

ACCESSORIES

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● The fabric is based on a patent-pending technology resembling a car radiator.

BY ARTHUR FRIEDMAN

Polartec, known for its warming fabrics such as fleece, is cooling things down with Polartec Delta.

Launching for spring, Polartec Delta is based on a patent-pending technology resembling a car radiator, explained Karen Beattie, product marketing manager at Polartec.

Beattie explained that the Delta fabric consists of two yarns — Tencel lyocell and polyester — that serve specific purposes.

“The hydrophilic yarn spreads across the fabric in a radiator matrix designed to carry sweat across the body and hold it there, so that when it dries you get direct benefit from evaporative cooling,” she said in an inter-view. “That hydrophilic element is Tencel lyocell. Interspersed between that matrix is polyester, the hydrophobic element that resists getting wet. It stays open and breath-able and that body moisture vapor can pass freely through the shirt.”

The company said it successfully navigates the middle ground of natural and synthetic

fibers, taking comfort cues from cotton for immediate and long-term cooling ability, and synthetics for their fast dry time, reduced wet cling and chaffing.

A special knit construction promotes maximum breathability and a quick dry time. In addition, the yarns are created and constructed to have a cool touch, regulated drying and an odor control additive.

The target market for Delta is primarily athletic end uses, such as cycling, running and fitness, “people generating heat who would welcome some relief and a cooling fabric.”

Beattie said the initial launch is a single fabric in two weights and will be followed in spring 2018 by a group of fabrics in different textures and end uses, including a golf shirt fabric, a fitness or cycling fabric, and a mesh shirt with a smooth inner face to avoid cling for sublimation printing and hiking. All the fabrics have a built in UPF rating of 15 to 50.

There have been several recent prod-uct introductions in the activewear space addressing cooling and wicking. Cotton Incorporated and Nanotex have collaborated on a new technology called Nanotex Dry Inside aimed at enhancing cotton’s moisture management characteristic, and Eastman Chemical launched Avra Performance Fibers with performance benefits that include moisture management and a chemical-free “cool to the touch” sensation.

The patented Nanotex Dry Inside technol-ogy enables effective moisture transfer away from the skin, eliminating dampness and chaffing in 100 percent cotton apparel, while maintaining the additional comfort aspects of garments made from the natural fiber.

“While the technology is new, this does build on previous knowledge and technol-ogy at Polartec, “ she said. “We are known for our fleece and raised-surface warm fabrics, and this takes that in the opposite direction.”

THE MARKETS

Polartec Shows Its Cool Side With Delta

● The mass retailer plans to open 28 flexible-format stores in the next two years.

BY SHARON EDELSON

Target on Thursday said it will unveil a 27,000-square-foot flexible-format store in Manhattan’s East Village in summer 2018. The two-level store, which will have 9,500 square feet on the ground floor and 17,700 square feet on the lower level, will open at Extell Development’s new mixed-use project at 500 East 14th Street on the corner of Avenue A.

Target chairman and chief execu-tive officer Brian Cornell has made growth in urban areas a priority and flexible-format stores are a vehicle for fueling that expansion. Target on Oct. 5 plans to unveil a 45,000-square-foot flexible format unit in TriBeCa featur-ing a Chobani café.

“We’re adapting our store footprint so that we can be in TriBeCa. It’s a sensational location on the corner of Greenwich Street. We have to continue to adapt to follow the consumer. The majority of new stores we open will be flexible format stores in urban cen-ters,” Cornell said earlier this month, adding, “We’ve just started. You’ll see more and more of [these stores]. There’s the potential for hundreds of stores. The opportunities will be driven by the consumer.”

The retailer operates 23 of the smaller stores and said it will continue to add flexible format locations, includ-ing 28 previously announced stores set to bow in places such as Cupertino, Calif.; Freeport, Elmont and Brooklyn, N.Y.; Hyde Park, Chicago; Rittenhouse Square, Pa., and on the Penn State University campus in State College, Pa. The stores range in size from 20,000 square feet in Chicago to 46,000 square feet in Freeport, N.Y.

Flexible format stores offer assort-ments tailored to the needs of local shoppers. The East Village Target will offer an assortment of men’s and women’s apparel and accessories; home items geared to refreshing small living spaces, as well as apartment essentials; food, including grab-and-go items such as sandwiches, salads, snacks and beverages; health, personal care and beauty products, including a multicultural assortment, and portable technology products and accessories. The store’s services will include Target mobile and order pickup.

A flexible-format store unveiled in the Streeterville neighborhood of Chicago has exposed brick walls and wooden beams, and sells craft beer, Chicago sports team products and Todd Snyder apparel. The retailer said test stores with personalized products realized a 1 percent to 2 percent sales increase.

RETAIL

Target Takes Aim at East Village

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● Wu designed a limited-edition Caudalie Beauty Elixir.

BY RACHEL STRUGATZ

Jason Wu is giving a designer spin to Cau-dalie’s best-selling Beauty Elixir.

“I gave him total freedom and he came up with crazy ideas. He wanted to change the material of the bottle and that wouldn’t have worked,” Mathilde Thomas, cofounder of Caudalie, said with a laugh. “Because it has essential oils and rare plants, it has to be in a specific bottle. It’s quite fragile and we couldn’t put it in plastic.”

Next Wu wanted to dress the bottle in actual lace. But because he had very little lace (it was left over from a collection he just designed) and it was extremely deli-cate, this became an impossibility as well.

Finally, the two comprised and decided to “draw” the designer’s lace of choice onto the bottle and the Wu-clad version of the signature product was born.

Starting this week, the limited edition, $49 Beauty Elixir hits Caudalie boutiques, caudalie.com and Space NK. Only 50,000 bottles were produced.

This marks the second time the French skin-care brand has teamed with a designer. In 2013, the late L’Wren Scott created a bottle for the brand, which sells about half-a-million bottles of its Beauty Elixir a year, or one bottle every 30

seconds, according to Thomas. She devel-oped the formula in 1996 and sold the first one in 1997. The elixir — a blend of bitter orange, grapes, rosemary, myrrh, rose and peppermint — hasn’t changed since Thomas introduced it to the range almost 20 years ago.

Next week also marks the opening of Caudalie’s fifth U.S. boutique and second in New York City. A 500-square-foot shop will bow at Westfield World Trade Center on Wednesday. Thomas said the store concept is more interactive than that of existing doors, and the space will have a “DIY Recipes” experience (inspired by her book that came out last year, “The French Beauty Solution: Time-Tested Secrets to Look and Feel Beautiful Inside and Out”) that lets customers select masks and blend a corresponding face oil.

A second Miami door will open in the Brickell City Center in November, which

Thomas called a response to launching in Sephora Mexico last year.

“Those are big markets for us [New York City and Miami]. We have a lot of Brazilian and South America consumers. We like to focus on big cities,” Thomas said of her decision to open two new stores in cities where the company already maintains a retail presence.

Caudalie is expanding its product range too. In September, a new Resveratrol Lift Soft Cream will launch, the result of sev-eral years of research and a patent from Harvard Medical School. Thomas said the $76 cream, which contains a healthy dose of micro hyaluronic acid and Vine Resver-atrol, helps to firm, plump and produce “long chains of hyaluronic acids similar to what injections would do.”

Caudalie operates 24 boutiques worldwide with 10 spas that carry the brand exclusively. Distribution globally is roughly 11,000 doors across 25 coun-tries, including the brand’s native France

where the range is sold in about 4,000 pharmacies.

BEAUTY

Caudalie Partners With Jason Wu, Expands Retail Presence

A Polartec Delta shirt.

Caudalie’s Resvera-trol Lift Soft Cream.

Jason Wu designed a limited-edition bottle for Caudalie’s best-selling Beauty Elixir.

PREVIEWISSUE: 09.07 AD CLOSE: 08.24 MATERIALS: 08.29

An Advertising Opportunity

NYFW

Front Row Fashion Kicked Into High Gear

FOR MORE INFORMATION, PLEASE CONTACT PAMELA FIRESTONE, ASSOCIATE PUBLISHER AT 212 256 8103 OR PFIRESTONE@WWD.COM

12 AUGUST 2016 13

Saks Fifth Avenue has expand-ed not up, but over.

The retailer just opened its terrace at the flagship location on 5th Avenue to the public, a sea-sonal extension of the retailer’s Café SFA. On a muggy Wednes-day night, Saks’ Marc Metrick, Tracy Margolies, and Roopal Patel welcomed a slew of designers — Keren Craig, Brandon Maxwell, Prabal Gurung, Adam Lippes — to show off the new space.

“You’re going to come shopping all day, and then you’re going to want to come with your girlfriends and hang out and enjoy the view,” said Margolies. She was explain-ing the concept to Josie Natori, Ken Natori, and Santiago Barberi Gonzalez (son of Nancy Gonzalez.)

“It’s a huge luxury to have outdoor space in New York, and they have such a great view of the Rockefeller Center,” exclaimed Gonzalez. “Richard [Baker] is a visionary in real estate, and it was about time he was going to use every single space in this thing.”

The terrace will be open sea-sonally, and features sofas and chairs situated underneath low canopies. Views also look out on Rockefeller Center’s private roof-top events space, with manicured gardens and reflective pools.

“Reaction has been over-whelmingly positive, just a lot of questions about why has it taken this long?” said Metrick, holding court up and down the terrace’s narrow stretch. “Look, our entire purpose of what we’re doing at Saks and what we’re doing with this building is making Saks the hero. And you think about what

do we have that no one else has? What can we exploit that no one else can exploit? How do you differentiate the Saks experience from everywhere else you can go in the city? This is one of a kind, and it’s really special.”

The terrace’s views aren’t the only way location is working to Saks’ advantage — Carly Cushnie

and Michelle Ochs were quick to reference the venue’s 8th floor neighbor. “We were just saying when we came up, it’s a little bit dangerous,” said Cushnie. “You come up here, have a few drinks on the terrace and then walk back through the shoes. I think it was a very good ploy on their part.” — KRISTEN TAUER

Costume designer Consolata Boyle wasn’t worried about keeping her designs subtle for “Florence Foster Jenkins.” The English biopic is centered around the titular character, a real-life New York social fixture who pursued a musical ca-reer during the early 20th century despite a lack of talent for singing. Just as she was known for her out-

of-tune performances, Jenkins was equally followed for her over-the-top style of dressing.

“Florence Foster Jenkins loved clothes, and she loved decorating clothes. You could never have too many flowers or ribbons or drapes,” explained Boyle, who reimagined Jen-kins’ wardrobe for the film. “She literally didn’t know when to stop. She had no

sense of what was appropriate or what was not appropriate...she literally did what she wanted,” she continued. “She created a world of joy around her — obviously it was complex as well, there was a darker side to it — but her love for music just filled everything, and she wanted everything to reflect that joy.”

The film had been in the making for a while; director Stephen Frears mentioned the idea to Boyle in the very early stages of the project; she was already aware of Jenkins and familiar with her singing. When cast (Meryl Streep as Jenkins; Hugh Grant as Jenkins’ husband St. Clair Bayfield) and financing for the film started to come through, Boyle was ready to begin working on the costumes, par-ticularly given the role that dressing played in Jenkins life. She ended up creating original designs for virtually all of Jenkins’ costumes, amping up the lavish factor.

“She used costumes as perfor-mance, and she was performing all of the time,” Boyle explained. “She was

performing in her normal day-to-day life, and she was performing on the stage...performing to her ladies, to her friends. Her whole life was a perfor-mance, so you can imagine how that worked itself out in how she looked. It just added to the extraordinary edge of how she looked.”

The more conventional dress of the men around her — her husband and piano accompanist Cosme McMoon, played by Simon Helberg — “acted as a foil for her eccentricities” and made her “stand out as even more exotic like an exotic bird.”

“[St. Clair Bayfield] was a beautiful but very classic, conventional dresser of a very English-gentleman type. Hugh Grant wore all his clothes really beautifully. He was perfect in the part,” she said.

And for her portrayal of Jenkins, Streep was game for all of the over-the-top costumes thrown her way, starting with the bodysuit.

“I had to have a bodysuit made for her to bring her closer to the shape of Florence Foster Jenkins because Meryl is very slim, very slight and Florence was a big, rather large stocky lady,” Boyle explained. “Meryl had to be padded all the time, and she wore it with great grace from morning to night. She was a very good sport about that. I think in the end she quite enjoyed wearing it because it made her feel that very lovely large feeling, so it wasn’t quite so bad.”

Boyle added that Streep and Hugh embrace costuming as an extension of their job to tell the story. “Meryl is the most un-vain person I’ve ever met, it’s only about the characters. Same as Hugh,” she said. “They’re very aware of the power of costume, and the importance of costume as part of a performance in expressing the innermost being of a person.” — KRISTEN TAUER

Designers Toast Saks Terrace OpeningMarc Metrick, Tracy Margolies and Roopal Patel wel-comed designers to the new Saks Fifth Avenue Terrace.

Dressing the PartCostume designer Consolata Boyle reimagined Jenkins’ style for Meryl Streep’s portrayal in the film.

The characters around Jenkins were dressed more

conventionally, which drew attention to her eccentric

costuming.

A costume sketch for Florence Foster

Jenkins by Consolata Boyle.

Santiago Gonzalez and Marc Metrick

Michelle Ochs, Roopal Patel and Carly Cushnie.

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NBC NEWS

Still DownThe British women’s fashion maga-zine sector edged down in the first half, with titles including InStyle, Marie Claire and Glamour seeing drops in circulation.

According to the U.K.’s Audit Bu-reau of Circulations, which published the figures on Thursday, the overall circulation figure for women’s fashion titles declined 1.9 percent year-on-year, to 5.32 million for print and digital. Print circulation for the sector fell 2 percent, while digital circulation was up 6.7 percent.

Among the women’s titles that saw their combined digital and print circulations rise were Cosmopolitan, published by Hearst Magazines U.K. Circulation climbed 59.9 percent year-on-year to 413,155 following a successful relaunch last year. Good Housekeeping was up 10 percent to 444,941, while Elle grew 4.7 percent to 171,874, followed by Harper’s Bazaar, 4.4 percent to 110,710.

Cosmopolitan said circulation also increased due to the launch of a new marketing and distribution strategy, including new distribution routes such as “pick-up” and “pop-up” spaces at shopping centers, movie theaters, festivals and selected airport gates and gyms.

Elle U.K. and Harper’s Bazaar U.K.’s figures were also up due to marketing efforts. Elle collaborated with retail-ers such as Lookfantastic.com, Space NK and Matchesfashion.com, while Harper’s Bazaar partnered with the Victoria and Albert Museum, the Roy-al Academy of Arts and the Victoria Miro Gallery. The latter title also took part in events including the Chelsea Flower Show, Canary Wharf Weekend Treat and Masterpiece London.

“It is extremely encouraging to see that our dynamic new routes to market are working,” said Hearst Magazines U.K. chief executive officer Anna Jones.

“Cosmopolitan was the first brand

to lead this strategy last year, and the brand continues to grow. Whether in print, digital — including the hugely successful Snapchat platform — or through large-scale consumer events, Cosmopolitan can reach young women on a scale that very few brands can. Our clients are using the brand to target the Millennial audi-ence, culminating in projects such as The Edge for Estée Lauder, a bespoke digital pop-up aimed at promoting The Estée Edit to Millennials.”

At Condé Nast, Tatler’s combined figure rose 6.4 percent to 84,515, while Vanity Fair was up 5.5 percent to 80,083. Vogue U.K.’s edged up 2.3 percent to 195,053. The publication, which is celebrating its centenary this year, mounted its Vogue 100: A Cen-tury of Style exhibition at the National Portrait Gallery earlier in the year, which drew 152,290 visitors. Later this fall, BBC2 will be broadcasting two 60-minute documentaries focused on the anniversary.

Glamour, which has been strug-gling for a while, fell 18.9 percent to 300,063 as it endeavors to speak to its Millennial audience.

Time Inc. U.K.’s Look retreated 30.3 percent to 91,902, while InStyle fell 18 percent to 123,076. Marie Claire was down 11.1 percent 165,362.

Men’s lifestyle titles as a sector grew, with the category’s combined digital and print circulation up 22.2 percent to 1.68 million. Hearst’s Esquire climbed 14.5 percent to 64,712 while Condé Nast’s GQ was up 2.3 percent to 117,039. The men’s web site revamped its mobile platform and launched its GQ Video channel. Wired edged up 0.1 percent to 54,094 in its combined circulation year-on-year. — LORELEI MARFIL

Model QuarterAfter spending 20 years at Condé Nast, William Wackermann, chief executive officer of Wilhelmina, finds

himself at home in the modeling world. “I’m loving it….It’s so nice to stay tangential to the industry, but it’s a whole new game,” he said. On Wednesday, Wilhelmina reported re-cord second-quarter revenues based on an uptick in its core modeling busi-ness. Revenues were $22.3 million, a 2.8 percent increase over the prior year. Net income jumped 54.7 percent to $0.6 million for the quarter, com-pared to $0.4 million a year ago.

Wackermann attributed the gain to its high-end business. “We have a model named I-Hua, who is the first global ambassador signed to Maybel-line. That was a big deal here. She’s from China.” He said also said Cindy Bruna, a Victoria’s Secret model, is the new face of Ralph Lauren Collec-

tion campaign, and Francisco La-chowski is the face of Balmain.

As brands cut back their print campaigns, how does that impact the modeling business?

“They’re doing less print, but they’re doing more digital. They want the models for their Instagrams and want to do videos behind the scenes. While one part of the business is de-veloping at a slower rate, other parts of the business are developing at a much faster rate,” Wackermann said. While the high-end image models are always going to be in demand for the fashion campaigns, he said this gives the agency a chance to develop its social media stars. “Maybe they’re not the face of a campaign, but they’re creating content for a brand and that’s growing tremendously,” he said.

Wilhelmina has always had a Curve division and launched a fitness division in 2007. “Our fitness division has been booming. There’s such a push for ath-leisure, clothes that are performance-based but can be worn on the weekends. We have a whole division of models who work on all those ath-leisure brands.” Wilhelmi-na opened a studio with personal trainers, who are on set, to make sure the shoots are authentic. Its celebrity division represents such people as Demi Lovato, Nick Jonas and Shawn Mendes for commercial endorse-ments. — LISA LOCKWOOD

Memo Pad

So Long, Santa FeTom Ford has put his Tadao Ando-de-signed Santa Fe, New Mexico, ranch on the market, according to a listing with the luxury real estate agency Leading Estates of the World.

The property was listed last month and the price is on request. The Santa Fe New Mexican newspaper, citing real estate sources, said Ford is asking $75 million. Tom Ford’s company did not respond to a request for comment on Thursday.

Leading Estates put the property — a modernist low-rise structure that appears to be floating on a shallow rectangle of water — on the cover of one of its recent catalogues. It describes Cerro Pelon Ranch in Galisteo Basin, N.M., as among the largest in Santa Fe County.

According to the agents, the ranch encompasses more than 20,000 acres, or 32 square miles. It says the Galisteo Creek meanders through the northern boundary of the ranch, providing “scenic vistas from open waterways to picturesque canopies of shady cottonwoods.”

It adds that the land and water have been “conscientiously managed to provide beautiful grazing pastures within

a productive cattle ranch” and touts the “pottery shards and Pueblo ruins” that sit alongside Ando’s “dramatic contemporary compound.”

According to the Santa Fe New Mexi-can, the property includes staff quarters, two private guest houses, the home of the ranch manager, as well as equestrian facilities, an airstrip, and even a Western movie town originally built as a set for the film “Silverado” in 1985.

The latter no doubt appealed to the cin-ematic sensibilities of Ford, who already has two films under his belt. His second movie, “Nocturnal Animals,” premiered at the Toronto International Film Festival, and will be in cinemas in November.

In 2012, the Texas native told WWD that laying down roots in New Mexico was a big deal. “Moving to Santa Fe coming from Texas was very exotic. I mean, Charles Manson was living there. Many of the roads were dirt. There were hippie com-munes,” he said. — SAMANTHA CONTI

Back Home AgainVivienne Westwood will showcase her fall 2017 ready-to-wear men’s and

women’s ranges together under one label during London Fashion Week Men’s in January.

Westwood’s Red Label women’s wear collection and her Man Label men’s wear line, which has been shown in Milan, will mer ge under the Vivienne Westwood label.

The move was part of an effort by the company to streamline and clarify its branding and product offer for the industry and the end-consumer.

The designer aims to present the ranges ahead of the sales period. While Westwood won’t stage a show for her spring 2017 women’s line in September, she will showcase the range to press and buyers via private appointments and look books.

The Andreas Kronthaler for Vivi-enne Westwood range — a unisex line-up — will continue to show in Paris on Oct. 1, while the brand’s diffusion lines Anglomania, the Worlds End collection and accessories ranges will remain under the brand’s umbrella.

“Reduce our company in size and reduce it to its essentials,” summa-rized Westwood. “Selling only what we

love. Our whole structure will be direct-ed by quality. Buy less, choose well, make it last. Together Andreas and I head the design teams for all lines.”

Earlier this year, Westwood added Kronthaler, her longtime design collab-orator and husband, to the label of her main runway collection that she shows during Paris Fashion Week. — LORELEI MARFIL

Bigger StakeSports Direct International plc has added to its stake in Iconix Brand Group Inc.

In a filing with the Securities and Exchange Commission on Thursday, the company revealed it now has an economic interest of 7.3 million shares, or 13.01 percent. The stake represents an indirect economic interest through contracts for difference.

Sports Direct has been acquiring shares in the brand management firm. It first disclosed a stake of 4.3 million shares in early January. That was followed shortly thereafter with an additional purchase that brought its interest up to 5.6 million shares. It made an additional purchase, also in January, which gave it ownership of nearly seven million shares.

Sports Direct offers a wide range of products and brands in its stores and online. It has long been keen on Umbro, which Iconix acquired in 2012 for $225 million.. — VICKI M. YOUNG

Fashion Scoops

12 AUGUST 2016 15

Bill Wackermann

The cover of Cosmopolitan UK.

Tom Ford

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