China market to play big role in revival of Juicy Couture
US leisurewear company looks to mainland China and elsewhere to resurrect brand as it closes US stores and ramps up expansion overseas
"Name a brand that has an iconic item," said Nick Woodhouse, president of Juicy Couture's parent, Authentic Brands.
He paused before saying: "I'm not going to compare Juicy Couture to Hermès, but Hermès, you know, [has] the Birkin bag.
"Hermès has done an amazing job of Birkin bags, and scarves and accessories have been filled in around it."
For the California-based brand that pioneered the idea of luxurious casual wear, its iconic product is the tracksuit.
"If you think of Juicy, that is the core that we will build on," Woodhouse said.
The rhinestone-covered velour tracksuits that made the brand famous were once found on everybody from Britney Spears to the Olsen sisters.
However, the company, founded by Pamela Skaist-Levy and Gela Nash-Taylor, is now a far cry from its early millennial peak.
The label was sold at upscale department stores like Saks Fifth Avenue and Neiman Marcus, but they have since dropped it. Last year, it began distribution through discount retailer Kohl's.
Then Juicy Couture announced last month it would be closing all its US stores but would ramp up expansion overseas.
The company said it planned to open a further 127 stores and outlets in shops outside the US in the next five years, focusing on major cities in Asia, the Middle East and Europe. It now has almost 200 locations in more than 60 countries around the world.
As Juicy Couture's new owner, Authentic Brands faces a long road ahead to turn the company around, but while it is looking at a painful restructuring exercise in the brand's birthplace, rocketing sales growth in mainland China and other foreign markets could provide the firm with a lifeline for its legacy leisurewear.
"It was always our plan to not so much revamp the brand as the company," Woodhouse said. "The brand itself is very, very strong and is very well received globally and particularly in Asia."
The company says the Asian market has outpaced all other regions, with double-digit percentage sales growth.
On Tuesday, Juicy Couture signed a deal with its regional distributor ImagineX extending the partnership for a decade, with an option to continue for a further two terms of 10 years.
"I think the brand hadn't evolved, and if you look at strong brands over time, there's always an evolution," Woodhouse said. "The fact that sales were as strong as they were and the brand hadn't done a full evolution meant that we needed to do a revolution in the brand.
"We're going to take the heritage of the brand - which is couture and California lifestyle, whimsy, fun - and reinterpret that around the world."
Bruce Rockowitz, chief executive of Global Brands, the Li & Fung spin-off that holds the Juicy Couture licence in Asia, said "the design needs work".
"The new line we've put together is really exciting," he said. "Everybody who has seen it has said the same thing. Some brands, you could say, are very hard to resurrect, but Juicy's not. Juicy still resonates."
Frequent management changes had detracted from the brand's focus, Rockowitz said.
"Each person that came in, and there [were] a lot in 10 years, took it in a different direction," he said. Skaist-Levy and Nash-Taylor sold the brand to Fifth & Pacific, now renamed Kate Spade & Company, before it landed with Authentic Brands in October for US$195 million.
To a certain extent, Juicy Couture's tracksuit also made it a victim of its own success.
"It was so successful that the company relied on that maybe too long," Rockowitz said. "The tracksuit was amazing. Everybody was wearing it, but then it kind of hit its peak. As they were trying to broaden out the assortment, they stumbled."
Today, the tracksuit makes up just 17 per cent of the firm's business.
As to why mainland consumers are still flocking to style themselves à la Paris Hilton circa 2003 while their American counterparts now treat it as the passé uniform of the Real Housewives cast, OC&C Strategy Consultants analyst Richard McKenzie said it was actually quite common for brands to position themselves differently in overseas markets.
"In the US, [the brands have] been around for decades, and they're starting to look tired," he said. "Foreign brands will have more cachet for being newer to the market.
"If you look at what Gap has done in China, they are shinier. They are in nicer locations.
"But to some extent, things tend to catch up with you. There's only so far between your performance in your home market and your new markets."
Authentic Brands' new vision for its most famous product will be unveiled in six months, when it relaunches new concept stores in Los Angeles and New York.
The company's plan is to bring the US stores up to par with store formats in newer markets and to roll out a new assortment of categories, including children's wear and intimates.
The company also secured a deal with Steve Madden as its global footwear partner, expecting footwear to grow to 10 per cent of the entire business and evolve into its own free-standing stores.
"We want to illustrate the point that this isn't some store with tracksuits," Woodhouse said. "This is encompassing the full category breadth of Juicy Couture: a full fragrance section, accessories, a full footwear wall with beautiful shoes - all the categories represented."
Authentic Brands chief executive Jamie Salter says Juicy Couture's revenue should double over the next five years to more than US$2 billion.