Like most of retail, Jones Apparel Group Inc. spent 2009 righting a ship that bounced up and down in choppy economic waters. In October, the New York City-based company, parent to such retail brands as Nine West, Jones New York, AK Anne Klein, Bandolino and the fledgling ShoeWoo, reported third-quarter results that showed a sales drop of 11% — not so surprising, given the stormy climate.
But on the flip side, Jones’ third-quarter performance included slimmed inventory levels and a significantly improved cash position from the year prior, thanks to a rigorous effort across the company and its brands to manage costs amid the downturn.
Beyond intense cost-cutting measures, the company announced it would shutter underperforming stores and hone its focus on merchandising and product initiatives. Leading the charge for the retail division is the newly named CEO of Company-Owned Retail Footwear and Apparel, Jay Friedman.
Friedman, 56, was promoted from president to CEO in August 2009. He arrived at Jones Apparel Group by way of Foot Locker, where he was USA president, and has served in various executive capacities with Dayton-Hudson, Filene’s and R.H. Macy’s department stores. At Jones, Friedman wears many hats. He is deeply involved in the day-to-day running of the business, which involves setting strategic goals, managing the financial side and allocating capital expenditures.
In a recent interview with senior editor Katherine Field, Friedman described himself as the “voice of retail within a wholesale company,” and spoke candidly about the company’s struggles and triumphs during a very tough retail year.
“If there is a silver lining to the difficult retail environment,” Friedman said, “it is that the field of retailers has been somewhat thinned out, and the remaining have learned to operate with greater efficiency. As the economy strengthens over time, the knowledge of how to operate more efficiently will remain a part of retailing.”
Has your leadership role/style changed at all in the face of the economic downturn?
My leadership style hasn’t really changed, but I am very aware that all of the people involved in the business are feeling pressure to deliver the financial results that we budgeted. As the economy takes us on this rollercoaster ride, I find that it is not productive to focus solely on results. When people are extending maximum effort and are well-motivated, but the going is tough, I find that this is the time to be supportive and not to create an atmosphere where people are even further stressed.
What employees need is support in achieving their goals. I see my role as the guy who is a “sounding board” for ideas and the one who clears the obstacles that might be in their way. The time to assert pressure is when all is going very well.
Has the company’s course altered at all due to the recession?
Sure, we have made many changes based on the current and forecasted economic environment. When I arrived in this position [as president] in mid-2007, the retail business was struggling, and we had a fairly large group of stores that were either underperforming or losing money.
We built a strategy to bring these locations back to profitability over time. As the recession deepened and, more importantly, the future became difficult to predict, we altered our strategy to focus on “right sizing” the portfolio. We announced that we are closing over 200 locations from 2009 through the end of 2010. This is a reflection of the reality that many of these locations, in the near term, will not see sufficient growth due to the current economic conditions to justify keeping them open.
As you can imagine, when you downsize the chain by that number of stores, it also affects how you structure your field organization. We went through a consolidation of the field organization in Q3 of 2009 in anticipation of the reduced store count.
What about the merchandising side?
We have spent a great deal of time reviewing our assortments and evaluating categories, pricing and promotional strategies, and most importantly implementing tighter management of our inventories. We made the decision, which turned out to be correct, that we would be better served to potentially miss a sale than get caught with excess inventory. The results of that decision netted us a modest comp-sales increase for the fall season with greatly improved margins.
How do the various divisions/brands break out?
Our brand/concept portfolio is quite diverse, including Footwear specialty stores under the brands Nine West, Easy Spirit, Bandolino, AK Anne Klein and ShoeWoo. We have three outlet apparel concepts, including Jones New York, Kasper and Anne Klein. Both Nine West and Easy Spirit also have large outlet businesses.
Do you interface routinely with your divisional peers in the company?
Wes Card (CEO, Jones Apparel Group) does a great job of formally keeping us connected. All of the JAG division leaders meet in a staff meeting with Wes regularly. This keeps us all on the same page as to the direction of the brands and any initiatives or issues that may apply across all operating divisions of the company. We routinely collaborate on all issues that affect the brands.
What’s on the horizon for the retail division?
We are totally focused on returning this division to historic profit levels. We are in the process of “right sizing” our real estate portfolio, editing our assortments to ensure that we are focused on our core business, and eliminating [clutter] and low-margin categories from our stores. We have scrubbed our P&L line by line and achieved significant expense savings.
These are all important steps in this difficult economy to ensure profitability. But ultimately, in order to be successful, you need to achieve sales and margin growth. You can’t win strictly on being efficient. We have worked very hard on creating exciting merchandising assortments with a great price/value component. Our brands continue to be very strong, and with the addition of some sub-brands such as Vintage America in Nine West and Anti-Gravity in Easy Spirit, there is a new visual focus and excitement in our stores. We have spent the last 24 months upgrading our physical plants to provide a great shopping experience, and we will continue to invest in the stores in 2010.
What about new concepts?
In terms of new concepts, we are currently testing ShoeWoo, a multi-branded mall-based footwear concept. There are four locations currently open and doing very well. The company also markets the Rachel Roy brand of RTW (ready-to-wear) and accessories, which is doing very well in our wholesale channels.
How has your past experience with Foot Locker, as well as your department-store roles, impacted your current role at Jones?
We are all the product of our cumulative experiences. Each of those experiences has been unique as it relates to specific merchandise and the nuances of managing the specific businesses. The common threads that tie all retail together are developing a recognition of who your customer is and what it is that you bring to the marketplace, which gives you a “right to win.”
Specifically, the department store experience prepared me to manage multiple category businesses, while the Foot Locker experience expanded my knowledge of the real estate markets and exposed me to the power of a specialty store. Both require the ability to multitask, to be flexible and build appropriate product assortments for the targeted customer.
What do you value most about your job?
Although it is a bit of a cliche, I find that the most fulfilling part of what I do is building a team of diverse, well-motivated people who are focused on achieving a common goal. There really are two types of executives who run retail companies: One type is the “merchant prince” who does everything from selecting the individual styles to controlling every detail (both merchandise and operational), and the second type is a broad-based manager who sets the strategic goals, is involved in assembling the plans to achieve those goals and assembles a strong team around him to implement those strategies.
I am the second type, so building that team is a critical part of any success that I may have.