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What's In A Name? Tom Ford, SJP To Find Out

A strong brand may be the most valuable thing in retail these days. Maintaining the credibility of that name in a market saturated with brands is what separates the flash in the pan from the successful.

Liz Claiborne
Liz Claiborne

From Liz Claiborne's 50% stake in Narciso Rodriquez to the slew of private equity firms snapping up designer names (Permira's stake in Valentino, HILCO's purchase of Halston), merchants are fighting for fresh star brands as they spend the cash on their books these days. Phillips Van Heusen's very eloquent CEO Manny Chirico says he's looking to spend part of the $400m in cash they have in order to acquire more brands about 6-9 months out from now. Here's the vdieo of our interview from the Piper Jaffray Conference.

Not every bold face has an aesthetic that can sell. Designer Tom Ford is not just a brand, his design sensibility permeates everything from his store, to his ad images to the presentation of the brand concept itself. In a coup for Neiman Marcus and Bergdorf we now know that they will be the department stores of choice for designer Tom Ford's new line. In a rare move, Ford will also make the leap into emerging markets at a time when he only has one store.

Why would retail partners like UAE Trading,Harrods, Lane Crawford Joyce, etc. back the international expansion of a month's old line that is only sold in a single market here in the U.S.?. The answer: Tom Ford is a businessman and a fashion mind well aware of the many dimensions behind the art of marketing and maintaining a brand. He reportedly trademarked his own name back in the 1990s at a time before it became synonymous with Gucci's reborn success. Ford finally announced which retail partners will be taking his menswear line to the global retail space.

Ford has taken his time finding the right retail partner to sell his marquee name. After setting up shop on Manhattan's Madison Avenue this April and signing a licensing agreement with Ermengildo Zegna for production, the man who remade Gucci has been building up the business behind his own identity for this moment.

He'll also have store within a store shops in Bergdorf and Neiman Marcus along with his own name-brand vertical shops in London, Milan, Hong Kong, LA and Tokyo.

Here in New York, hedge fund king Eddie Lampert shops at Tom Ford along with a slew of high-profile names from the financial world who favor bespoke suits over Brooks Brothers. With Chairman Domenico de Sole behind him (formerly of Gucci) and a stable of welldressed clients with deep pockets, there is no question that Ford is flush with financial options when it comes to finding the right partners. These days there are plenty of designers without such brand equity behind them--who are looking for partners with deep pockets to take on the increasingly expensive task of opening stores and getting product on the shelves of a fewer and fewer number of department stores.

Designer v. Celebrity Brands
Among low cost retailers (H&M, Target , Wal-Mart ),the desired brand names that sell apparel are not necessarily those with design experience. A celebrity endorsement or aesthetic is also much sought after. How successful some of smaller names are with the execution of these celebrity lines may begin to indicate how long this brand-craze can last. One very interesting case to watch is mall-based sportswear retailer Steve & Barry's.

With 198 stores in 33 states, Steve & Barry's is a small-scale, vertically-integrated retailer with relatively low penetration but it is bringing in some serious celebrity name endorsements. Inthe wake of its successful partnership with NBA star Stephon Marbury (Starbury shoe sells for $14.98), Steve & Barry's partnered with Sarah Jessica Parker - or SJP as she is known among Vogue-readers and fashionistas - to create a low price line of casual wear under the label BITTEN.

Thanks to her role as Carrie Bradshaw on TV's "Sex and the City," Parker is one of Manhattan's fashion icons. Clearly she understands that the Carrie character remade her image and that association is one of the strongest aspects of the SJP brand. What's significant is that while Parker is a household name, she's endorsing a company that has yet to become one itself.

Why lend her valuable name to a line of basics? Steve & Barry spokesperson Howard Schacter said Parker was attracted to the company's mission to sell at the lowest cost price point. Having grown up in poverty, the company's pitch to the more economical side of Parker (each item is priced at $19.98 each) was successful. The financial arrangements behind such a "partnership" are unclear. Parker already licensed out her 'brand' name to perfume companies (Lovely by Coty) and has leant her image to a not-so-successful Gap ad campaign.

Steve & Barry's spokesperson said the partnership wasn't part of a new strategy for the company which he said was broadly focused on increasing sales. Instead, he said BITTEN and the scheduled August 10th release of a low-cost line by teen star Amanda Bynes fits into its strategy of expanding into women's' wear. S&B wouldn't disclose the structure of their "partnerships" with stars like Sarah Jessica or Amanda Bynes. When pressed about whether the stars are offered equity stakes, S&B declined to answer. Even with the backing of private equity firm TA Associates (the $10B firm took a minority stake), the privately held Steve & Barry's has to be offering an advantageous package to its celebrity partners in order to borrow their names.

Steve & Barry's has yet to disclose just how sales of the BITTEN line have fared so far. Still keep your eye on this up and coming retail name. The retailer plans to add another 80 stores by the end of the year and a spokesman says they have "thousands more on the way." We'll be watching whether this growing company can retake the basics market once-dominated by the Gap or even give H&M a run for its money.

Questions? Comments? retaildetail@cnbc.com

Retail

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