French Connection's New Partnerships: Li & Fung (Smart) and Sears (?)
Strategic partnerships with retailers can make or break a brand, especially a struggling fashion group such as French Connection (FCCN). London-based French Connection just announced two collaborations: one with multi-national supplier Li & Fung for U.S. licensing; the other -- wait for it -- a contemporary clothing and accessories line for women, men and children with Sears (SHLD).
At first glance, the Li & Fung licensing deal is a no brainer. Creating a collection for Sears, however, is a bit mystifying.
As one of the world's largest producers of consumer goods, Li & Fung's stamp is on everything from Cannon sheets to Hilfiger polos, and apparel by high-profile names as Sean Combs and Hollywood stylist Rachel Zoe. As a high-street brand, French Connection understands that to stay competitive, it needs to turn out clothing as fast as the likes of Urban Outfitters (URBN) or Forever 21 to keep attracting customers. Li & Fung not only delivers goods at lightning speed but maintains reasonably pricing by keeping its own overhead low. It's accomplished this by amassing 10,000 suppliers who can work together on a project basis.
Li & Fung's assets come at the right time for French Connection which is still trying to recapture the relevance it lost when devotees left the FCUK brand for other fast fashion outlets. The company's tried several initiatives, investing heavily in social media such as ChatRoulette.
That paid off in a pre-tax profit of £200,000 ($310,000) for the six months ending in July driven by e-commerce and men's wear. (That ChatRoulette contest was for gents only). The company's being cautious for the second half of the year, especially as retail comps only represented a modest 3 percent increase.
Which is why the Sears deal leaves me scratching my head. We know the management team at Sears has put a laser-like focus on upping its fashion quotient in recent months. And Kmart's "Design" makeover is definitely praise- (and covet-) worthy.
Currently, Kmart's the stronger of the two chains, so Sears has some catching up to do. Indeed, John Goodman, executive vice president of apparel and home for Sears Holdings, told WWD, "This is definitely a move signifying we are serious about apparel."
Goodman says Sears' strategy to overhaul apparel continues apace -- adding labels (notably in young men's, juniors, and tweens) and merchandising staff. The best move the company can make is improving the store experience. Sears upgraded 200 stores recently with fresh paint and new fixtures.
So far, it looks like the UK Style by French Connection collection will be sold in these revamped locations, as well as 300 others, to start. For perspective, the nation's fourth largest broadline retailer has about 3,900 full-line and specialty retail stores in the United States and Canada. There's still plenty of freshening to be done.
The good news is that UK Style by French Connection won't debut until March of 2011. Perhaps by then, Sears elves will have taken a hint from Walmart's (WMT) rapid remodeling schedule and completed makeovers in many more stores.
Image via courtesy photo
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