11/02/2008

By Rachel Sanderson, Reuters

Belinda Earl, chief executive of British fashion brand Jaeger, knows the value of trading up.

Three years ago, the former chief of mid-range British department store group Debenhams joined Jaeger, a 124-year old apparel chain that had tumbled into the red after losing its way as British women marched towards discount fashions.

Fast-forward, and having swapped Jaeger’s dowdy suiting for cashmere studded with Swarovski crystals and faux snakeskin trousers, Earl is marking the brand’s shift in fashion status: from has-been to a trendsetting label worn by Kate Moss.

Top-line sales are up 15 percent this financial year ending February, and Earl on Sunday took a front row seat at London Fashion Week for Jaeger’s first catwalk show for its younger, trendier Jaeger London line.

“It takes us up another notch and that’s where we want to be,” said Earl, 46, who swapped her business suit for Jaeger’s top-selling tuxedo jacket and skinny pants to mingle with the fashion set on the front row.

The revival of privately owned Jaeger comes at a time when trying to spot the next turnaround story among Britain’s faded high-end brands has become an even trickier business.

Since Burberry proved a global luxury goods group can be built out of a First World War trench coat maker, London’s catwalks are full of once-storied names – Asprey, Aquascutum, Biba, Ossie Clark – whose backers are hoping to build fortunes by exploiting their heritage.

While seasoned luxury industry executives believe many of these to be doomed to failure, Jaeger is considered to have potential not least because of Earl’s steady hand.

For Richard Hyman, managing director of Verdict Consulting, Jaeger now has a more secure position in its market than it has had for decades.

“For a long time it was one of those heritage brands that didn’t know what it stood for. What Belinda’s done is given it a sense of identity,” he said.

Pierre Mallevays, a former LVMH executive who is now managing partner of luxury goods corporate finance and M&A consultancy Savigny Partners LLP, said management was “doing a great job” on products, but that some improvement was needed in the design and ambience of Jaeger stores.

“Products and image keep getting better,” he said.

NO BURBERRY
Earl, for her part, maintains the comparison with Burberry underestimates her ambitions for Jaeger: “I actually think Jaeger has a lot more potential because we are not hampered by a trench coat or a house check,” she told Reuters in an interview at her offices close by Regent Street, where advertising campaigns from Jaeger’s 1950s and 1960s heyday line the walls.

The growth of Burberry, Britain’s biggest fashion house with 850 million pounds ($1.66 billion) of sales last year, is strongly linked to its signature trench coat and red, camel and black check.

Jaeger is much smaller, with sales standing at 70.6 million pounds for the 52 weeks to February 28, 2007, the latest figure made public.

Earl, who owns 20 percent of the chain, has sought to expand the appeal of its 144 UK and European stores by extending the ranges to three from one. Besides the original Jaeger line and the younger “Jaeger London” range, is high-end “Jaeger Black,” where floor-skimming cashmere coats costing 450 pounds set out to rival Max Mara and Gucci in price as well as finish.

“It’s only a couple of years old, but it’s really moving the brand upwards in the luxury stakes – I could see it having a show in its own right, ultimately a couture show,” Earl said.

Higher margin accessories also now account for a far greater proportion of sales, rising to 20 percent of turnover during Christmas, Earl said, from less than 10 percent two years ago.
But the focus for 2008 is on international expansion with Jaeger’s overseas stores set to double to 80 as it enters eight new markets, including the United States, South Asia and Australia.

A franchise deal announced last week with Speciality Fashion, part of the Kuwait- based Sultan Center Group, will see it open at least eight shops across the Middle East by 2013. Earl expects international markets to account for half of turnover eventually.

Chairman Harold Tillman acquired Jaeger in 2003 for an undisclosed price that included 10 million pounds in working capital and the cost of the 25 million pound lease for its Regent Street store.

The entrepreneur, who says the option to buy Jaeger was so irresistible it stopped him from retiring, told Reuters he sees Germany’s Hugo Boss, which has 266 directly operated stores worldwide and many more franchised, as a model for Jaeger.
Ruling out a stock market listing while financial markets remain buffetted by fears of a global economic slowdown, Tillman also scotched talk he is looking to exit.

“Absolutely not,” he said. “We decided we are having too much fun.”

Earl, who earned favorable reviews for Jaeger London’s Sunday show of shaggy Mongolian bomber jackets and fringed dresses, agreed the job was nowhere near done: “I’d say we’re 30 percent of the way along the journey.”