Loehmann's Finally Notices It Needs a Turnaround Plan
A decade after emerging from bankruptcy, discount-apparel chain Loehmann's announced managers are considering turnaround options. Given that this faded, 90-year-old brand could have used a turnaround plan 20 years ago or more, it's really about time.
A Bloomberg report named three advisors their anonymous sources said are involved in the plan -- business consultants AlixPartners, investment bank Perella Weinberg Partners, and Clear Thinking Group, which is a bit of both. Smells like they're thinking sale, financial restructuring, finding a new investor, and looking at business processes for cost-savings. A selloff isn't a bad idea, since Loehmann's is currently owned by Istithmar World PJSC, the finance arm of Dubai World, the famously imploding United Arab Emirates-owned holding company that recently had to restructure $20 billion in debt. American owners, ideally a clothing conglomerate with apparel expertise and fewer problems of their own, would probably be a better parent.
On the operations side, Loehmann's could probably save some money on consulting fees by doing a few obvious things:
- Discover ecommerce. Loehmann's has a Web site, but you can't buy from Loehmann's online -- have a look. I am not making this up. Even their closeouts are being done in three physical stores. Managers should take a mosey over to Coldwater Creek's online outlet store and learn to win at closeout sales in the 21st Century.
- Stop selling dresses for $7.99. OK, Loehmann's is known for big discounts on designer fashions... but they may have cut prices too far, judging from their most recent ad circular, in which you could also qualify for another 20 percent off that price in a special promotion.
- Get some press. From their media page online, it looks like the last time Loehmann's was featured in a women's or fashion magazine was about 18 months ago. They've got a great story to tell -- a 2009 More magazine piece reports on a shopper who saved nearly $10,000 shopping mostly at one of the chain's stores -- but they need to crank up the marketing machine and tell it.
- Plug the personal shoppers. Loehmann's has got to be the only deep-discounting chain that offers personal shoppers. They clearly aren't getting all the PR mileage they should be out of providing this premium service level.
- Shrink the real estate. In March, Loehmann's opened a new store in Costa Mesa, Calif. in a cavernous former Linens 'N' Things store. Check out the picture of company CEO Jerry Politzer inside the vast new unit. This is a big, awkward size for a specialty apparel retailer -- too big to feel like a boutique, but too small to feel like a department store. Most successful chains in this niche are operating in a smaller footprint. Loehmann's may be picking up a deal on rent right now, but in general it looks like Loehmann's may be paying too much in overhead.
- Focus the assortment. Loehmann's made its name in womenswear, but has gradually crept into menswear, home goods and accessories. Given the company's financial woes, it's safe to say that diversification hasn't paid off. Time to refocus back on Loehmann's core customer -- bargain hunting, fashion-savvy women.