New York fashion might have changed, but if you look closely, there’s still a little bit of Seventh Avenue that’s not just hanging on, but thriving.
BCI Brands is proof.
The company is run by chief executive officer Ariel Chaus, who has steadily built on and expanded the business his parents, Bernard and Josephine Chaus, started in 1975.
BCI is something of an enigma — selling branded and private label goods to department stores and generating some $400 million in sales.
The company is seeing double-digit growth in a tricky consumer landscape and is “highly profitable,” according to chairman Manny Chirico, the former chairman and CEO of PVH Corp.
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Now the firm is looking to expand across a number of different vectors.
BCI is hitting the accelerator with its contemporary CeCe line, expanding it into a lifestyle play, while also ramping up the Ted Baker women’s apparel business, under license from Authentic Brands Group.
Some dealmaking is in the offing, an effort that no doubt will be helped along by Chirico, who had a hand in or led the deals to buy Calvin Klein, Tommy Hilfiger, Warnaco and more while at PVH.
“We have a very solid platform,” Chaus said in an interview with Chirico at the company’s showroom on, of course, Seventh Avenue. “We’re going to continue to build upon that. We have great brands in our portfolio. I think we’re going to continue to maximize that, looking for new opportunities as they present themselves.
“We’re never going to jeopardize that or take a crazy swing or over-leverage the business or buy something that has too much risk,” the CEO said. “There aren’t a lot of competitors out there that have our balance sheet or that are growing and looking to expand.”
BCI is working with a business model that would be familiar to a garmento from 25 years ago. And while Chaus acknowledged the similarities, he also stressed just how different his business is today.
Not only is it dealing with a smaller competitive set in the Garment District, Chaus said the business has evolved dramatically and is set up to cut goods quickly, test the market and then chase what’s working.
“We are really de-risking the fashion element of these goods by putting things on the floor that we know are going to sell,” he said.
The company is also set up to drop-ship goods directly to consumers, accentuating its business with wholesale accounts.
“Going into a season we will strategically work with our retail partners as to what they’re going to buy and take in and then maybe an expanded assortment that we’ll drop-ship,” Chaus said. “Having those capabilities for us is very important. It’s a much closer partnership than it used to be.
“We’ve really tried to look at the business in a different way than how it’s been in the past and how we put goods on the floor, how we strategize around what goods we’re going to sell and when,” Chaus said. “We’re focused all on the customer. What does she want? And if we can service her, we’ll be just fine.”
CeCe is a good example of how BCI operates.
Launched in 2013, the contemporary line established itself as a crossover brand between better modern and contemporary in department stores and is “highly searched” for online, Chaus said.
Now the brand is expanding into girls and also launching into swimwear and outerwear with new licenses. InMocean will start producing CeCe swimwear for next summer and S. Rothschild will follow that up in the fall with outerwear.
“We want to take advantage of the momentum we have,” Chaus said. “We don’t have a private equity firm saying ‘we have to sell in the next five years.’ So we’re just going to do it the right way.”
But doing it the right way also means keeping an eye on the future.
“It’s a world in which you have to continue to evolve and you have to be able to look forward and not put your head in the sand and say, ‘OK, how do we reimagine this business? What else can we add? What are new brands? How do we stay relevant?’” he said.
That’s something Chirico can help with — and it sounds like he’s happy to be away from the glare of Wall Street while he lends a hand.
“You can see some other players in the industry, they pile the inventory high and let it fly,” Chirico said. “And if you’ve got to have more markdowns throughout the season, that’s fine. This model is, we are growing nicely, but we’re not out there just chasing growth for the sake of chasing growth, [we’re] really managing for profitability.”
Chirico said BCI could bring in a new brand or look to extend its current ones — in addition to CeCe and soon Ted Baker, it also produces goods under the Baker, 1.State, Parker, Chaus, Sam and Jess, JBS, MSK, Pisarro Nights and Cynthia Steffe names. Both could happen at the same time, for instance, if the firm bought a denim specialist, it could then use that expertise to build its other businesses.
“That was the most attractive thing to me when we looked at the business with the capabilities that I saw here, that acquisitions could be bolted on and layered in,” said Chirico, who invested in the company last year.
“The business self-funds itself,” he said. “It’s a real advantage not to have that hanging over your head. Now we could sell to a private equity player, we could talk to a strategic buyer. We’ll look at the opportunity, the market, the timing. Multiples right now are still not where they were four or five years ago. I think over time they’ll come back.”
In the meantime, Chirico is enjoying the work and looking to expand the business.
“I like being involved and not having to worry about the day-to-day,” he said. “I’m able to work with Ariel on the strategy, talk about where the business is going, thinking long term.”
