Lacoste's new look
A phenomenal U.S. turnaround has positioned Lacoste to move past polo shirts.
(Business 2.0 Magazine) - Something was glaringly absent from the backstage frenzy at Lacoste's New York Fashion Week show in February: There wasn't a single one of the label's classic polo shirts on the racks.
Instead, Lacoste's famous logo--actually a crocodile but more commonly referred to as an alligator--was stitched onto cherry-red moon boots, shearling jackets, and leather porkpie hats. The models strutting down the runway looked more suited to 1970s Brooklyn than the '80s country clubs where the croc once famously roamed. In fact, the event marked only the third time since its 1933 founding that the French brand, known for its summer sportswear, had launched a line of fall and winter fashion.
"It is certainly edgier than what Lacoste is known for," Robert Siegel, chairman and CEO of Lacoste USA, says of the latest line. "When you think back to Lacoste 10 years ago, we never had the young customer that we have now."
For that, the company can thank Siegel, the former Levi Strauss executive and Dockers creator who was lured out of semiretirement in 2002 to rescue Lacoste's U.S. business. Since Siegel took over, the $2 billion family-owned company has been on a tear, with North American revenues swelling 70 percent in 2005 after a torrid 125 percent rise the previous year.
What's most impressive is how Siegel took what had become a discount-store staple and rebuilt its luxury status. He raised prices, made the clothes harder to find at retail, added new designs, and hoped that consumers would follow. Follow they have, turning Lacoste into a high-end, multiseason brand that's not just an emblem of prep. "If we overexpose one product--the polo shirt--then we have problems," says external relations director Philippe Lacoste.
Philippe's grandfather, tennis star Rene Lacoste, practically invented preppy sportswear when he marketed the first-ever polo shirt 70 years ago. Dubbed the "alligator shirt" in the United States, the crocodile polo had its U.S. heyday in the late '70s and early '80s. But during the 1980s, American shoppers moved on, and then-owner General Mills (Research) (yes, the cereal maker) cut prices and quality, dumping the shirts at Wal-Mart (Research) and other discount retailers.
In 1992, General Mills sold the U.S. rights to the logo--by then rebranded as Izod--back to the Lacoste family. It languished Stateside until 2002, when Siegel came in to lead the relaunch. Execs in France had decided to invest in better quality (using a finer pique cotton) and raise the shirt's price point ($69, vs. $35 or so in the discount days), but Siegel's task was to fix the brand's image.
He instructed the design team to give the shirt the slightest sexual frisson by creating a closer fit for women. That helped attract fashion-conscious consumers in their 20s, instead of just 40-somethings replenishing their faded inventories. Ten years ago, women's wear was only about seven percent of Lacoste's sales; now it accounts for a third of U.S. revenues.
At the same time, Siegel yanked the shirts from nonluxury retailers, including T.J. Maxx and a number of Macy's, narrowing distribution to high-end shops like Barneys, Neiman Marcus, and Nordstrom (Research). Following the lead of Burberry and Coach (Research) (and, most famously, Apple (Research)), Lacoste also opened its own freestanding boutiques in affluent shopping districts along both coasts and in Texas, giving the company an upscale showcase for its clothes.
"By putting our stores in markets with young, contemporary consumers, we're staying away from the mainstream points of distribution," Siegel says. By the end of 2006, Lacoste will have a total of 46 boutiques in the United States--now, for the first time, the brand's largest market.
Admittedly, some of Lacoste's recent success was simply good timing. "Lacoste's comeback was partly contingent on the fact that 'preppy' came back," says Amanda Freeman, vice president of trend-consulting firm the Intelligence Group. To maintain momentum, Lacoste needs a steady stream of new products--hence the moon boots and shearling coats--and Siegel will have to persuade retailers to carry these new twists on the brand.
Meanwhile, thanks to licensing deals left over from the old days, a number of unrelated manufacturers churn out Lacoste-branded shoes, bags, and fragrances. Siegel will need to either persuade the licensees to adhere to the quality requirements of a lifestyle brand or buy them out and launch a homegrown line of accessories.
The more immediate challenge, Siegel says, remains branding. He's happy to accept low growth from third-party partners such as Nordstrom in order to bolster the high-end image. Meanwhile, he thinks there's room for about 20 more Lacoste-owned boutiques before running the risk of making the clothes too accessible.
His long-range goal is to manage growth so Lacoste can sneak up on established lifestyle empires such as Abercrombie & Fitch (Research) and Ralph Lauren (Research). As a source of competitive advantage, Siegel points to Lacoste's long history. "We're not a made-up brand," he says. "A Le Tigre or even a Polo was created by someone's great marketing. We have been around since 1933." Lacoste might not be proud of its more recent past, but thanks to Siegel, the brand is once again living up to its legacy.
Greg Lindsay is a freelance writer based in Brooklyn.
EDITOR'S NOTE: After Business 2.0 went to press, Bernard Lacoste, president of his family's company for more than 40 years, died in Paris. He was 74. Mr. Lacoste was the son of founder Rene Lacoste, and succeeded his father in 1963 as president of the Paris-based apparel firm. Bernard Lacoste's younger brother, Michel, became president in September 2005. Bernard Lacoste is survived by his wife, Sachiko, and three children from an earlier marriage.To send a letter to the editor about this story, click here.