By Jackie Crosby
WWR Article Summary (tl;dr) As Jackie Crosby reports, “After 27 years at Target Corp. and a brief stop at Dick’s Sporting Goods as chief merchant, [Keri] Jones arrived at Christopher & Banks with a reputation for understanding how to lead enterprisewide change.”
Keri Jones was clear-eyed about the enormity of the challenge before her.
When she took over as chief executive of women’s specialty retailer Christopher & Banks in March 2018, the top job had switched hands four times in seven years. Sales were spiraling, and an activist investor had taken over the board.
“I saw promise and potential,” Jones said. “But every piece of the business needed some work.”
The road to consistent profitability for the Plymouth-based chain has been littered with failed turnaround attempts.
Christopher & Banks caters to a shrinking market of older women, and with most of its 452 stores in malls, it is striving to find new customers at a time of declining mall traffic.
“For any of these small-cap specialty apparel chains, this fourth quarter is crucial,” said Ken Perkins of Retail Metrics. “What are their plans to differentiate themselves and drive traffic to stores? What are they going to be doing that’s different from Maurice’s, Anne Taylor, Chico’s, White House Black Market or even Talbots?”
Jones believes she has built the kind of team that can do just that.
Christopher & Banks’ potential comes from its deeply loyal customer base and veteran salespeople, she said. The challenge: how to bring more fashion to its stores without driving away traditional customers.
“We’re in the sweet spot with the boomer female,” Jones said, “but we weren’t keeping up with her.”
After 27 years at Target Corp. and a brief stop at Dick’s Sporting Goods as chief merchant, Jones arrived at Christopher & Banks with a reputation for understanding how to lead enterprisewide change.
She wasted no time hiring an experienced merchandiser from Target and Old Navy to modernize the assortment at Christopher & Banks and C.J. Banks, the company’s plus-sized brand. Jones directed her new chief financial officer, who spent a decade at Chico’s, to work on renegotiating leases, which has saved $2 million this year.
To improve the store experience, Jones brought in an executive with nearly 30 years at Express, who trained staff on a new sales protocol that focuses on helping women put together complete outfits. This summer, Jones added a marketing chief to polish the brand’s image and boost social media.
“No training wheels needed,” Jones said of the new leadership team. “We don’t have time.”
Heading into the holiday season, Jones and her management team are starting to see results. Christopher & Banks eked out its first quarterly profit in three years, a modest $487,000, in the third quarter. The company’s profit margins expanded for the fourth straight quarter and it reported positive quarterly cash flow for the first time in two years.
“We’ve touched every part of the business,” Jones said. “It just took awhile for it all to come together.”
Christopher & Banks has a long history of serving older, value-conscious women. The chain grew out of Braun’s Fashion, which opened in Minneapolis in 1956 and went public in 1992.
In 2000, the company’s name was changed to Christopher & Banks, which had been one of Braun’s private labels. The retailer now operates in 44 states, mostly in malls and strip centers outside of urban hubs.
But despite its longevity, Christopher & Banks has taken investors on a roller coaster of expansions and contractions, never quite hitting peak performance.
In October 2007, weeks before the global financial crisis plunged the nation into recession and put many retailers out of business, shares were trading above $30 and the company was operating 825 stores. But in the decade that followed, sales plunged and the company cut its nationwide footprint in half.
In fiscal year 2018, Christopher & Banks reported a net loss of $32.8 million, or 88 cents a share, and same-store sales fell an adjusted 2.9%. With its stock consistently worth less than $1, Christopher & Banks was delisted from the New York Stock Exchange in the spring, and the retailer showed up on bankruptcy watch lists. Its stock, now sold on the over-the-counter pink market under the ticker CBKC, is trading at around 35 cents per share.
A big part of the problem in the past was failing to recognize that baby boomer women want more style at an affordable price than Christopher & Banks and C.J. Banks had been offering, Jones said in an interview earlier this month alongside four of her top executives.
The retailer’s core customer is generally between 55 and 75, with the average age in the mid- to late-60s. Eighty-five percent are college-educated and two-thirds work outside of the home. They work as nurses, educators and professional assistants among other fields, with average household income around $75,000.
They are more likely to shop at Kohl’s or J.C. Penney than they are at J. Jill or Chico’s, but they don’t want to feel dowdy.
“Real life is important,” said chief marketer Rachel Endrizzi, who spent 15 years at Regis Corp. “She’s very value-oriented, centered around family, friends and community. She volunteers. Our job is to help her find her style and give her confidence for everyday life. She’s not going to the prom and she’s not a power broker.”
Christopher & Banks is striving to be a niche player in a sea of mass marketers, discounters and department stores that also are calling out to this same demographic.
Brands such as Lululemon and Athleta have what analyst Ken Perkins of Retail Metrics calls a “cult following” and are able to draw shoppers back while middle-tier, mall-based stores are struggling.
“Catering to the boomer demographic is becoming increasingly difficult for a lot of retailers,” said Perkins. “Many are retired, they’re not going to be spending at the same levels, and apparel isn’t the cutting edge thing you used to buy in droves.”
Although three-quarters of Christopher & Banks and C.J. Banks stores are located in traditional malls, the retailer has an advantage in that a sizable chunk — about 44% — are in small and rural markets where it has high brand recognition and less competition, Jones said.
Andrea Kellick, Christopher & Banks’ chief merchandising officer, is leading the charge to add just the right amount of bling to the brand.
In a photo studio at corporate headquarters, Kellick showed off a new collection of Fair Isle knitted sweaters, quilted vests and blouses with flattering ruffles and updated fabrics and colors. A red and black plaid hooded buffalo jacket quickly sold out, she said.
“In today’s world, you can buy anything online,” Kellick said. “So what’s going to get someone into a store? Often it’s the experience. Customers want to touch and try on product. And this emotional connection they have with our associates is important — and something you can nurture and build over time.”
Kellick also raised the game on pants, which had been selling poorly, and introduced a line of jeans with stretch waist bands and slimming panels that have a modern cut. The company hired a Twin Cities fashion expert to appear on TV shows, including KARE-TV and a handful of national markets, with models wearing Christopher & Banks outfits and showing off “jeans for any age.”
Stores also began selling dresses, which had dropped out of the assortment.
“The associates are all wearing the product,” said Carmen Wamre, the executive in charge of stores. “People in the [headquarters] building are wearing the product. When I started, you didn’t really see our product, even in this building.”
Changing culture among the 200 corporate employees and 1,500 store workers has also been key to the turnaround effort.
“When a business is so bad, people forget how to win,” Jones said.
Mannequins showing off the latest jewelry and apparel styles are set up in the entry lobby. Large marketing images of the brand are in hallways.
Employees redesigned an old mail room in the lower level, now dubbed “The Hanger,” where co-workers meet for lunch and hang out among library books, comfortable sofas and high-top tables.
During the “dog days of summer,” someone suggested allowing two employees to bring their dogs to work each Friday. It was so popular it’s still going on.
“It got people outside of their silos and speaking to each other,” Jones said. “It signaled that we’re going to have some fun and become a company that knows how to win.”
The company remains in turnaround mode, and Jones resisted putting a time frame on how long it might take to pull through it.
Christopher & Banks is actively pursuing Dressbarn customers and looking to grab share from Sears, Bon Ton Stores and J.C. Penney, among others. It announced a plan to close 30 to 40 underperforming stores by 2020, though CFO Richard Bundy said with renegotiated rents, the company may not need to close as many.
The retailer has trimmed operating expenses and expects to cut $7 million by the end of 2020 by shuttering stores and negotiating better lease terms.
That has enabled Jones to shore up the retailer’s digital game, something she knows well. At Target, she oversaw the global supply chain and led the rollout of the Minneapolis-based retailer’s “omnichannel” fulfillment strategy, which included using stores as mini-distribution centers to speed up merchandise delivery to customers and reduce some of the shipping costs.
In a year’s time, Christopher & Banks launched ship-from-store in all 375 of its non-outlet stores. Customers now can also order online for in-store pickup, though the process is not quite “optimized,” Bundy said. About 22% of the retailer’s business comes from online sales.
Getting online shopping and speedy delivery is an expensive proposition but one that no retailer can afford to get wrong.
“Amazon is really pushing the envelope with same-day delivery. That’s where it’s headed,” Perkins said. “Christopher & Banks customers tend to be a little older and didn’t grow up with instant gratification. But most boomers are in tune to technology and are relatively savvy. They don’t like waiting either.”
Jones said the company is able to invest toward a more seamless online shopping experience without diminishing its focus on improving stores, its assortment and marketing efforts to promote a more fashion-forward assortment.
The third-quarter results represented “a major trajectory change,” she said, and she expects to a report positive cash position at the end of the year.
“We’ve been very prescriptive about how we’re going to work together, how we’re going to measure our performance, and how we’re going to challenge each other but support each other,” Jones said. “That’s one of the remarkable things about bringing in this many new leaders and having it be so well functioning. It’s about the brand and not one person or one area.”
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