Rue21 Taps Bill Brand as CEO
Rue21, the resilient Warrendale, Penn., specialty apparel retailer, has tapped Bill Brand as chief executive officer.
Brand, formerly chief retail officer of Carnival Corp. cruise ships and earlier president of HSN, succeeds John Fleming, a board member who had served as interim ceo since February. At HSN, Brand was instrumental in revamping an old business model that leaned heavily on TV home shopping with digital and mobile experiences and partnerships with Disney and celebrities.
In an exclusive joint interview, the executives said Rue21 was performing well this year despite the pandemic; that the health crisis was an opportunity to “reset” the business, including the merchandising; that the digital side of the business is under-developed, and that there is a view to opening more stores next year.
“There is an opportunity for significant digital growth, but the stores will also help build the brand,” Brand told WWD. “It’s about the overall experience — putting it all together.
“With digital, there is a huge opportunity to go from being transactional to building relationships, making people feel part of a community and that we play a more important role in their lives.”
He said Rue21 offers “fashion, affordability and inclusivity. It’s one of the most compelling, yet under-the-radar brands in the U.S. We’ve got to build awareness here.”
He said the digital side of the business is “not optimized.…With digital, there is a huge opportunity to go from being transactional to building relationships, making people feel part of a community and that we play a more important role in their lives.”
It is believed that digital represents less than 10 percent of the retailer’s total volume, which approximated $700 million last year. Fleming declined to specify the percentage of digital sales to the total but acknowledged it is low.
Fleming credited Brand with an ability to modernize retail companies and build “high-performance” teams. He also said Brand will “double down on omnichannel enhancements to create more compelling customer experiences.”
Asked if he plans to make any management changes, Brand replied, “There is a strong team in place. We will identify where we need to bring new people in. I’m excited to work with the team that’s there and excited to bring new energy to the table.”
The retailer, which targets men and women ages 15 to 25 with affordable, “on-trend” private-label fashion. Among the key items, girls sweaters, priced $26.99, and $29.99 in plus sizes, as well guys hoodies, priced $34.99 and joggers, $24.99. Jeans and jeggings are priced in the $25 to $40 range.
The retailer has been extending its size range. At the beginning of this year, a “dedicated merchant team” for plus sizes was formed and the West Coast buying office in the Los Angeles Fashion District was tripled in size to accommodate the expansion of the business. The retailer also bolstered its team for plus sizes from three merchants to eight.
Six weeks ago, three Rue21 stores were opened. Additional store openings will happen next year, Fleming said. The company operates just over 670 stores in 45 states, in addition to its web site. The company says it has 2.6 million followers on social media.
There’s something resilient about Rue21, having survived two bankruptcies and the pandemic. Apax Partners bought the company out of its first bankruptcy for $1.1 billion, put $800 million in debt on the books, and sold the business to hedge funds BlueMountain Capital Management, Southpaw Asset Management and Pentwater Capital Management in September 2017 to get the company out of its second bankruptcy.
Rue21 was a victim of overly aggressive store expansion under Bob Fisch, a past ceo, who took the company on a fast track until it ran out of speed. Insufficient marketing and technology, critical fashion misses and too much debt were problems in the past. Fisch left Rue21 in October 2016 after 15 years. In its second bankruptcy, Rue21 closed about 500 stores, many of which were in smaller cities and towns. Currently, 50 percent of the stores are in strip centers, 40 percent are in malls and 10 percent are in outlet centers.
After Fisch left, Michael Appel, who was also on the board, became ceo. He abruptly left the company last February, when Fleming became interim ceo.
With the outbreak of the coronavirus in March, Fleming said he sensed it would be a couple of months before Rue21 stores could reopen and determined it was time to “reset” the business from being all about stores to being focused on the customer.
“On May 15, we started reopening the stores,” said Fleming. “The majority opened by the end of June, which gave us a chance to reset inventory, how we promoted products, and how we serviced customers in the stores. They came back. We improved the way we presented products, made it clear and simple, and the customer responded. We had too much inventory. We cancelled a lot of orders. We identified all the aged inventory, and fed a lot of the inventory into the e-commerce channel. We came up with a promotional strategy to eliminate aged inventory and flow in fresher, new product,” which meant fewer markdowns were necessary.
Asked if Rue21 is profitable, Fleming replied, “Yes. The company will make money this year — more than last year.”
“This pandemic proved that our brand promise has significant staying power,” Scott Vogel, Rue21’s chairman, said in a statement. “During one of the most tumultuous times in retail history, John brilliantly steered the brand to not only survive when myriad retailers liquidated, but thrive beyond our expectations. Now, Bill’s ability to build teams around understanding the customer at every touch point makes his appointment the next natural progression in accelerating Rue21’s growth.”
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