It’s been a busy year for Cushnie et Ochs, the designer ready-to-wear firm, that got a minority investment from Farol Asset Management and a group of investors, including Gary Wassner, last November.
The company moved into new offices at 251 West 39th Street, launched e-commerce and activewear, opened a temporary shop through the CFDA Retail Lab store, expanded its staff from five to 18 people, and looks to extend the brand to handbags and footwear in 2017.
At the time of the investment, Peter Arnold joined the firm as the brand’s first chief executive officer. Having previously been ceo of Cynthia Rowley and John Varvatos, he was also senior vice president of corporate branding and communications North America and global licensing at Swarovski. Earlier, Arnold was executive director of the Council of Fashion Designers of America for five years, having been an attorney with Sidley Austin LLP.
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Cofounders and designers Carly Cushnie and Michelle Ochs, who met at Parsons School of Design during their junior year, went into business together in March 2008 after graduating. “We had a shared aesthetic,” said Cushnie, although they had never worked together until they launched their company. “When we started, we hung both our senior theses together, and they hung kind of seamlessly,” she said. Ochs described the aesthetic as “clean, sophisticated, modern, sexy, bold, sensual with an edge.”
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The company has always been known for its dresses, particularly sexy, cutout ones, but over the last year, it’s grown in other categories such as separates, tops and knitwear.
“There was a deliberate strategy to expand the breadth of the assortment,” explained Arnold. “Since the investment, the company has the wherewithal to focus on broadening the assortment and investing in the development of those classifications,” he said. Nearly everything is made in New York within a three-block radius, plus one knitwear factory on Long Island.
Cushnie et Ochs has more than 150 points of sale around the world, including stores such as Bergdorf Goodman, Saks Fifth Avenue, Neiman Marcus, Harvey Nichols, Intermix, Net-a-porter, Shopbop and Nordstrom. The collection frequently hangs near such brands as Joseph Altuzarra, Jason Wu, Stella McCartney and Proenza Schouler. In 2009, Cushnie et Ochs was the winner of the Ecco Domani Award, and the company has also been a finalist for the CFDA/Vogue Fashion Fund (2011) and a nominee for the CFDA Swarovski Award (2012).
Elizabeth von der Goltz, senior vice president, general merchandise manger of fine apparel, 5F, contemporary, jewelry and beauty at Bergdorf Goodman, said, “From their very first collection, we have worked very closely with Michelle and Carly to develop their line and exclusive pieces for Bergdorf Goodman. This holiday season, we are very excited about the exclusive velvet cocktail dress that they designed for us. We continue to see significant growth year after year with their brand.”
Describing the Cushnie et Ochs customer, she said, “Their customer is a confident woman who wants to look chic but sexy. Dresses have always been their number-one classification, but lately their separates have been performing very well — their pants have a great fit and our customers love their tops and knitwear,” she said.
The brand, whose receivables are factored by Hilldun Corp., established a very good relationship with Wassner, ceo of Hilldun. Wassner is part of the investment group that was formed with Farol to invest in Cushnie et Ochs. “He [Wassner] was always someone we would go to talk to when we needed advice or help,” said Cushnie.
Wassner said, “I brought Farol into it, and it’s going incredibly well. The business is growing and what’s most exciting is that they now have the tools to build out the brand. It was a such a quiet brand for such a long time.” He said now they can start thinking about global expansion and omnichannel.
Asked why they decided they needed a minority investor, Ochs said, “We were at a point where the company was doing well. We were already making a profit, but to really scale it and grow at the rate we wanted to,” they needed investors. “By the time we got to last year, we were ready to run a little bit. We needed the help doing that,” said Cushnie. Ochs said the investment allows she and Cushnie to focus on design.
Among some of the company’s initiatives are expanding the wholesale footprint, which the designers established, and adding depth and breadth to the assortment. They also set out to expand digital and social media. Earlier this month, Cushnie et Ochs launched e-commerce on its web site, which features the resort collection. In addition, the brand was selected by the CFDA to participate in the Retail Lab from October through December. The CFDA seeks brands that are on the cusp of opening their own store and could benefit from the learning opportunity. This is Cushnie et Ochs’ first store.
Located in the Cadillac House at 330 Hudson Street, the boutique is operated by Cushnie et Ochs personnel, and they have to do everything but pay the rent. The shop features a selection from the brand’s fall/winter 2016 and resort 2017 ready-to-wear collection, as well as a curated assortment from fellow CFDA designers Morgan Lane lingerie and Illesteva eyewear, in addition to Monica Sordo jewelry, Christian Louboutin shoes, and Caudalie beauty.
Arnold said the company was responsible for building the environment and merchandising the store. The firm hired two salespeople. “It’s our first tangible expression of the brand in our own space,” said Arnold.
Ochs said this has been a good experience before they find a permanent home. Although it’s not a huge traffic area, they’ve learned about entry price points and that location is critical. They’ve held special sales events to get consumers to go there. “It’s not a high traffic area generally,” said Arnold. The company is looking to open a store in the next year and a half, and they’re thinking downtown Manhattan. They want their first store to be in New York because they produce their collection here.
Last summer, the company got its feet wet with an activewear capsule with Bandier. The line was sold in Bandier stores and their web site for one season. Now, Cuchnie et Ochs is creating a larger range of activewear for their own site and wholesale accounts. The line includes leggings, bra tops, jackets, and workout tops in the premium active category. The company introduced activewear for spring market and it was well received. They’ll launch it “bigger and noisier” for fall, said Arnold. Activewear wholesales from $60 to $100.
Since its launch, the brand has always held fashion shows and hasn’t gotten on board with the “see-now-buy-now” movement. It shows the following season’s clothes on the runway. The spring collection wholesales from $250 to $900, with the bulk of the sales in the knitwear and dress categories.
“Because we make everything within three-city blocks, we’re very nimble and we’re able to replenish very quickly, so it’s a different variant on the ‘see-now-buy-now.’ We’re able to give her very quickly what we hear she wants,” said Arnold. “With a lot of accounts, we can do exclusives and re-cuts, it’s a very significant aspect of our business,” he said. Arnold said a brand like Burberry can afford to totally pivot and do “see-now-buy-now,” but most brands can’t.
Arnold said they’re getting pretty close on a couple of categories, namely footwear, handbags, and eyewear. For the most part, they want to do them in-house, or with a manufacturing partner. They prefer the control and participating in the product’s design.
Now that they have their own e-commerce site, people can see something on Instagram and can buy it on their site. The company doesn’t do traditional print advertising, but advertises digitally across all platforms, as well as retail sites and paid Facebook ads. “The power of our spend is so much more effective digitally,” said Arnold.
Arnold declined to reveal how much volume the company generates. At the time of the minority investment, it was believed that the brand was generating between $10 million and $15 million at wholesale.
“We’ve had double-digit growth year to year. For us, given the challenges of the wholesale environment, it’s quite an achievement. We’re very bullish,” said Arnold.