When Gwen Stefani decided to design shoes, big-name footwear companies Adidas-Salomon AG, Nike Inc. and Reebok International Ltd. all vied to land the Orange County-bred pop star and fashion plate.
But Stefani, the No Doubt frontwoman who’s known for her rocker edge, rejected the more recognizable brands and elected to go with Royal Elastics, an under-the-radar K-Swiss Inc. subsidiary with roots in Australia’s skateboarding scene.
The choice was a monumental coup for the Westlake Village-based company that’s yet to turn a profit since K-Swiss acquired it in 2001 for about $3 million. The company has been peddling slip-on sneakers created for skateboarders to avoid tripping on unwieldy laces, while Stefani’s L.A.M.B. shoe collection for women, priced at $125 a pair, includes four versions of shoes named Love, Angel, Music and Baby (the initials of which spell L.A.M.B.) available in gold, white and black, frequently decorated with splashy lettering.
“It is very significant,” said David Nichols, the company’s president and son of K-Swiss chief executive Steven Nichols. “Gwen is very unique in many ways in terms of the size and diversity of her audience. She brings fashion credibility.”
The shoes are another entrant into the crowded field of apparel products attached to celebrity names rapper Sean John “Puffy” Combs, teen titans Mary-Kate and Ashley Olsen and actress and singer Jennifer Lopez are among those who have jumped into the apparel business. For companies, it’s a chance to spotlight a brand that might be struggling to gain notice and, for the stars, it’s another venue to expand their empires.
But like Hollywood careers, celebrity-spawned products often disappear from the market as quickly as they enter. Marshall Cohen, an industry analyst at the NPD Group, estimated that celebrity fashion lines typically fade two years after they crop up, leaving companies scrambling to replace the revenues.
Yet for all the risks, the collection could mark a turning point for Royal Elastics. With the company’s branded shoes not performing up to K-Swiss’ expectations, Stefani brings a needed buzz. “Any time you have a celebrity link you are always subject to some degree to what happens with that celebrity,” said Jeff Van Sinderen, an analyst with B. Riley & Co.
Royal Elastics’ second-quarter domestic revenues tumbled 14 percent, to $695,000, compared to the like quarter a year ago. U.S. sales of parent K-Swiss’ products increased 7.7 percent, to $94.4 million during the period.
Evolving brand
Nichols said that the deal with Stefani is long-term. Though he declined to state terms, he said Stefani and Royal Elastics will be developing other L.A.M.B. shoes, including high heels and boots.
Founders Tull Price and Rodney Adler started Royal Elastics a decade ago in their 20s to sell footwear to fellow skateboarders who were tired of laces ruining skateboard tricks by getting caught in the wheels.
When the company was acquired by K-Swiss, Price and Adler relocated to K-Swiss’ Westlake Village. The two eventually left the company in the hands of K-Swiss executives, moving back to their homeland to run Royal Elastics’ Australian operations, a separate company from the K-Swiss subsidiary.
In its early years, Royal Elastics developed an underground following, especially in its native Australia, as well as New Zealand and England. The brand’s customers are early adopters of fashion trends, a quality that was alluring to trend-setter Stefani.
In stores, the L.A.M.B. brand will become separate from Royal Elastics, which will do the manufacturing and marketing. Nichols said Stefani signs off on everything down to the font size of the lettering that goes on the shoes.
Despite L.A.M.B. footwear’s distinction from Royal Elastics, the company is betting that the customers Stefani draws will be introduced to the Royal Elastics brand and consider buying the shoes. That’s worked for Sevierville, Tenn.-based LeSportsac, Inc., which sold four seasons worth of L.A.M.B. handbags until the line was discontinued in the fall season last year. (The company has a policy of rotating celebrity designers to avoid being overly dependant on a single name.)
“The Gwen Stefani-L.A.M.B. for LeSportsac brought a new customer base to LeSporTsac, and we’ve been able to maintain those customers with new initiatives,” said James Bunn, executive vice president of LeSportsac.
Royal Elastics strategically debuted L.A.M.B. shoes this summer in Kitson, a Robertson Boulevard store often visited by Hollywood clientele, before they are sold at higher-end department stores like Nordstrom. Royal Elastics is also launching the men’s L.A.M.B. shoes in November. It will start selling the shoes in Japan and Hong Kong later this year.
“There are not going to be a lot of pairs right way. We are in it for the long-term, and we will manage the brand appropriately,” said Nichols.
Casey Collins, manager of Kitson, said that the shoes are selling at a pace competitive with the other footwear brands the store carries, which includes Pony, Arleen C and Jill Stewart. Collins said the simpler Angel version of the shoe is the most popular. “The other ones have a lot of writing. They are not as overwhelming,” she said of the Angel shoes.
Sustainable business
Nichols said Royal Elastics is committed to developing L.A.M.B. as a stand-alone brand that grows bigger than Stefani herself. He goes so far as to say that he has a vision for the brand to “become another Gucci or Prada.” Before that happens, Stefani has to resonate with customers of Royal Elastics shoes.
“If it is not the right match, then the whole thing becomes a disaster,” said Kenneth Hirst, president of New York-based Hirst Pacific Ltd., which designs products for companies that license celebrity brands. For instance, he said, consumers didn’t buy sophisticated fashionista Sarah Jessica Parker hawking shirts and pants for Gap Inc.
Stefani has a punky, rock and roll persona that has helped her stand out even as the fashion industry gets more crowded with celebrities seeking to cash in on their fame. Rapper Missy Elliott is doing a line of shoes for Adidas called “Respect Me,” “American Idol” winner Carrie Underwood is promoting Skechers Inc. shoes, and rapper 50-Cent is behind “G-Unit Collection by Rbk” for Reebok.
Elisa Bruley, owner of the Pasadena store Elisa B., which sells L.A.M.B. clothes, produced by Stefani’s New York-based company L.A.M.B, thinks Stefani has a fashion sensibility that distinguishes her from others and will make L.A.M.B. outlive most other celebrity brands. “She does have this sense of style that goes beyond her celebrity,” she said.
