With a chain of trendy mall stores in its back pocket, Blue Holdings Inc. has plans to pump up its denim brands' retail presence and spread its store base across the country.


The Commerce-based jeans maker announced last week that it acquired Washington, D.C.-based Long Rap Inc., operator of 24 Up Against the Wall stores. The deal, expected to close in September, is valued at $32 million in cash and stock.


Now, Blue Holdings is working to put its stamp on Up Against the Wall. The stores already carry some of the company's brands, including Antik and Taverniti, but will add more and increase the selection of the existing labels.


Izzy Ezrailson, president of Long Rap, said it is too soon to be certain about the exact in-store changes. However, he envisions that window displays will feature Blue Holdings' brands in prominent positions and there will be space set aside within the stores to highlight them.


"The idea is actually to build recognition of the brands as they develop attributes that differentiate them," said Ezrailson. One possibility: a range of Blue Holdings products from accessories to sweaters will be introduced into the stores if Long Rap detects consumer demand for new items.


Despite the attention paid to Blue Holdings clothing, Ezrailson doesn't expect other companies to be concerned their products will get short shrift. He indicated there are so many brands in the store that no one brand is going to outshine another. In addition to the Blue Holdings brands, Up Against the Wall stores sell True Religion, Citizens of Humanity, Ed Hardy, Primp and Paul Frank, among many more.


Until recently, Ezrailson said Long Rap hadn't been particularly interested in selling. But he had a chance encounter with Paul Guez, chief executive of Blue Holdings, earlier this year at an Integrated Corporate Relations conference in Florida and started to be convinced that marrying his retailing operation with manufacturing would be a good move. And he's looking forward to the performance results: Ezrailson estimated margins on Blue Holdings-branded goods will swell 10 basis points.


At Blue Holdings, Guez has considered building retail operations for some time and began doing it himself with an Antik store on Melrose Avenue that opened last year. "This is exactly what I wanted to do, have a chain of stores where you don't suffer to grow to 25 stores because you are already at 25 stores," he said.


Guez believes the Up Against the Wall chain can reach 100 stores in the near future and maybe even push 300 one day. The expansion is likely to come mostly from organic growth, but Guez said he might pick up small regional chains along the way.


Expansion could be easier for Up Against the Wall than other chains because Ezrailson said the merchandise inside the stores can be tweaked to suit the local demographic. "We can exist in Fox Hills mall as easily as Beverly Center. We can exist anywhere," he said.


Including the retail operations, Guez projected that Blue Holdings can rack up $100 million in revenues next year. The company's fiscal year 2005 revenues totaled $36.3 million. Shares of Blue Holdings, traded on the Nasdaq, landed at $5.15 last Thursday, up 3.4 percent from the previous day's close.


Co-op Corner


Another one sprouts at the Grove.


The go-to lifestyle center will be home to Barneys New York Co-op, set to open in March of next year. The Co-op, typically housed within Barneys stores, offers merchandise a bit hipper and more casual than the traditional fare at Barneys New York, owned by Jones Apparel Group Inc.


After handling the deal to put the Co-op in Orange County's South Coast Plaza, Todd Russell, senior vice president of retail leasing at lifestyle center powerhouse Caruso Affiliated Holdings, said he knew that it would fit nicely into the Grove. He said the key attraction was the similar customer base. At both malls, customers are affluent, with a steady helping of tourists.


In L.A. County, the Grove location will be the first and only Co-op outside of a Barneys store. And Russell suspected that it would remain so for a while as Barneys turns elsewhere for additional locations, although he said exclusivity wasn't written into the lease terms. The full terms were not disclosed.


The Co-op will go into a 9,200-square-foot space where Amadeus Aveda Spa, Tracy Allen Fine Jewelry and Bodega Chocolates currently reside. The former two stores will be relocated in September, the month before construction is scheduled to begin, while the chocolate store will exit the shopping center.


With the Co-op arriving, the Grove's Nordstrom unit could be facing internal competition. But Russell said Caruso Affiliated has had friendly conversations with the store, which believes that alluring neighbors will pull enough traffic for both stores.


"As the Grove evolves, we continue to bring in these exclusive shops. That better customer will seek our property out," he said.


Towne Call


Gap Inc. is coming to town with its newest concept, Forth & Towne.


The San Francisco-based retailer is opening three locations in the Los Angeles area at Westfield Century City, The Oaks Shopping Center in Thousand Oaks and Westfield Topanga. The Century City and Oaks stores are expected to open in September, while the Topanga location will serve customers starting in October.


"Certainly, we believe in Los Angeles as an overall market for a new concept," said Kimberley Grayson, a senior vice president at Forth & Towne. "In Los Angeles, women have a sense of fashion. We really are a destination for chic fashion choices."


Forth & Towne is Gap's answer to Chico's FAS Inc. It's aimed at women 35 and older who may be too mature for Gap looks. The concept kicked off last year, and currently has five locations, four of which are in the Chicago area.


"We believe there is a grown-up fashion element that is missing in the marketplace today," said Grayson. "We have tremendous success with women that are looking for a shopping destination where fit is carefully considered."


Grayson declined to state how many more stores are planned for the L.A. area, but the market could sustain additional locations. And the company has intentions to spread the concept to about 25 units by the end of 2007, including spots in Atlanta, San Francisco, Houston and Seattle.


California Concerns


There's only one C left in C & C California.


The trendy Los Feliz-based T-shirt company has lost Cheyann Benedict, who co-founded the company with fellow actress Claire Stansfield in 2003. Together, the two helmed the company as co-presidents when it was sold to Liz Claiborne Inc. last year for around $29 million.


"Cheyann Benedict voluntarily resigned her position with C & C in order to pursue other interests," Liz Claiborne said in a statement.


In addition to Benedict's exit, Stansfield is leaving her president post and concentrating on the creative side of the business. "I have a baby, and it was getting to be too much to run the company day-to-day," she was quoted as saying in the trade publication Women's Wear Daily.


The company is getting a quick infusion of new talent. Liz Munoz, senior vice president of merchandising and design at Lucky Brand Jeans, has been appointed president, effective immediately. She will continue to work at Lucky and will report to Susan Davidson, a group president at Liz Claiborne.


"Liz will lend her many years of industry experience and strong branding skills to lead the evolution of C & C; California and drive business growth within the division," said Davidson in a statement. "She will be a great asset to the team as we pursue the exciting opportunities ahead for this brand."


Staff reporter Rachel Brown can be reached at rbrown@labusinessjournal.com or at (323) 549-5225, ext. 224.

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