Lacoste's Riposte

By Kristina Dell

Sure, Andy Roddick and his splashy American Express "Mojo" ad campaign got bounced out of the u.s. open. but his clothing sponsor, Lacoste, had a great tournament. The little green crocodile not only showed up on tennis togs of French pros like Richard Gasquet and Natalie Dechy but was also worn by celebs and many upmarket fans who descended on Flushing Meadows, N.Y.

Lacoste's popularity at the Open--the elegant croc outcooled the oversized pony of official sponsor Polo in straight sets--was emblematic of the brand's astonishing turnaround over the past three years under the tutelage of Robert Siegel, who took over the company as a project for his retirement--or perhaps to avoid it. A self-proclaimed clotheshorse, Siegel had made a name for himself during his 29-year career at Levi Strauss, where he launched the hugely successful Dockers brand in 1986. Siegel left Levi's to run Stride Rite, then headed south to Charleston, S.C., to contemplate retirement. But, he says, "those thoughts lasted like two minutes." He took on a few consulting jobs. Among them was Devanlay, the global apparel licensor of Lacoste, a brand that had been so badly managed in America that it was eventually withdrawn from the U.S. market, even though it had ruled fashion for a while.

Like many other Americans, Siegel remembered a time when the ubiquitous French amphibian adorned the chests of the country-club set. Now, by developing hipper clothes and raising quality, he launched a Stateside comeback for a brand that was considered to be dead in the Atlantic. "To head Lacoste was a dream come true," Siegel says. "The brand is so powerful because of its heritage."

With a look that's classic, colorful and once again hip, its polos are go-to shirts for almost anyone. Since Siegel became CEO of Lacoste USA in January 2002, sales have grown 800%, and Lacoste worldwide has developed into a $1.8 billion brand globally. In 2004, U.S. sales increased a whopping 125% over the previous year, and by 2005 the U.S. had become Lacoste's top market. According to Siegel, 2005 is set to be Lacoste USA's most profitable year yet. "I credit the whole company for this success," says Marshal Cohen, chief analyst at the NPD group. "They did a good job in Europe of keeping it a premium brand, and the U.S. followed suit. That drove this phenomenon."

The sponsorship deals Lacoste is making reflect its sporty heritage and retooled popularity. In April the company signed a rumored six-year, $30 million--plus contract with top U.S. tennis player Roddick. Lacoste has cleverly made itself a Hollywood favorite too. To add to the buzz, Siegel and his team have seeded the shirts with celebrities: Natalie Portman, Katie Couric and the cast of The O.C. are just a few who have donned the clothes on television and at high-profile events.

The story of a little French crocodile smashing its way onto the U.S. apparel scene is a fashion legend. Rene Lacoste, a famous French tennis champion nicknamed the Alligator (le Crocodile in French) by the American press because he "never let go of his prey," grew tired of the starched, long-sleeved shirts that players wore during the 1920s. He designed a breathable, short-sleeved polo for himself, and soon for his tennis friends too, creating what was to become one of the most famous sportswear companies in France.

When Lacoste brought the shirts to the U.S. in the 1950s, they were a huge hit--the perfect preppie fashion statement--and their popularity lasted through the 1960s. But General Mills (as in cereals, not woolens) acquired the brand in 1969 during one of corporate America's periodically insane conglomerate phases and decided to combine Lacoste with another brand, Izod. The company got lucky, riding the preppie fashion wave in the 1980s. Then, desperate for sales growth, Big G cheapened the shirt, reduced the price to $35, and sold it everywhere, even to low-end stores like Wal-Mart. "They ran it into the ground," says Courtney Reeser, managing director of Landor Associates, a brand-consultancy company.

To save what was left, Lacoste (which is still family owned) partnered with clothing licensor Devanlay to buy back the U.S. rights in 1992, and then got out of town. Lacoste returned to Palm Beach and Bal Harbor, Fla., three years later and attempted to reclaim its upper-class cachet. But the next six years were a struggle for the brand.

When Siegel took the reins in 2002, the vintage preppie look was hitting fashion runways. Retro street wear such as Puma sneakers and Adidas tracksuits was suddenly the rage. And no one embodied old-fashioned preppie better than the cute green croc. With Gwyneth Paltrow sporting Lacoste in the movie The Royal Tenenbaums, the brand inched back.

Siegel saw the opportunity and pounced on it as Roddick would a short second serve. Quickly Siegel redefined the product to appeal to a younger crowd. With teenage girls in mind, he and creative director Christophe Lemaire introduced the Lacoste stretch pique polo, a Lycra-cotton shirt with a sexier, sleeker fit, in 25 vibrant shades. It's Lacoste's best-selling item for women; polos account for 30% of sales in both the men's and women's lines. "The pique tight polos were the natural look to be paired with low-rise jeans," says Siegel. "They just took off."

The next test for the company was to avoid repeating Izod's mistakes. Retailers encouraged Siegel to slash prices to increase sales. He did the opposite, pricing the new shirt at $69 for men and $72 for women, making it the most expensive polo on the market. (Ralph Lauren's Polo retails at $65.) Siegel understands that luxury is now a mass market, but to keep up appearances, sells only to high-end department stores like Saks Fifth Avenue, Neiman Marcus and Barneys. "Our biggest challenge is to continue to grow without overextending or overexposing the crocodile," he says. This time management will make sure the crocodile holds on to the prey.