Bon Business

By Nadia Mustafa/New York City

MAX AZRIA HAS SPENT HALF OF HIS LIFE in France, but he thinks Americans are more fashionable than Europeans. "The American woman is more stylish than any other in the world," he declares, in English less fluent than his French. "She understands the power of good style and has the confidence to feel comfortable." In 1989, inspired by what he saw on the streets of Southern California, he founded a modest contemporary label named after the saying bon chic, bon genre, Parisian slang for "good style, good attitude." Today he is chairman, CEO and designer of BCBG Max Azria Group, a $1 billion fashion powerhouse with 16 brands and a retail and wholesale network of more than 5,200 global points of sale, including 320 boutiques, some of them in locales as far-flung as Guam and Doha.

Azria, 57, has achieved his vision of merging mass appeal and fashion credibility by coupling the sophisticated detail of European tailoring with the casual, unfussy spirit of American sportswear. His primary line, BCBG Max Azria, consists of dresses, denim, outerwear, swimwear, footwear, handbags, sunwear, eyewear, belts, small leather goods and watches as well as men's shirts, tailored clothing and ties. Much of this product expansion is due to a series of licensing contracts Azria began in earnest around 2002. Last year he hired veteran stylist Lori Goldstein to focus BCBG Max Azria, which will have its first runway show in five years this month in New York City. While price points for the line range from $100 to $600, Azria branched out in 2001 with an eponymous designer brand in the area of $300 to $2,000. "We did it for more freedom," he says. "It can be a tad fashion-forward, and we can play. There are no restrictions." Last month he opened the runway line's first flagship, a 2,700-sq.-ft. boutique on Hollywood's Melrose Avenue that resembles an artist's studio, with four more locations to come later this year. In 2004 he launched a women's couture collection called Max Azria Atelier, which has become popular on the red carpet among celebs like Naomi Watts, Beyonce and Eva Mendes.

But it's his contemporary clothing--the original BCBG Max Azria line--that is big business for upscale department stores around the world like Neiman Marcus, Nordstrom, Macy's, Harvey Nichols, Hong Kong's Lane Crawford, Taiwan's Mitsukoshi and Singapore's Takashimaya. "They fill a lot of niches," says Frank Doroff, general merchandise manager at Bloomingdale's. "If you want clothes to go to work, to go out at night, a dress to wear to an occasion, they're trend right." Doroff says it all started with "the slinky dress," but what really put Azria on the map were his "sexy tops" and ponchos. "Two to three years ago, his ponchos alone were selling easily over $1 million. That propelled us into looking at him in a whole different way."

It seems as if a lot of people have been taking a new look at the company, which finally broke into the New York City fashion crowd in 2002, years after its first runway show there in 1996. "Our product had changed," says Azria. "Our collection was much more deep and really meant something." Still, says BCBG president Ben Malka, it wasn't easy. "There was a certain stigma that Max broke. He said, 'We're here to serve consumers, not egos,' and he designed a product that was salable and had a fluid, sophisticated sexiness, a point of view. Everyone said he was crazy, but he went up there and fought his way in like a pit bull, and here we are today." Where they are, says Marc Cooper, managing director at investment bank Peter J. Solomon Company, is in the right place at the right time with the right product. "It's rare for any company to be as successful as Max is. As of late, his broader business team has coalesced, and that has contributed to his success."

This year alone BCBG opened stores in New York City (where there will be five by the end of the year); Indianapolis, Ind.; Charlotte, N.C.; Bordeaux, France; Valencia, Spain; and Athens, among other cities. Still to come: Albuquerque, N.M.; Woodland, Texas; Wailea, Hawaii; the Virgin Islands; Lisbon; Brussels; and more. "The world map looks smaller than ever before. In 2007 Europe will be very big. We're accelerating that, based on my acquisition of strategic brands," says Azria, referring to designer retailers Alain Manoukian and Don Algodon and French couturier Herve Leger. "We're fantastic in Asia because China is booming and that market has known and liked me for 15 years. Japan is unbelievable. Canada is as good as the U.S."

Born in Tunisia, Azria grew up in Paris, one of six children of an olive-oil producer and a homemaker. As a teenager he sold sugared-almond candy on the street and stumbled upon his interest in fashion only "by accident" at the age of 16 when he was hired as an apprentice to "an old man in the business" (he's vague on the details). After studying classics in college, he designed and ran a womenswear line for 11 years. "It was very junior and very technical," he says. "I learned the business there--production, manufacturing, development." In 1981 he moved to the U.S. "for the California sun" and launched Jess, a successful French fashion retail chain. Eight years later, eager to do more than ready-to-wear, he started BCBG. "I decided to combine my two paths and challenge the leadership of the designer of the moment," says Azria. "When I entered the market, I was rejected because the elite say that you have to sell things at a certain price point. My position was that the consumer is smarter than that. Who cares if it's $200, not $2,000?"

By 1991 Azria was looking for a design partner. A mutual friend sent Azria's way a Ukrainian-born former ballerina who had attended Los Angeles' Fashion Institute of Design and Merchandising and had worked for several small designers but was considering leaving fashion for her other passion, art. Her name was Lubov. "In the interview he asked me one question: Are you global, or are you detail oriented?" she says. "I said, 'The latter.' And he said, 'Great, you're hired because I'm global.'" Soon Azria asked Lubov another question. "He asked me to marry him after a shopping trip to Rodeo to do market research," she says. "He pulled into my driveway, looked at me and said, 'Would you sleep with me?' I said no. Then he said, 'Would you marry me?' I said maybe. Obviously on Monday I went in to resign. But Max apologized. Then I went to his house and saw him sitting with his daughters on his lap, hugging them so gently, and I thought to myself, If that man could love me half as much as he loves his children, I would be the happiest woman in the world."

They wed in 1992, the same year they opened their first boutique, in Los Angeles. "After I got engaged, I changed my mind about fashion," says Lubov, 38, now creative director for BCBG Max Azria, Max Azria and Max Azria Atelier, "as long as Max understood my needs as a designer." It's not surprising to hear Azria call Lubov his muse, whereas she speaks with a bit more nuance. "Max creates the vision, and I make sure it's executed," she says. "We're a great team as long as his office is on the other end of the building. There are days when we don't agree." Lubov is hailed as the prototypical BCBG woman: wife, mother (she and Azria have three daughters, and she is stepmom to his three children from a previous marriage) and career woman, who, according to the company bio, "successfully balances life's demands with enviable grace, refusing to compromise on her fulfillment of each role." She speaks Russian, English and a bit of Spanish, takes salsa classes and has a thing for foreign films.

Sometimes, says Lubov, she just walks into a BCBG store, takes a seat and watches customers go in and out. She also gets weekly feedback from sales associates and managers. "You don't always have to be right, but you have to be focused on the customers' needs. We do a lot of marketing research." All of which has produced three "customer profiles": the connoisseur, a sophisticated woman with a discriminating and chic sense of style; the socialite, the enviable elite fluent in the latest must-have culture; and the visionary, an original and unprecedented trendsetter with inspirational expressions of fashion. Connoisseurs make up about 50% of BCBG's clientele, whereas visionaries are a "very little" slice of the pie and socialites fall somewhere in between. "Customers shop by taste level, not by whatever's hot," says Lubov. "We're training sales associates to pin customers and call them when something new comes in." It's a uniquely personal approach for a company with as many stores as BCBG. "We think of ourselves as a boutique, not a chain," she says.

MALKA, 45, A SHOE MAN FROM MONTREAL, says the company underwent some changes after he became president in 2001 (before that he headed the footwear division from its inception in 1995). "We decided it was important to not just have a single brand. So we created a multibrand, multichannel distribution concept, where you're selling 20 to 10,000 garments. This allows us to go from junior to haute couture, understand consumers from Tokyo to Wisconsin and mass merchants to Bergdorf Goodman. We're going to make sure that every one of our 16 brands has a voice and a very differentiated model." Their slew of brands includes BCBGirls, BCBG Attitude (men's ready-to-wear), Max & Cleo (dresses), Noun (tops and sweaters), Maxime (pants) and young contemporary labels To the Max, Dorothee Bis and Parallel.

Malka also got production and shipping in order at a time when technology had begun to offer consumers other options. "As the market changes, if you don't change, you die. Demand planning has changed aggressively in the last few years. Every element of your design and supply chain has to be geared towards speed-to-market tactics," he says. "We're one of the few in the U.S. market at our level capable of reacting to fashion the way we do because we've put our machine together that way. That means quick decision making, being able to control and respond to demand and organize your supply, and being able to fulfill that demand. It's very complex."

What's simple, says Malka, is what unites BCBG's staff of more than 10,000 worldwide. "If you really want to understand the essence of our company, look at the society we've built, with our own rules, our own laws. It shocks me how much the culture of a company can move it forward. It makes me laugh when headhunters call and try to take a designer from us. So many of them have come back here because they realize that they're not as good without the team. Max and I get a lot of credit for work that is done by a movement."

So what's next? Azria wants to take the company public but not imminently. "We expect to reach $1.3 billion in revenue in 2007," he says. "Any company of my size cannot live without thinking it's possible to go public one day." This fall the group will introduce an inexpensive line of teen clothing called MaxRave in 488 stores around the country. It will also launch its first online store early next year. "When I first met Max, he was doing items, baby dolls," recalls Lubov. "I pushed him into doing collections, juniors. You miss out on sales when you do items. People want to see what your vision is as a whole. Of course Max was a visionary because 10 years later it was all about items."