Casual Corner Group, Inc. Business Information, Profile, and History

Company Perspectives:

Simply put, our customer comes first. At Casual Corner Group, we pride ourselves on understanding her changing needs, and we make it our number one priority to ensure her shopping experience is enjoyable and rewarding. When a customer visits our store, we do everything possible to treat her with respect, consideration and incomparable personal attention. Her continued satisfaction with Casual Corner Group is essential to our growth ... and to our success.

History of Casual Corner Group, Inc.

Casual Corner Group, Inc. operates approximately 950 clothing stores for women in 45 states. Primarily based in malls, the company's stores include the flagship Casual Corner chain as well as Petite Sophisticate, August Max Woman, and Casual Corner Annex. Casual Corner Group is owned and managed by President and CEO Claudio Del Vecchio, whose family controls Luxottica Group, the Italian eyeglass manufacturer.

Humble Beginnings: 1950s

On April 1, 1950, partners Charles E. Carples and Stanley W. Vogel opened the first Casual Corner on 14 LaSalle Road, West Hartford, Connecticut. The partners borrowed $5,000 each and furnished the store with poles, beams, and nets from old tobacco barns. Their 750-square-foot store had a sales staff of two—the founders' wives. After three months the store lost its entire staff due to pregnancies.

Casual Corner's founding arose from the strong relationship between Carples and Vogel. Their friendship went back to their youth—they grew up together on the same street in Hartford, Connecticut, and attended the same public schools. After World War II both men returned to the area. Carples entered the women's clothing industry working for Sage-Allen; Vogel entered the same industry working for Brown-Thomson. Although the friends enjoyed the work they felt there had to be a better way of being in business. They wanted to start a company that would be friendly and fun—one that would make employees look forward to coming to work.

Carples and Vogel saw an opportunity in the way the country was changing. Suburbs were springing up. Dress was becoming less formal. Yet, in the 1950s, a women's clothing shop meant a dress store. Any sportswear was found in the large department stores. Specialty shops did not exist. Consequently, Carples and Vogel founded Casual Corner as one of the first sportswear stores for women.

The partners planned to attract 50 percent of their business from working women, 30 percent from college students, and the rest from what they called country club women. Vogel said the store began in an era when women could not wear pants in most places, Bermuda shorts did not exist, and the concept of paired blouse and skirt was relatively new. Also unusual for the era was Casual Corner's allowing women to browse and try on clothes. In most stores blouses were kept behind glass and there were no dressing rooms. The store name was chosen partially to convey the less formal, more friendly nature of both the shopping experience and the clothes.

The personality of Casual Corner was captured in a poem that appeared near the front door of each store in the 1950s: "Come in and browse and tarry and chat/ Casual Corner is meant just for that/ Come in and leisurely look awhile/ And find here what's good and fine in style/ And if you wish your business we'll tend/ Come in as a stranger—leave as a friend."

By 1951 Carples and Vogel were successful enough to open a second store in Springfield, Massachusetts. Further expansion during the early years occurred in Providence, Boston, Worcester, Syracuse, and Rochester. In the early years Carples and Vogel discovered another store called Casual Corner based in Washington, D.C. The D.C. store had started the same week as Carples and Vogel's store and 85 percent of the merchandise was the same. The discovery led not to a legal challenge but to the formation of the Casual Corner Association, one of the nation's earliest retailing cooperatives.

Carples and Vogel gave store employees some unusual benefits for the time period. Employees who stayed with the company for three years received 10 percent of their salary in a retirement fund that was vested from day one.

In the business partnership, Carples handled the real estate and operations, while Vogel made the merchandise and retailing decisions. Two decades after founding the company they still shared a large office in the company's Springfield, Massachusetts headquarters.

1960s-70s: Mall-Driven Success

Casual Corner was among the first U.S. retail companies to buy product from the Far East. In the late 1960s the company bought sweaters, T-shirts, and sportswear from Hong Kong. During that decade Casual Corner became a store for junior women.

Through Carples's initiative, the company became an early convert to the shopping centers or malls that sprouted up outside core cities in the late 1960s and early 1970s. About 1966 Casual Corner opened a store in the Framingham (Massachusetts) Shoppers World. The following year the company anchored a Cincinnati, Ohio mall, Tri-County Shopping Center.

During their department store days Carples and Vogel had witnessed the power of advertising. They used both newspaper advertising and direct mail to build Casual Corner sales. A Dalmatian became the store mascot. Carples thought the dog with spots reinforced the fun image the store sought to convey. Through the years the Dalmatian changed from a long, skinny, upright dog leaning against a lamp post to what Carples called a "Dalmatian pig," a short, stubby animal on all fours with round spots.

Acquisition by U.S. Shoe

In 1970 U.S. Shoe bought Casual Corner. Under Chairman Philip Barach, U.S. Shoe wanted to expand its shoe sales through a specialty retail chain. But selling shoes at Casual Corner did not work at that time because specialty stores were not set up to house large assortments or provide the technical expertise of shoe sales experts.

Two vital elements U.S. Shoe brought to Casual Corner were sound managerial skills and the funds required for major expansion. The new owner planned to expand Casual Corner by about 15 stores a year. Carples and Vogel were placed on the board of U.S. Shoe and Stan Rutstein, the Casual Corner general merchandising manager, became president of the store chain.

By 1971 Casual Corner had about 700 employees in a chain of 32 "sportswear emporiums." Large chain stores were difficult to manage in this pre-computerized era. When Carples and Vogel installed point-of-sale computerized registers in the early 1970s other retailers came to corporate headquarters to examine how the system operated. Each store was polled every night via telephone lines. The day's sales results were downloaded and a sales report printed.

During the 1970s Casual Corner continually expanded. It built a large warehouse in Enfield, Connecticut, and offered a Casual Corner credit card. By the end of the decade, what had been a chain of 16 stores in the early 1960s had grown to 352 stores.

1980: Formation of Women's Specialty Retailing Group

In sheer store numbers, the heyday for Casual Corner ran from the mid-1970s through the mid-1980s when the chain grew to 1,800 stores. By 1980 the company had become one of the nation's most successful specialty retailers and wanted to expand its reach to different market segments. Traditionally, the store had targeted women ages 25 to 45. In 1980, the company opened the Caren Charles chain for more conservative women, ages 35 to 55. It also formed Antics, a store for juniors or younger women.

In 1982 Casual Corner acquired Ups and Downs, a women's specialty store with some 200 outlets, and merged the nine Antics stores into it. That year the company purchased Petite Sophisticate of Cincinnati, a store for women 5 feet, 4 inches and shorter.

U.S. Shoe felt there were now too many store divisions for one executive to oversee. It thus formed the Women's Specialty Retailing Group (WSRG) and named a president for each division. The divisions reported to WSRG Chief Executive Officer Noel Davidson.

Petite Sophisticate showed particularly encouraging success. During President Fred Skurow's 13-year reign, Petite Sophisticate grew to more than 450 stores. However, WSRG was not immune to failure. A "test" division for women's accessories called Cabaret opened during the 1980s but soon closed.

In 1986 Davidson added a division for large sizes called Sophisticated Women. August Max, which had been kept separate from WSRG for about eight years, was then put under Davidson's control. Three years later he merged the two and the name became August Max Woman.

About this time another U.S. Shoe division, a discount women's clothing business in Washington, was not doing well. In 1990 that business was put under the WSRG umbrella. Under the name Career Image, the stores were moved by Davidson into outlet malls which were just starting at the time. By 2000 that division, renamed Casual Corner Annex, had more than 250 stores nationwide.

Signs of Struggle: Mid-1980s to Mid-1990s

By the middle of the 1980s Casual Corner showed signs of struggle. Some industry observers felt the chain did not have a strong enough appeal to any segment of the market. In 1991 the U.S. Shoe board removed Barach in favor of his heir apparent, Bannus Hudson. Hudson had a strong marketing background and wanted Casual Corner to become more of a marketing-driven company. He hired Mike Searles away from Kids "R" Us to run Casual Corner.

"This was not a business that could be fixed by tinkering with a strategy here or there. There were just too many problems cutting through the company. Drastic action was needed," said Barry Bryant, a retail analyst at Lardenburg Thalmann & Co., in the March 1994 issue of Stores.

Searles said Petite Sophisticate and Career Image were Casual Corner's only healthy divisions. In 1993–94 he reshaped the WSRG subsidiaries into a leaner, centralized, synergistic operation. He focused Casual Corner on one particular market—business women from 25 to 45. By moving the company from individual brand management to cross-brand management he greatly decreased payroll and added efficiencies. Rather than having five brand managers traveling to one city to serve five different divisions, Searles had one manager for all stores in the geographic region.

But, while these and other expense reductions saved close to $40 million on an annual basis, Searles was not successful. His inability to solidify a differentiated product strategy resulted in losses of $50 million in 1993 and $100 million in 1994.

1995: New Owner, Luxottica

Attracted by the profitable LensCrafters subsidiary of U.S. Shoe, Luxottica Group, a world leader in eyewear, bought a struggling U.S. Shoe in October 1995. Luxottica CEO and President Claudio Del Vecchio, son of Luxottica Chairman Leonardo Del Vecchio, sold the shoe business but kept the women's clothing operations. In October 1995 WSRG was transformed into Casual Corner Group, Inc.

Del Vecchio replaced Searles with Leopoldo Borzino and began to set up a vertically integrated organization similar to Luxottica. Under this strategy the company would design, manufacture, and retail its own product. After a year Del Vecchio took over the Casual Corner presidency himself and determined that Casual Corner could not manufacture its own product profitably.

Del Vecchio opened a fashion office in Milan and hired a chief merchandising officer. Two production teams were formed—one in the Enfield, Connecticut office and another in Hong Kong. He cut the New York-based staff by about 50 percent, invested in a new distribution center in Enfield, and put money into management information systems. Del Vecchio also developed a new superstore concept to bring two or more of the company's brands under one roof. Older Casual Corners usually were about 4,500 square feet, but the new stores were to be 6,000 to 10,000 square feet in size. Del Vecchio's ability to take the company private, invest heavily in the infrastructure, and build an efficient organization allowed the company to remain in business.

Under Del Vecchio the company announced a signature collection called "collectibles." Collectibles were affordable seasonless separates in black and navy that could be combined in multiple ways and give customers the feel of a much larger wardrobe. By 1999 Casual Corner had returned to profitability.

In July 2000 Del Vecchio announced the opening of the company's web site. "Our desire," he said, "is to provide a dynamic e-commerce environment and superior customer service along with the capabilities to create a more personalized purchase experience to help drive sales and traffic through our various retail stores."

Throughout 2000 Casual Corner sold moderate and higher priced women's clothing from more than 300 mainly mall-based shops in about 45 states. It also sold under the names Petite Sophisticate (300 locations; sizes 0-14); August Max Woman (90 locations; sizes 12-26) and Casual Corner Annex (250 locations).

The September 2000 opening of a new 22,000-square-foot flagship store, on 3rd Avenue in New York City, gave Casual Corner Group another hold on its claim as one of the largest and oldest specialty retail chains in the United States.

Principal Competitors:AnnTaylor Stores Corporation; Christopher & Banks Corporation; Federated Department Stores Inc.; The May Department Stores Company; The Talbots, Inc.

Chronology

• Key Dates:
• 1950: Company is founded in West Hartford, Connecticut.
• 1970: U.S. Shoe Corporation purchases the company.
• 1980: Casual Corner operates under U.S. Shoe's newly created Women's Specialty Retailing Group (WSRG).
• 1995: Luxottica Group buys U.S. Shoe in May; WSRG becomes autonomous and is renamed Casual Corner Group, Inc. in October.
• 2000: Company opens 21,000-square-foot flagship store in New York City.