On October 25th 2007 David Jaffe, President and CEO of Dressbarn Inc, sat down to be interviewed by Antony Karabus, CEO of Karabus management. The purpose of the interview for Jaffe was to recount the history of Dressbarn and explain how it became the success that it is today.
Karabus first asked Jaffe to speak a little bit about Dressbarn’s past in order for the audience to get a better understanding of who they are as a company. Jaffe proceeded to tell Karabus that Dressbarn started off as a discounter business. However, the 90s brought stiffer competition, and Dressbarn’s operating profit began to decline as a result. This led to the company changing direction when Jaffe took over as CEO. In order to reinvigorate the business, Jaffe looked at three basic areas, the first of these being merchandise. With more competitors in the marketplace, Jaffe realized that Dressbarn had to offer current and differentiated fashion at all times in order to stay ahead of the curve. “We went about upgrading our merchandise mix, improving the quality, adding the fashion content.” This led to things such as Dressbarn switching to 100% private label merchandise. One of the big differentiating factors between Dressbarn and the competition, according to Jaffe, was the connection with customer service, which the company capitalized on by training people in dealing with customers.
The second area in which Jaffe looked to improve Dressbarn was in recognizing and rewarding those people who performed the best. This had the two-fold benefit of increasing productivity and reducing turnover. Jaffe then stated that the final area of exploration regarded communicating with the customer in a way that appealed to him or her. This led to money being spent on image ads, which ultimately led to an uptick in comps and outputting profits.
Karabus then asked Jaffe how Dressbarn avoided losing old customers while acquiring new ones. Jaffe responded that the transition was purposely gradual, so as not to shock the customers. Jaffe also mentioned things like customer improvements and customer communication, which had the desired effect of making the customer feel as though they had a connection to the store.
Jaffe was then asked how he was able to change’s the store’s culture so quickly to become a retailer on the cutting edge of fashion, rather than just a discounter. Jaffe replied that the change came from the bottom up. “We put together these little committees by department where I would meet with them individually and talk about things that we could do better to improve our business.” This democratic style of decision making led to people taking more responsibility for their roles within the company, and a general open-mindedness with regards to new ideas.
The next question asked by Karabus was in two parts: What the impetus was for this culture change, and how said change was received by employees. Jaffe said that this new culture was received well, as every employee wants to be treated as a valued member of the team. Jaffe added that the culture change kept Dressbarn from falling into a rut. “We’ve got this expression at Dressbarn, ‘if you do what you always did, you get what you always got.”
After a bit more talk about the positive effect that the culture has on employees, Karabus asked Jaffe how the changes made to Dressbarn have affected the company’s financial performance. According to Jaffe, comps and operating margins have been steadily increasing since the change. “We’re pleased with what we’ve done, we realize there’s still a lot more opportunity out there.” In an industry facing challenges, Jaffe believes that Dressbarn provides a unique solution, which allows them to continue to build on the business.
In that vein, Karabus asked how Dressbarn differentiated itself from a number of competitors. Jaffe answered that there are a multitude of ways.The first of these is the edited selection of merchandise that is brought to the customer, which fits in with the Dressbarn lifestyle. The key, according to Jaffe, is creating this unique lifestyle and communicating it better than the competition. Jaffe concluded by saying that the Dressbarn environment is also different, with clothes organized according to different lifestyles.
After some brief discussion regarding the benefits of customer relationship management, Karabus asked Jaffe about the acquisition of Maurice’s, a low profile company which Dressbarn spent $320 million to acquire. Jaffe responded that his rationale for this was that the store fit well with Dressbarn’s reinvigoration, and could help the company get back on track. Jaffe turned out to be correct as Maurice’s grew after the transaction from four hundred stores to about six hundred and fifty, on its way to one thousand. Prompted by a question from Karabus, Jaffe then stated that it was very important to keep the original Minnesota team in place, as he felt they had some great ideas. According to Jaffe this has led to overlap opportunities in which employees from Maurice’s can be repurposed to other areas within the company. This has all led to improved performance of the brand itself. Some of these positive results, Jaffe added have been due to the hard work of the employees of Maurice’s.
Karabus then asked Jaffe about one of Dressbarn’s key objectives, which is to get both chains selling at $200 per square foot. Jaffe commented that Maurice’s is close, and getting there will require execution. “We need to improve, we need to reinvent so that we can keep growing our business. “ When asked what is next for the two companies, Jaffe responded by saying it all depends on what needs to be done better. Jaffe then stated that there are initiatives in the pipeline for both companies based on this criterion.
When asked definitively if more acquisitions are on the horizon, Jaffe said that it is important to remain selective in order not to have a purchase bet on the company. “There are a lot of companies out there that are available but I’m not sure they’re the right fit for Dressbarn, whether it’s the culture or whether it’s their business model or their growth potential.” Jaffe concluded his address by adding that the investors coming in tend to be more focused and understand value orientation, and are not simply looking to make a quick buck.