Struggling Rue21 elevates execs to 'transform the customer experience'

Dive Brief:

  • Teen apparel retailer rue21 has elevated two of its executives to newly created positions — promotions that will "propel the company forward in its mission of being a customer-centric brand," it said Tuesday.

  • Dirk Armstrong, who has been with rue21 for five years (most recently as senior vice president and director of stores), has been appointed chief operating officer, tasked with driving the strategic vision of rue21’s brick-and-mortar locations and managing 21,000 field employees across its 1,217 stores. Armstrong will also spearhead the strategy to revamp the girls' in-store experience efforts in alignment with the girls' merchandising transformation led by Chief Merchandising Officer Nina Barjesteh, who joined rue21 from Target after the abrupt departure of Kim Reynolds in October.

  • Rue21 also named Brett Trent to the newly-created position of chief marketing officer. Trent spent the past two years at the company in the roles of chief digital officer, previously serving as SVP of digital retail. 

Dive Insight:

Rue21 has been struggling in the difficult teen apparel space since being taken private by private equity group Apax Partners in a $1.1 billion sale in 2013. Apax shook up the executive ranks in October, shortly after a report released by credit ratings firm Fitch Ratings warned rue21 could slip down the slope to bankruptcy, replacing Reynolds as well as CEO Bob Fisch, who together had run the company for some 15 years. The New York Post at the time reported that Fisch and Reynolds were summarily fired by Apax board members; since then, Keith McDonough, who had been CFO for 13 years, has served as interim CEO while the board of directors continues searching for a permanent chief executive.

As a private company, rue21 finally entered e-commerce in late 2013, so it may now be suffering the slimmer margins that come from selling online. Like rivals Abercrombie & Fitch and bankrupt American Apparel, the retailer is also faced with a lukewarm attitude from teens when it comes to buying clothing, prioritizing their limited spending on experiences and electronic devices. 

Fitch’s blunt report last fall singled out rue21 as one of seven retailers with tenuous futures. “The lack of proprietary products in many categories leaves retailers vulnerable to permanent traffic decline resulting from the rise of competitors (for example, discounters and online-only players),” Fitch said, pointing out that mall-based apparel brands in particular can quickly become irrelevant as consumer sentiment changes. “The outcome in either case is that the bankrupt retailer has lost its place in the market and thus has limited value as a going concern.”

While rue21 said Tuesday that it's focusing on strategy, its problem may be its merchandising; McDonough alluded to both issues in his statement, noting "We have clear goals in 2017 to transform the customer experience and girls’ merchandise offering, while being completely customer-centric."

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