Dressbarn finds new life, new customers as online-only brand

Shayan Zadeh, Dressbarn CEO, joins Yahoo Finance to talk about how the brand is doing under new ownership and an online-only presence.

Video Transcript

JULIE HYMAN: We have seen a number of US retailers file for bankruptcy during this coronavirus pandemic. Many of them had already been troubled and this had only hastened their demise. But there are some other retailers that are finding new life online only. One of them is Dressbarn. And the CEO, Shayan Zadeh, is joining us now from Houston, Texas. Shayan, thank you for being with us.

So Dressbarn is, at least for me, is sort of a legacy retailer that I think of as very much bricks and mortar, right? So how do you transfer a whole brand online and then actually make it work?

SHAYAN ZADEH: Thanks for having me, Julie. No, it's a great question. I mean, a lot of the historic brands, retail brands in the United States, have ultimately started to do e-commerce and be online and have a presence online. I think the challenge that they've had is the company has been stores first and e-com second, and really never gave it all to make the e-commerce experience work.

So last year, our group of investors and operators acquired intellectual property of Dressbarn from a Ascena Retail Group after they announced that they're winding it down. And the reason we were interested in this was when we looked under the hood, even though the brick and mortar was declining and it was unprofitable and it was hurting the business, the e-commerce was growing very rapidly. Even at the time that it was an afterthought for the organization, it was doing quite well.

So we acquired the intellectual property of Dressbarn in end of October last year and relaunched it as an e-commerce-only play January 1, and have seen quite a success with it. The consumers are loving the fact that their beloved brand is still around. And they can still shop.

And all of this was before COVID, like you mentioned. So now that every other store is having trouble being open in the physical world, obviously, e-commerce is being even more accelerated.

ADAM SHAPIRO: How much of this, though, is dependent upon legacy brand? There are names that we all know. But as people get older, younger folk may not be as familiar. And it becomes even harder if there's not a brick and mortar experience for them to buy into the legacy.

SHAYAN ZADEH: That's an interesting point, Adam. But the interesting, exciting thing for us is that the younger generation is digital first. So the brands that they actually are starting to associate with and love and learn about, they do so online. They do it on their social networks. They do it in digital experiences.

So it actually gives us an interesting angle to start establishing that relationship early on with the consumers. And we have seen this with Dressbarn already. We have been live for just seven, eight months with the brand, but already, the demographics that's responding to our product line and our merchandise has grown a little bit younger. And I think that's a testament to where the younger generation is actually spending their time and how we're able to engage them with our product lines.

JULIE HYMAN: Rick, you've been trying-- I'll go first, and then, Rick, you ask after me. Shayan, who is the Dressbarn customer? You say that the brand had a lot of sort of legacy fans who have now come back to it now that it's online. What's the identity of Dressbarn, I guess?

SHAYAN ZADEH: Yeah, this is-- this is quite phenomenal. I mean, historically, Dressbarn has been a little bit of an older customer base compared to other fashion apparel retailers, a little bit more career-focused, maybe, than some that are more leisure-focused. So if you wanted to kind of envision a typical Dressbarn customer, you can think of a 40-year-old teacher, for example, that's looking for clothing for their work environment. So that's kind of like the quintessential Dressbarn historical customer.

But, like I said, what we have seen since relaunching, that group is responding very positively. And we are very, very excited about that. But we're also seeing some of the younger audiences really being captivated with the brand. We did a very successful campaign, for example, with swim as a category this year, which historically had never been a strong suit for Dressbarn.

But we were able to personalize the experience online for our customers. And not only our existing core set of customers responded positively to that, we were able to even engage younger audiences in that type of campaign.

RICK NEWMAN: Hey, Shayan, Rick Newman here. I shop at Dressbarn all the time and I notice you have a lot of masks, a lot of face masks on the site, including on the home page. Are you making-- I mean, is this a significant source of profits? Is it a loss leader? Is it just something you have to offer as an obligatory piece of merchandise?

SHAYAN ZADEH: I mean, it's essential these days, right? So our customers are demanding it. And we're definitely making sure that we're serving their needs.

It's not necessarily different from a profit margin profile or anything like that compared to other merchandise. But we think of it as essentials. And we want to make sure that our customer can get all of their apparel needs on our platform, and that it fits with the rest of the appeal of products.

So if you look at our masks, for example, there is an element of kind of self-expression and fashion to it, right? It's not just the bland, one-color cloth mask that you might purchase if you're just looking at the utility of it. Here, our customers are mixing and matching it with the rest of their outfit that they're purchasing on the platform.

DAN HOWLEY: Shayan, I want to ask about how you can get young people interested in brands like Modell's or Dressbarn. Obviously, most people now, when they do search online, they go to Amazon or Google. And Amazon has a lot of these products. So how do you [AUDIO OUT] interested?

SHAYAN ZADEH: It's a good question, Daniel. I mean, one of the key things about the relationship with the consumer is obviously the trust in the brand, right? So you might find similar products from a name that you have never heard of.

And even if you were not a Dressbarn shopper in the past, you know of Dressbarn. The kind of brand penetration and brand equity, even with people who have never shopped at Dressbarn, is really, really significant across the consumer base. So that definitely gives you an opportunity to establish that trust relationship, that they can expect a certain level of quality, a certain level of experience from a brand like Dressbarn versus some unknown third-party reseller on the Amazon platform or what have you.

The other part of this is that Facebook and other social elements are also a big part of where the shopping is originating these days. So if you have a specific idea, you might go to Amazon. You might go to Google. But if you're browsing and you get exposed to something that could be interesting to you that you didn't even-- intentionally were looking for it, there can be an entry for the consumer from that angle, too, which we feel that's another dimension that allows us to kind of establish a relationship with a brand-new customer that hasn't shopped at Dressbarn in the past.

JULIE HYMAN: Thanks, Shayan. Shayan Zadeh is the CEO of Dressbarn. Appreciate your time.