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FASHIONABLY FIT

The Finish Line launches Paiva for active, affluent females

By Maura K. Ammenheuser

A select few malls around the country are seeing the light — in the form of a new store concept called Paiva (pronounced “pie-vah”), a Scandinavian word that means “of the light” (and also refers to a sun deity).

The Finish Line, an Indianapolis-based active-wear company, launched this women’s fitness wear chain in April. The company currently operates four stores and says it plans to have a total of 15 across the U.S. this year.

Finish Line executives say the name was chosen for its associations with brightness and energy. And the fact that a foreign word is easier to trademark in the U.S. than an English one did not hurt, says George Sanders, Finish Line’s executive vice president of real estate.

Though people might wrestle with the pronunciation, Paiva’s opening is part of a trend of fitness-oriented clothes, shoes and accessories for women who demand both style and function from their workout gear.

Paiva is “grounded in performance and grounded in sports,” said Finish Line CEO Alan Cohen. It serves an active, busy, affluent 25-to-40-year-old customer who “doesn’t want to give up fashion or performance.”

The store carries “quality, colorful, styled athletic gear that is really trendy,” said Julie Hansen, a spokeswoman for Mall of America, where Paiva opened this spring. Most of Paiva’s clothing “you could wear outside the gym and look great and not feel underdressed.”

The chain sells goods from the likes of Adidas, Fila, Nike and Speedo, and such private-label essentials as tank tops and pants. It also includes what Cohen calls a shoe salon, a boutique within the roughly 4,000-square-foot store dedicated to athletic shoes.

The chain is no mass merchandiser. Even though in Paiva’s first few weeks the top-selling items were $16 tanks and T-shirts, Cohen notes, one tennis dress goes for $600. In May the Web site was peddling pants for $70-$95, sports bras for $20-$45 and tops typically costing $50.

Paiva launched on April 14 with a 3,700-square-foot store at Barton Creek Square, in Austin, Texas. Since then, besides the Mall of America store, units have opened at Natick (Mass.) Mall, near Boston, and at Westfield Annapolis, in Maryland. Paiva says its fifth store is coming to Bellevue Square, in Seattle, by the end of this year. Further, executives cite Chicago, Dallas, King of Prussia, Pa., Lake Grove, N.Y., and Orlando, Fla., as sites for future stores. The company says it has identified about 200 U.S. shopping centers that are suitable for the concept.

Cohen declined to comment about Paiva’s early sales performance beyond saying that sales are meeting expectations.

Paiva’s early focus was on enclosed malls, but about half the sites in its planning are in lifestyle centers, says Sanders. Such centers, typically in warm climates, offer another way to reach an outdoorsy, active clientele. But most lifestyle centers are new, Cohen says, whereas malls are typically better established and thus present little by way of surprise.

A mall-based strategy makes sense for Paiva because Finish Line has succeeded in malls for many years, says John Shanley, a retail analyst at Susquehanna International Group, an institutional sales and research firm based in Bala Cynwyd, Pa.

Cohen and Sanders acknowledge that Paiva faces a learning curve, because it is the first concept that Finish Line has launched. (It acquired street-fashion chain Man Alive in 2004.) “This is quite a new and different experience for us,” Cohen said.

Paiva seeks space in the dominant mall in a market, Sanders says, especially in fashion-oriented centers with Neiman Marcus, Nordstrom or Saks Fifth Avenue as anchors. Co-tenants economically suited to the Paiva customer include Ann Taylor, Banana Republic, J. Crew, Pottery Barn, Restoration Hardware and Williams-Sonoma, he says. Coach, Lucky Jeans and upscale children’s merchants such as Gymboree also make good neighbors, says Richard Hollander, president of the customer ID division of Buxton Co., a Fort Worth, Texas-based consumer analysis firm.

Less than a decade ago, athletic wear did not qualify as high fashion. The usual strategy of the makers of this kind of apparel was simply to offer the exact same merchandise they were making for men, only in smaller sizes and pastel tones. But that had to change eventually, sources say.

“Women don’t like just ‘shrink and pink,’ ” said D’Lynda Fischer, a consultant who was at press time preparing to open Sporteve, a Los Angeles active-wear boutique for affluent women. Hollander concurs, pointing out that a “jogging mom” cares as much about how she looks when she’s grabbing a coffee at Starbucks as at any other time.

But Finish Line is hardly the only company looking to serve this woman. Nike launched Nikewomen (initially called Nike Goddess) several years ago, though it has not done much with it. The chain operates just 12 stores so far. Shanley says Nike has refrained from a major rollout because the company is trying to expand its presence in department stores, which do not want the competition from a showcase boutique. In any case, he says, Nike is not a retailer so much as a brand.

Sportmart and similar general sporting goods merchants are another source for women’s apparel, says Hansen, but they are not exclusively for women and are limited in terms of designers.

Several sources point to Nordstrom as a popular source of women’s active wear. Department stores cannot devote thousands of square feet to the category, however. This leaves the market open for Paiva, some footwear companies and a new crop of fairly small private businesses.

Take Lululemon Athletica, for one. This yoga-inspired chain based in Vancouver, British Columbia, operates 33 stores, mostly in Canada, with four in the U.S. The chain says it plans to roll out 15 stores annually in the U.S. over the next five years.

Portland, Ore.-based Lucy now has 28 stores in Arizona, California, Colorado, Illinois, Oregon, Texas, Virginia and Washington state, as well as in Washington, D.C. These stores post in excess of $600 in sales per square foot, according to CEO Mike Edwards. The company says it plans to open 13 additional stores this year in the same markets.

Shanley says he sees no other chains specific to Paiva’s target consumer. Lady Foot Locker caters more to teens, though Champs, which owns Foot Locker, probably comes closest to Paiva’s focus, with 40 to 55 percent of its wares in apparel and aimed at an older market than Lady Foot Locker, he says. But Champs also carries menswear.

So far Paiva’s few landlords say they are pleased. For one thing, the chain lives up to its name with a “very light-filled” store design, says Mall of America’s Hansen, citing the glass front wall. “The store has an upscale, trendy feel, with chrome and glass,” she said. “They also have a special section for pampering, which features robes, chenille towels, bath salts and cashmere sweat outfits that are gorgeous.” “It’s a very fun store,” said Maureen McDonough, area director of strategic marketing for Simon Property Group, which runs Barton Creek Square. “It’s very bright. The storefront is all windows.”

Frank Lazorchak, general manager of Natick (Mass.) Mall, says he likes the stores’ European flair. Previously, the Boston area lacked a women’s active-wear specialty retailer. Paiva fits in with an ongoing expansion at the mall that is seeing the addition of Nordstrom and Neiman Marcus, says Lazorchak.

In Finish Line’s most recent annual report, Cohen described fiscal 2006 (ended Feb. 25) as “a year of investment,” partly because the company was developing Paiva. There are about 660 Finish Line stores in 48 states, plus 51 Man Alive shops in 13 states. Net sales for the year totaled $1.3 billion, up 18 percent from the year before, while gross profit rose to $413 million from $368 million.

Finish Line says it plans to open about 100 new stores between its three concepts in 2007, and there are signs it could do this very successfully. The company is in a strong position with Paiva, says Shanley. It has experience with active wear and seems to have the right category mix in mind: about 60 percent apparel and 30 percent shoes, which, he says, reflects a general industrywide sales ratio of women’s apparel to shoes.

“Finish Line is sitting on a load of cash,” said Shanley — $96 million according to company reports. The company is debt-free, too. “They could roll out very aggressively.”

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