Business

Plus-size ambitions for James Rhee and the Ashley Stewart brand

James Rhee, chief executive of Ashley Stewart, often refers to the apparel chain as “she.’’
Joe Tabacca for The Boston Globe
James Rhee, chief executive of Ashley Stewart, often refers to the apparel chain as “she.’’

James Rhee is in the hot spot of the Ashley Stewart store in Roxbury, the flashy front section of the shop that lures customers in off the street. Standing amid the racks, he pauses to fawn over the tight tie-dyed jeans, slinky halter tops, and purple- and white-striped neoprene skirts. He waves hello as a curvy 30-ish woman in a slouchy off-the-shoulder top wanders in, then turns to the older, buttoned-up Avon consultant who set up her table by the front door.

“How long have you known Ashley Stewart?” he asks.

“A looong time,” she says with a grin.

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The Ashley Stewart chain has found an unlikely champion in Rhee, a 45-year-old Korean-American father of three who is the company’s chief executive. Within three years of taking over, the Newton-based Harvard law grad has transformed a brand that is especially popular with black women from a bankrupt and oft-ignored company to a booming apparel chain. In a retail environment reeling from online competition, Ashley Stewart is a bright spot, one that’s making over $20 million in profit and predicting over $180 million in annual sales this year.

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Since 1991, Ashley Stewart clothing stores have been de facto social hubs in urban African-American neighborhoods. The fashion-forward brand, which sells clothing in sizes 12 and larger, has developed a fierce following among its plus-size customers.

Under Rhee, this year in particular has been impressive for the chain.

In June, the Invus Group, a private equity firm that owns Weight Watchers, took a majority ownership stake in Ashley Stewart, a vote of confidence in the Secaucus, N.J.-based brand. The company’s Rock the Block fashion event in Brooklyn in July garnered more than 15 million social mediaimpressions. And in a sign of plus-sized fashion moving more into the mainstream, size 16 supermodel Ashley Graham seduced readers from Cosmopolitan magazine’s cover this month while wearing a bodysuit by the brand.

In many ways, Ashley Stewart is at the crest of a much bigger trend. US sales of women’s plus-size apparel increased 17 percent over the past three years to $20.4 billion, according to NPD Group, thanks in part to new lines at Target and JCPenney and the success of such online upstarts as Eloquii and Gwynnie Bee.

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As an established player, Ashley Stewart has an edge in an industry that’s just beginning to acknowledge the fashion concerns of the plus-size woman, NPD research analyst Marshal Cohen said. “Everyone else is kind of playing catch up.”

But that higher profile also brings challenges. “How do you compete against the Lane Bryants of the world?” Cohen said, referring to the country’s largest plus-size retailer for women.

Rhee has been known to engage shoppers in heart-felt chats.
Jonathan Wiggs/Globe Staff
Rhee has been known to engage shoppers in heart-felt chats.

And more exposure may change the unique relationship the Ashley Stewart brand has cultivated with its traditional audience. “At what point do you expand your customer base in favor of growth?” said Ellen Davis, executive director of the National Retail Federation. “How much can you grow and do you want to grow?”

For years, debating how fast to grow hadn’t been an issue for the company. From 2007 to 2013, Ashley Stewart was hemorrhaging over $5 million a year and was on the cusp of its second bankruptcy proceeding when it found a savior in Rhee, who left his private equity job to rescue the company. Today, Rhee sees the brand and its customers as his life’s mission.

“There’s a genuine passion about the consumer that he has. He’s like ‘Hey, hi, we are in this together,’” said Marie Denee, who chronicles trends on her blog, The Curvy Fashionista.

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“He may be a plus-size black woman on the inside. He gets it,” she said.

‘He may be a plus-size black woman on the inside.’

Marie Denee, Curvy Fashionista blogger, on James Rhee 

Rhee is, in fact, a first-generation Korean-American, whose father immigrated to the United States in 1967 and started a pediatric practice on Long Island. Rhee attended Harvard for both undergrad and law school and was a high school teacher before landing in private equity, where he reorganized such distressed brands as Meow Mix and Murray’s Discount Auto Stores. He had launched his own firm, FirePine Group, then another local investment group, Gordon Brothers, approached him seeking help managing its troubled companies.

Ashley Stewart became part of Gordon Brothers’ portfolio in 2010, and they asked Rhee to join the retailer’s board. He quickly became fascinated with the store and the unique role it plays in its customers’ lives. Like Rhee, its founder was no fashion mogul — Joe Sitt was a New York real estate developer who had struggled to find suitable retail tenants while developing urban neighborhoods.

“There was no place for a working woman to get a nice suit, a nice blouse to go out in,” Sitt told Inc. magazine in 2006. Noticing that some African-American women were “fullerfigured,” he conceived of a store to serve them, getting the Ashley from Laura Ashley and the Stewart from Martha Stewart. “[W]e wanted to bring that upscale shopping experience — the antithesis of what you’ve seen in the inner city,” he said.

Over time, the brand took on a life of its own. Rhee learned store managers are often known as “Miss Ashley” in their neighborhoods. He watched women walk in and ask anyone within earshot: “I’ve got a date tonight, who’s helping me?” Customers come in two or three times a week to hang out and feel comfortable trying on clothes in the aisles.

“You can’t fake the emotion that’s in these stores,” he said. “It was the most loyal customer I encountered in my entire investment career.”

Rhee quit his job in private equity before joining Ashley Stewart.
Jonathan Wiggs/Globe Staff
Rhee quit his job in private equity before joining Ashley Stewart.

But it had been losing money by the millions. “It was a bit of a laughingstock business. We all knew about it as investors,” admitted Rhee, who plans to open a corporate outpost in Boston next month to be closer to its technology partners.

The chain was on the verge of its second bankruptcy proceeding, a state from which few companies recover, when Rhee stepped in as chief executive. He arrived at its headquarters and found the books in disarray. Some of its 180 stores failed to clear a profit. E-commerce was nascent at best and the company’s office didn’t even have Wi-Fi.

“The company was on a fast track to get liquidated,” said Stephen Warren, an attorney representing Clearlake Capital, which bought Ashley Stewart during the 2014 bankruptcy proceedings. But Warren says Rhee’s passion for the brand and its customers swayed a roomful of cutthroat investors to allow the company to reorganize. “He was so disarmingly honest. . . . And it was the only way the deal would get done,” he said.

Rhee effuses an Oprah-ish enthusiasm and tends to discuss Ashley Stewart not as a company but a person, referring to it as “she.” Wandering through the Roxbury store, he ticked off “her” ideals — kindness, friendship, and community — and engaged shoppers in heart-to-hearts on the fit of its patented Butterfly Bra and the shopping dilemmas that larger women often face.

“I remember it being really hard to find stuff to wear for a woman with curves,” Alexis Major divulged to Rhee. The 34-year-old from Dorchester had been a size 24 when she discovered the brand. “It definitely changed the way I thought about picking clothes and the way I saw myself,” she said.

Major’s a size 12 now, but told Rhee she doesn’t want to lose more weight.

“I want to stay here,” she said.

Rhee says these moments remind him it wasn’t a company he was saving, but the woman it served. “This brand and this company, and sometimes one could argue this woman, has never gotten 100 percent of anyone’s focus,” he said.

Rhee has streamlined the business by closing nearly 100 stores and implementing a data-driven approach to sales that he said helps him understand his customers in ways that go far beyond feelings.

Moving into e-commerce has infused new life into the business as well — online shoppers are on track to account for over 40 percent of total net sales in 2016 — and has pushed it into new markets. Rhee plans to add stores this year, saying his newest customers are white and Latina women who are responding to the company’s underlying message that clothing and the women who wear it can be sexy, regardless of size.

Kristen Gaskins, the company’s president, says Rhee’s message of inclusiveness can translate to anyone who’s felt marginalized by retailers — and that number may be on the rise, as the US Centers for Disease Control and Prevention has found the average American woman is 166 pounds and a size 14.

“Have you ever felt like you weren’t accepted everywhere?” she asked. “Then you’re automatically Ashley.”

Janelle Nanos can be reached at janelle.nanos@globe.com. Follow her on Twitter @janellenanos.