• by Sarah Mahoney  @mahoney_sarah, March 12, 2008

Coldwater Creek, the clothing company aimed at free-spirited Baby Boomer women, is having something of a midlife crisis.

Of course, the Sandpoint, Idaho-based retailer has other problems. First, it's confronting the same ugly set of economic realties that is giving all retailers trouble. Second, its category is in a bit of a meltdown, with double-digit sales declines. Still, admits the CEO, the company's real problem is that the brand has lost its way, "and it's become part of the circle of sameness."

As a result, Daniel Griesemer, president/CEO, told investors at the Bank of America 2008 Consumer Conference, the company will reduce its advertising for the year by 70%, and will drastically scale back other marketing efforts, including cutting its catalog circulation by 20% and ending the use of $25-off coupons that it has come to rely on in its ads.

Instead, he says, the company will focus on its clothes. "We need to connect our product back to our brand essence, and restore the emotional connection. We have lost some of that in the last year," he says. "The spirit of the brand--and what sets it apart from such competitors as Chico's and Talbot's--is its Western spirit.

"In our peer group, we are the only one rooted in the West, not in the sense of Western clothing, but in the way we are casual, comfortable, and very colorful. Our clothes, in the past, have been inspired by sunsets and landscapes and wildflowers, very down-to-earth, accessible, with beautiful possibilities, and a sense of optimism. We need to recapture that sense of adventure in our product," he says, and eliminate the company's reliance on coupons, price cuts, and promotional activity.

"We're not going to market our way to greatness," he says. "It's got to come from an incredible product."

The company says it plans to spend $10 million on national brand advertising in fiscal 2008, and mail approximately 104 million catalogs. Last year, it spent $30 million on ads and mailed 129 million catalogs.

Last week, the company announced that its quarterly sales fell to $345.5 million, compared to $366.6 million in the prior year, while comparable store sales plunged 19.2%. Direct sales, from both phone and Internet, dropped to $119.3 million, compared to $142.3 million in the same period last year.

Its competitors have also been struggling. Chico's, for example, recently announced that its fourth-quarter sales fell 7.9%, to $409.3 million, and that its comparable store sales sank 15.7% for the quarter, despite an increase in marketing spending. The company, which recently hired a new CMO, says it expects to see comparable-store sales turn positive again in the second half of the year.

And while Talbots doesn't report earnings until today, it recently announced that sales for the quarter fell to $587 million, from $638 million in the prior year, while comparable store sales declined 6%. Talbots also owns J. Jill, and both are aimed at the 35-plus shopper.

Despite a tough macroeconomic climate now, Griesemer says he is optimistic about Coldwater Creek's future, especially given the category's demographic potential. "The peak of the Baby Boomer woman is moving into the bull's eye, giving us 10 years of growth ahead of us. This is a challenging year ahead of us, but we are positioning the company for long-term sustainable profitability."