Retailers and manufacturers in California are being relentlessly battered by a combination of economic forces, with more hardships forecast.
The recent liquidation of Mervyns and bankruptcy filing of Gottschalks Inc. — California-based chains — were benchmarks in a recession that has left stores throughout the state with fewer customers.
Clothing manufacturers are reeling from the retail weakness, resulting in some shutting down, while others take measures to cut staff, costs and inventory to survive. In addition, apparel businesses are bracing for negative fallout from an imminent 1 percent boost in the state sales tax, which was included in the legislative package that closed the state government’s record $42 billion budget shortfall.
“Most of us have just written off 2009 completely and are trying to focus on the better times ahead, what we hope will be 2010,” said Fred Levine, owner of the M. Fredric chain of contemporary boutiques based in Agoura Hills, Calif.
The Los Angeles County Economic Development Corp. projects an estimated 6 percent drop in retail sales for the state’s largest county this year, compared with a 1.1 percent decline in 2008. Measured by the number of residents, the average retail sales per capita in the city of Los Angeles equals $7,634 — versus $51,171 in Beverly Hills and $25,446 in West Hollywood.
As home foreclosures soar, Southern California’s median home price dropped 39 percent to $250,000 in February from a year ago, and the median price in the Bay Area fell 46 percent to $300,000 in January, according to MDA DataQuick, a San Diego-based firm that tracks the real estate market.
Economists and analysts said the broadness of this downturn works against a quick turnaround. Previous recessions were caused by the collapse of a single sector in the state — the dot-com bust earlier this decade and the aerospace industry’s decline in the Nineties. This time California, which has the biggest economy and population of any state, will rely on outside forces to spark a revival because of the overall erosion of its financial condition.
“We have three big sectors in our economy, which are really tied to the world,” said Stephen Levy, director and senior economist at the Center for Continuing Study of the California Economy in Palo Alto, Calif. “We are tied in with tourism…the world venture capital market and with foreign trade.”
The number of tourists visiting California in 2008 will fall an estimated 2 percent from 355 million in 2007. The amount of money that tourists spent is anticipated to be flat at $96.7 billion in 2008.
The upheaval hasn’t spared Hollywood, although box office ticket sales continue to grow — up more than 17 percent to date from a year ago, according to Media by Numbers — and California has approved a $500 million production tax credit incentive program. But at least 20 of 39 new television pilots are scheduled to shoot outside of the Golden State, trade newspaper Variety reported. Film production has been hampered by cost-cutting, financing challenges and protracted contract negotiations with the Screen Actors Guild, among other factors. Variety said there are 118 wide release films set to open in 2009, a 16 percent decline from 140 last year. That means fewer jobs in California.
@margotrobbie steps out onto the red carpet wearing @miumiu. The actress is nominated for “Outstanding Performance by a Female Actor in a Leading Role” in “I, Tonya” at the #SagAwards. (📷: Stewart Cook) #wwdfashion
For @massimogiorgetti of @msgm, the Nineties are his favorite decade. “They had a huge impact on my personal growth. What I like of the Nineties is that they are not so precise in terms of style as other decades…there was actually a bit of everything,” he said. As seen on MSGM’s Spring 2018 show: tie-dye and a bit of grunge, two styles that are synonymous with the decade #wwdfashion #wwddecades (📷: @kukukuba)
Breaking News: @hedislimane joins @celine as its new artistic, creative and image director. One of fashion’s preeminent image-makers and trendsetters, Slimane is to join the LVMH brand on Feb. 1 and unveil his first fashion proposition for men and women next September during Paris Fashion Week. It marks a major homecoming for Slimane, who cemented his reputation – and influenced men’s tailoring for more than a decade – as the designer of Dior Homme between 2000 and 2007. He went on to reinvent and ignite the house of Yves Saint Laurent, which he rechristened Saint Laurent, between 2012 and 2016 – all the while maintaining a close relationship with the Arnault family, which controls LVMH and Dior. Read the full exclusive story on WWD.com. Link in bio. #wwdnews #wwdfashion
“Personally I believe the Eighties have been the richest and more vivacious period for international fashion,” Giorgio Armani said when asked what his favorite decade of fashion is. It was a moment of disruption and experimentation and only thinking back to the first years of that decade is always an emotion for me, for what they have meant to me and my work.” The influence is clear in @giorgioarmani spring 2018 collection, pictured here, which was full of bright colors and unexpected prints. Read more about which decades designers loved most on WWD.com #wwdfashion #wwddecades (📷: @aitorrosasphoto)
For Lady Gaga’s only Italian show on her “Joanne World Tour,” the singer wore a range of @versace_official outfits. The standout piece: this custom-made bodysuit inspired by the brand’s spring 2018 collection. #wwdfashion (RG: @ladygaga)
@_camillaruth_ is expanding on the wellness-craze concept with @westbourne – a new NYC restaurant that’s both a healthy-minded café as well as a business that gives back to the community. Marcus works with the Robin Hood foundation to give back to The Door, a non-profit providing youth development services, and also hires employees through The Door. Read our full interview with Marcus on giving back through food on WWD.com. #wwdeye (📷: @lexieblacklock)