By and and  on October 28, 2008

NEW YORK — Just how bad will spring be for American designers?

With the economy cratering and consumer confidence sinking to new lows, it’s not surprising an uncertain mood, if not outright panic, has taken hold of many showrooms here. Vendors have reasons to be concerned — according to sources, retailers nationwide are cutting orders by at least 10 to 15 percent for spring, while the New York flagships are lowering their buys by 7 to 10 percent since they don’t anticipate they’ll take as hard a hit because of tourism. That’s amid an already disastrous fall selling season that is sure to put even bigger dents into open-to-buy budgets for fall 2009.

Neiman Marcus, for instance, said last month that it is keeping a tight rein on expenses, remaining highly liquid and is working hard to manage inventories.

“We’ve had a terrific run but now we are in our most difficult period since 9/11,” Burt Tansky, president and chief executive officer of Neiman Marcus Inc. said at the time. “We are anticipating the months ahead will be difficult. Our customers are heavily invested in the financial markets….I am concerned that fiscal year ’09 will again test our downside skills.”

“We are being conservative,” he added of spring orders.

Tansky’s comments came after difficult selling seasons for designer ready-to-wear last spring and in fall 2007. Retailers already had complained about the lack of sales oomph on the floor. “We’ve approached buying for fall ’08 and spring ’09 conservatively,” Ron Frasch, Saks Fifth Avenue’s president and chief merchandising officer, said in August. “We have challenged the merchant organization to make the hard decisions, to exit or reduce distribution in brands that aren’t working.”

Retailers’ growing caution — and gloom — is being felt in fashion companies throughout Manhattan.

Paula Sutter, president at Diane von Furstenberg, said the company is planning conservatively for spring and encourages its retail partners to do the same.

“We have been partnering with our retailers to come up with what we think are right plans and the right assortments for this economic time,” Sutter said. “We have had numerous meetings. We have triple- and quadruple-checked assortments, and we are not pushing. We are being very cautious, as are they. We don’t want them to buy anything they don’t think they can sell.”

Sutter said that while the U.S. business is currently “difficult,” there is still much opportunity, and the company continues to enjoy “extremely strong” successes in the Middle East, Eastern Europe and in China. But even those fast-growing economies now face challenges: key Eastern European countries like Hungary, the Ukraine and Poland are feeling the financial squeeze; Dubai’s debt load is causing worries, and economic growth in China, while still robust, is slowing, causing the government to take action to maintain the momentum.

“There are certain pockets where we feel there is opportunity, and then there are other pockets where we are saying, ‘cut back,’” she said. “Maybe in a department store situation, let’s get out of some of the smaller, weaker doors until we can regain our footing. The strategy varies based on country to country.”

Among the steps brands are taking are expanding their businesses overseas, including emerging markets; exploring sourcing alternatives; making earlier deliveries; improving their Web sites; managing their inventory better; spending more time in the stores, and fortifying relationships with retailers.

“We are super-inventory lean,” Sutter said. “We are running a superclean business. We are cutting very conservatively. There is no chasing of business this year, it’s just cutting to order. Because we ship 12 months a year, there is always fresh merchandise on the floor.”

Alex Bolen, chief executive officer of Oscar de la Renta, said, “We hold the view very strongly that in times of crisis there is opportunity to be had. We continue to proceed, albeit cautiously, to hire great people and to scout great locations to put our stores in.”

What is changing is the speed with which stores agree to the company’s proposed order. “Typically, we propose to stores what we think their orders should be — not style by style but based on the level of sell-throughs. That starts the discussion and the discussion is continuing much longer this year. They are not taking our proposals as readily as they have in the past.”

Recently, the company has added “a bunch of doors in emerging markets” such as the CIS (Commonwealth of Independent States) surrounding Russia, Bolen said. Building international sales through its wholesale business will remain a priority. Bolen is also reviewing the company’s position in terms of fabrics and inventory to see how improvements can be made, and de la Renta continues to open more freestanding stores, most recently in Madrid and Athens.

To continue reading this article...

To Read the Full Article

Tap into our Global Network

Of Industry Leaders and Designers

load comments
blog comments powered by Disqus