The back-to-school season is shaping up to be disappointing for the denim industry.
As retailers begin stocking shelves with initial fall merchandise at the end of the month, they are keenly aware that momentum isn’t on their side entering b-t-s. Evidence of slowing sales in the U.S. began appearing at the beginning of the year. VF Corp. saw sales in its jeanswear segment — the company’s oldest and largest business and home to the Wrangler and Lee brands — fall in the first quarter. Jeanswear revenues slid 6.4 percent to $712.2 million during the first three months of the year.
“The first quarter is not representative of what we expect from our jeanswear business for the rest of the year,” Eric Wiseman, president and chief executive officer, said in a conference call with analysts.
However, rising energy, gas and food prices have persisted and consumer spending has continued to contract. VF will report second-quarter earnings on July 15.
On Tuesday, Levi Strauss & Co. reported that revenues for the Americas plunged 19.3 percent to $477 million during its second quarter, compared with $591 million in the same period a year ago. The bulk of the decline was attributed to problems encountered in implementing a new management system that resulted in shipments being halted for a week. While the core Levi’s brand had only small declines during the quarter, retailers’ responses to the delay was telling.
“Issues continued with respect to fulfilling customer orders in a timely manner and this did result in some customer cancellations,” said Robert Hanson, president of the North American region.
Hanson acknowledged that some retailers struggling to make sales may have taken advantage of the company’s delays to cancel orders. Industry sources said retailers are looking to minimize their denim exposure and shift assortments toward lower price points.
“Women’s denim is generally down at retail,” said a source working on the supply side of the denim business that works with several of the industry’s largest retail chains.
The source said a major specialty store retailer had called this week asking that fall denim deliveries be delayed by two months.
“Nobody knows what to do,” said the source. “I don’t think anybody can strategically plan, and what’s even worse is there’s really no new product out there.”
Michael Silver, founder of the moderate-price Silver Jeans and premium 1921 label, said a fall slowdown was anticipated.
“Any smart person in the industry has been bracing for this for about eight months now,” he said.
Retailers and vendors have been waiting to get through the late winter and spring months to get a clear picture of consumer behaviors, one not colored by variables like weather, Silver said. Now well into summer, the issue is apparent.
“Traffic is down,” Silver said, and as a result, more brands are entering the market at lower price points. “Value is no longer a dirty word in the denim business. Value is good.”
Ron Gelfuso, president of the Fresh Ink denim label, said boutique and small chain-store owners have told him they increasingly feel the need to stock lower-priced labels.
“How are you going to move your business? Premium is the hard way to move forward,” Gelfuso said. “Some owners are getting that and getting around it. I see and hear more people wanting to move lower.”
Gelfuso believes store owners are moving as quickly as they can to lower-priced models, but expects that most will stick with the top two or three premium brands in order to fit the needs of older customers. Younger customers, however, seem to be less interested in spending upward of $200 on jeans. As a result, Gelfuso also anticipates a surge of brands entering the market at sub-$150 prices.
“You’ll see a lot of imposters show up with cheap stuff,” he said. “I think that will just be part of the process.”
Wall Street analysts are still upbeat on premium players such as Seven For All Mankind, True Religion and Joe’s Jeans.
Eric Beder, retail analyst at Brean Murray, Carret & Co., said in a research report that True Religion can achieve double-digit growth for the year in its wholesale business with premium denim alone.
“We note the company literally offers hundreds of denim styles compared to a handful at their key department store partners,” Beder said in a research note in June.
In his new book “Hollywood Royale,” Andy Warhol’s Protégé Matthew Rolston celebrates the Eighties revival of Hollywood glamour. Featuring more than 100 portraits taken by Rolston from 1977 to 1993, the book contains photos of icons like Michael Jackson, Cyndi Lauper, and @drewbarrymore, pictured here in 1991. “Hollywood Royale,” out today, will be accompanied by an exhibition opening at Los Angeles’ Fahey/Klein Gallery on March 1. #wwdeye
"Nowadays when life is not so happy with everything going on in the world, I think people come to me for a little bit of whimsy and color and fun." - Designer Rebecca De Ravenel on her cult-favorite jewelry line. (📸 : @vsteves) #wwd40
“Everyone is talking about how the retail industry is struggling, but I think it’s an incredible time because brands who are doing something different and innovative are setting themselves up for the future,” said @adamgoldston, who founded the luxury athletic brand @apl with his brother @ryangoldsten. The Goldston’s are part of WWD’s 40 under 40: a group of industry notables. See the rest of the list on WWD.com. (📷: @vsteves) #wwd40
@eyeswoon blogger Athena Calderone debuted her first-ever cookbook, “Cook Beautiful,” which is heavily centered on the presentation and visual expression of food. Pictured here are her miso glazed carrots from the book. Get the recipe on WWD.com. (📷: @johnny_miller_) #wwdeye
“It’s passion that helps get anybody to a certain point and it’s what’s propelled me,” said Kith founder @ronniefieg, one of WWD’s 40 under 40: a group of industry notables who are changing the face of retail, fashion and beauty. Fieg, who opened a Manhattan flagship on October 7, began his career at age 13 as a stock boy and salesman for footwear chain David Z. “I think staying true to [my] beliefs, hard work and passion have gotten me to where [Kith] is today.” See the rest of the 40 at WWD.com. (📷: @vsteves) #wwd40
25-year-old @samweaving is about to break out this fall, starring in Netflix’s horror film “The Babysitter,” fittingly out today on Friday the 13th. That’s not the only place you’ll be seeing her, though — Weaving’s got a role Showtime’s “SMILF” and another alongside Frances McDormand and Woody Harrelson in “Three Billboards Outside Ebbing, Missouri.” Though she’s got a full plate at the moment, there’s one role she’s got her eye on: Marilyn Monroe. “I’m a little too young at the moment, but it’s on my bucket list,” the actress told WWD (📷: @dandoperalski) #wwdeye
BFF's Poppy Jamie and Suki Waterhouse celebrated the launch of their bag line Pop x Suki at Nordstrom last night. "The line is really about our friendship, and how we are so different but complement each other," said Waterhouse. 👯 (📷: Katie Jones) #wwdeye
After designing the new @louisvuitton and @bulgariofficial flagships and a @chanelofficial boutique opening in Japan, @petermarinoarchitect has another project on his plate: The Lobster Club. Located in the Seagram Building, it’s the famed architect’s first restaurant project in New York, serving up modern Japanese brasserie-style cuisine. Bronze hues, bespoke material detailing, blush and chartreuse tones and a heavy emphasis on Picasso can be seen throughout. Mark your calendars for Nov. 1 for the much-anticipated opening. (📷: @clint_spaulding) #wwdeye
Did you know: @carlychaikin of "Mr. Robot" has been painting for about a decade? The actress, who plays Darlene on the show, is a self-taught artist who lists Salvador Dalí and Chuck Close as some of her idols. Chaikin told WWD that painting is a form of meditation for her — A much-needed one given the intensity of "Mr. Robot." See a piece Chaikin is working on at WWD.com (📷: @jilliansollazzo) #wwdeye