By  on July 29, 2010

Former Blue Holdings chairman Paul Guez is taking another stab at the denim business with Salsa Jeans, a Portuguese brand known for innovative denim fits he’s introducing to the U.S. market under a joint venture with its parent company, IVN Group.

Guez, chief executive officer of Los Angeles-based Salsa Distribution USA, marketer of merchandise using the label Salsa Fits My Life, expects to roll out up to 20 U.S. Salsa stores within the next 12 months, starting with a 2,000-square-foot flagship location that opened last Thursday on Melrose Avenue in Los Angeles. Future stores will be smaller, averaging around 1,000 square feet, or 500 square feet for a concept shop without on-site inventory storage the brand plans to replenish daily.

On the wholesale front, Salsa is scheduled to be available for fall at specialty stores such as American Rag Cie, Lisa Kline, Fred Segal and Politix. The retail prices range from about $89 to $190, although a high-end collection called 1st Level is priced from $179 to $250. The specialty store distribution is intended to lay the groundwork for expansion into department stores, which Guez said Salsa could enter with in-store shops spotlighting the brand’s key pieces.

Guez said he was drawn to Salsa because IVN Group is an experienced retailer abroad and had five to six jeans styles constituting about 45 percent of sales he believes stand out from the denim clutter. Those styles include the Wonder, a pair of jeans with a bottom push-up effect created by three lateral folds and a rounded panel; the Hope, which features removable elements enabling it to be worn during and after pregnancy; the Secret, a jean with a raised waistline to make stomachs appear slimmer; a reversible jean called the Two, and a unisex variety called the One.

“It is probably the only company with different styles that address every kind of customer,” said Guez, before adding the word “Salsa” in the brand name could help the brand appeal to Hispanic consumers.

With the upscale denim market falling from its height a few years ago, it was also important to Guez that Salsa Jeans show strength outside of denim to justify a U.S. launch, and he said about 40 percent of the brand’s sales are from categories that aren’t strictly denim. In Salsa’s U.S. stores, it is anticipated 60 percent of sales will come from women’s styles and 40 percent from men’s early on.

Guez forecast that Salsa Distribution U.S.A. will generate $18 million to $20 million in wholesale sales in the first 18 months in the U.S.

“Every time we opened a new brand like Antik, Yanuk or Taverniti, we did those numbers in the first year, and we didn’t have retail at that time,” he said, speaking of brands previously under the Blue Holdings umbrella.

Guez is all too familiar with denim’s ups and downs. The premium denim bust hit Blue Holdings hard. Shortly after the company reported its final quarterly earnings report on Sept. 30, 2008, which revealed sales dropping to $16.8 million from $26.3 million for successive nine-month periods, it entered into a joint venture agreement with Headgear Inc., owner of streetwear retailer Up Against the Wall, now the principal distribution outlet for the Taverniti So Jeans and Antik Denim brands.

The privately held IVN Group fared much better. Salsa Jeans went from being sold in 25 countries with fewer than 400 points of sale in 2008 to being distributed in 35 countries with over 1,000 points of sale today, notably Galeries Lafayette, House of Fraser, Selfridges and El Cortè Ingles. The company reports it registered a global retail volume of about $180 million in 2009 and projects sales to reach $1.4 billion by 2014.

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