Joe’s Jeans is lowering its entry price point for women’s denim by $7 for spring 2009 to drive business, and the company, along with competitor True Religion, is looking to expand internationally to help blunt the impact of the recession.
In presentations Tuesday at the Roth 21st Annual O.C. Growth Stock Conference at the Ritz-Carlton in Dana Point, Calif., executives from both Los Angeles-based premium denim firms discussed strategies for the year.
Although some shoppers are still shelling out $200 for a pair of jeans — both companies reported revenue growth for 2008, though annual earnings statements have yet to be released — executives acknowledged a softening in the women’s denim business.
Expansion and retail penetration internationally is a priority for Joe’s Jeans. The company recently opened a corporate office and a freestanding store in Paris. “Hopefully, the international and men’s businesses will see some growth and will mitigate any losses on the women’s side,” said Marc Crossman, president and chief executive officer.
“We think there’s that level of customer who is turning away from premium denim,” Crossman said. The company is moving more of its manufacturing abroad to justify the entry price point reduction to $138 from $145.
Both companies cited a spike in the men’s denim business and an increase in overseas revenue channels as key factors balancing tepid sales on the women’s side.
Crossman described the performance of the men’s business as “fantastic.” The division, which launched in 2006, grew 40 percent in 2008, while net sales were flat in the women’s category.
Despite the economy and the closing of 6 percent of its retail base in 2008 because of the recession, the company reported a 10 percent increase in total revenue for the fiscal year and a 16 percent increase in net sales in the fiscal third quarter, to $18.2 million from $15.7 million in the same period in 2007.
Joe’s Jeans, which produces sleek, embellishment-free denim, recently branched out into lifestyle categories and retail, opening stores in San Francisco and Chicago.
Peter Collins, chief financial officer of True Religion, voiced a question that preoccupied many attendees: “How in the world, in this economy, can people spend that kind of money on jeans?” Answering his own query, he said, “Well, premium denim is a category that’s bucking trends.”
The denim lifestyle brand, known for its thick stitching and flap-pocket design, reported $265 million in net sales for fiscal 2008, up from $173 million in 2007.
In 2009, the company is looking to grow its international business — at retail and wholesale — first in Japan, where it established a subsidiary last year, then beyond. “We’ll be looking to replicate what we do in Japan elsewhere,” Collins said, adding that the company will open one or two stores in that country this year, though leases have yet to be signed. “We see the international market [eventually] outgrowing the U.S. market.”
In the U.S. and abroad, True Religion hopes to open a total of 20-plus stores annually through 2010. “We really see ourselves positioned as a global aspirational brand,” he said.
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