Rock & Republic’s brazen attitude and cultivated image of extravagance and exclusivity are being tempered by the recession.
Within the last five months, the worsening economy has forced the Culver City, Calif.-based company to slash prices on jeans, rein in ambitions for the accessories market, undergo two rounds of layoffs, drop its sports sponsorships, cancel its New York fashion show and go on the hunt for bargains in everything from denim fabric to advertising space.
Rock & Republic’s stock-in-trade has been presenting itself as the ultimate Los Angeles stereotype — the embodiment of a life of supermodels, fast cars, exclusive night clubs, glitz and glamor and a devil-may-care attitude. Michael Ball, who started the label in 2002 and serves as chief executive officer and creative director, revels in leading that charge. Over the years, Ball has excelled at ridiculing competitors like Seven For All Mankind and True Religion while, in the same breath, espousing the untouchable status of his own brand. While Ball is sticking to his guns on that front, there is little doubt the severity of economic conditions has hit home.
“The worldwide economy, frankly, has taken a huge hit,” said Ball. “What we do now is shift gears and adapt, and understand what our market is doing and the buying behavior of the consumer now. If you don’t adapt, you’re destined to be extinct like the dinosaurs.”
The company’s latest adaptation will hit stores in March with the introduction of a limited edition Recession Collection. Priced under $140, the line will be 22 percent less than the opening price point of the $180 of its core product. Women’s styles include a $128 low-rise boot-cut and a low-rise skinny selling for $132. The men’s budget options are a low-rise relaxed straight leg and an ultralow-rise skinny, retailing for $132 and $138, respectively.
The last time Rock ventured below the $180 price mark was seven years ago, when it made its debut on the denim market with $158 jeans. While Ball refuses to use lower quality — and presumably cheaper — fabric, he said he managed to reduce costs by removing some of the hardware, eliminating the embellished details on the back pockets and trimming the profit margins. He dismissed the possibility the Recession Collection would dilute his brand, saying he plans to offer the budget pieces to Rock’s current retail network comprising 1,300 stores in 86 countries, including Neiman Marcus, Saks Fifth Avenue and Harrods, rather than opening distribution to B-list stores.
“I do not consider ourselves above doing something for our retailer and consumer,” Ball said. “It gives the consumer the ability to buy four pairs now instead of one. To speak in those terms [of diluting a brand], it’s complete arrogance. If anybody thinks they’re above adjusting product that is more tolerable, then good luck.”
Ball has also taken prices down at the higher end of the brand’s product range. The company recently sent letters to retailers urging them to cut the prices for spring styles to around $270 from more than $300. Despite losing $500,000 through narrower profit margins from the price cuts, Ball said he asked stores to drop prices because the market for $300-plus jeans has vanished.
The label’s approach to the accessories market is also being reconsidered. Unable to stand out in a saturated bag category that has lost some luster with shoppers fatigued from the “It” bag phenomenon, Rock pared down its handbag offerings that have encompassed $298 shoulder bags dotted with studs and $478 totes stitched out of a crinkly patent leather. The company also sliced the opening price for its shoes to $180, down from $298.
“Obviously, [with] our shoes, you look at it and see it’s a great deal,” Ball said. “You’ve got to be conscious of your customer and what is the new buying habit.”
Ball has had to adopt new habits at his own company. He made layoffs in August and December, the first to trim the fat and the second to respond to the drastically slowing economy, he said. Rock now has 158 employees, compared with some 200 during the peak of the denim boom in 2006.
Other budget-conscious decisions included jettisoning the IndyCar Series race car that had zipped around the track with Rock’s winged-skull logo emblazoned on the hood and severing sponsorship ties with Rock Racing, a professional cycling team that traveled with a caravan of six Cadillac Escalades. Plans for expanding the fashion empire to hotels and restaurants are still up in the air. He also canceled what would have been Rock’s sixth showing at New York Fashion Week next month. Downplaying that the decision was related to the economy, Ball said he will instead try viral marketing, such as a film-inspired showing, and turn the marketing focus to Europe.
“I learned a lot of lessons over the last couple of months,” Ball said. Those lessons include: “Don’t overextend, really watch the bottom line and make sure every decision you make is strategic in terms of expanding the brand,” he said.
Eric Beder, retail analyst at Brean Murray, Carret & Co. who tracks the premium denim segment, believes Rock & Republic has lost market share in high-end department stores over the last year to True Religion.
“This year, Rock & Republic has been late with shipments and has not had as much product, and I think that’s hurt them,” said Beder.
The analyst also sees similarities between Rock’s current situation and the situation True Religion found itself in several years ago.
“Are you a professional company or are you just a phenomenon? I think that’s what we’re seeing here,” said Beder. “It’s fun to have fashion shows and it’s great to have your own stores, but at the end of the day it’s about product and about getting your product to the retailers on time, and being a good partner with a retailer.”
Beder said Rock is solidly the number two or three fashion denim brand found in high-end department stores. It’s over-the-top design aesthetic has a solid niche. But Beder, too, has heard Ball’s constant talk about Rock hotels and airplanes.
“They’ve talked a really good game the last few years, but it’s starting to show if you’re for real,” he said.
There has been plenty of speculation about Rock’s future within the industry in recent weeks. In December, several industry sources said Ball had taken out a loan of between $6 million and $7 million from Richard Koral, who sells overstock to outlets and is the brother of Seven For All Mankind founder Peter Koral. The sources said the Rock & Republic label was put up as collateral for the loan. Ball denied the allegations in an interview with WWD before the holidays. Richard Koral did not respond to a call for comment.
Also in December, Rock began approaching other denim labels to inquire about purchasing their excess or liability denim. Ball acknowledged the company did approach several brands, including Joe’s Jeans, about picking up extra fabric, but said he was taking advantage of market conditions to pick up high-quality goods at lower prices.
“In this particular economy, I’ve sent out to my vendor that I’m expecting a reduction in all my piece goods,” said Ball in December. “I’m taking advantage of the opportunity to make larger margins right now.”
He added that in the last two months his business had grown by 60,000 units a month.
“I need more fabric….If you’re not doing that you’re not a businessman,” he said. “It’s a great market to make a killing if you’re doing it right.”
One area where Ball remains bullish is retail. He still nurtures the dream of opening 50 stores by 2010, but has only opened two so far. In November, Rock opened an outlet store in Cabazon, Calif., located some 100 miles east of Los Angeles. Three days before Christmas, it unveiled a modern, edgy store to anchor Wynn Resort’s new Encore hotel in Las Vegas, alongside boutiques operated by Chanel and Hermès. Rock is readying a 3,800-square-foot flagship on Los Angeles’ Robertson Boulevard to open next month, a year late due to an ambitious build-out, such as a rotunda lined with 15 flat-screen TVs. A 2,800-square-foot shop in New York’s SoHo neighborhood is on schedule to bow in the spring.
Beder believes developing a retail network will present another challenge for the brand.
“If you want to have your own stores, it requires a whole different level of infrastructure,” said Beder.
At the moment, Beder’s not convinced Rock has that infrastructure to achieve its goal.
Other things aren’t going as planned for Rock. As reported Wednesday, the company is trying to find a retailer to sublease the 1,400-square-foot space on North Rodeo Drive in Beverly Hills that it leased for 10 years last spring at a rate of about $50 per square foot. In late December, thieves broke into On Target LLC, a wash house in Vernon, Calif., and stole about eight pallets of jeans worth an estimated $719,400 from Rock and junior denim line Privacy Wear.
Despite the setbacks, Ball is forging ahead with a spring advertising push spearheaded by Julia Restoin-Roitfeld, the daughter of French Vogue editor Carine Roitfeld. Though smaller in scale than the rocker-themed fall campaign that Restoin-Roitfeld created for W, Elle, Harper’s Bazaar, GQ and Vogue, the new promotion breaking in March books will rely more on partnerships with magazines and international titles.
“You don’t just blanket the country with Rock & Republic,” Ball said. “Are we looking to do it smarter? Absolutely. Are we looking for deals? Absolutely.”�
The annual Veuve Clicquot Polo Classic in Pacific Palisades this weekend drew Kate Hudson, Tracee Ellis Ross, Laura Dern and more. See pictures of the star-studded event on WWD.com. (📷: @chelsealaurenla) #wwdeye
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