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Denim’s Downturn

After a few years of intense demand, consumer interest in denim is starting to fade like a pair of jeans that has spent too much time in the wash.

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NEW YORK — After a couple of years of intense demand, consumer interest in denim is starting to fade like a pair of five-pocket jeans that has spent too much time in the stonewashing machine.

Since the beginning of the year, a number of key suppliers of jeans and denim fabric, including VF Corp., Levi Strauss & Co. and Cone Mills Corp., have reported slips in sales for denim products. Retailers also acknowledged that the denim craze is ebbing, as consumers increasingly look for other fabrics to wear, such as basic cotton twills and corduroy.

According to industry executives, this is as much the result of overall economic trends as it is a matter of fashion preference. The apparel business, as a whole, has been limping along in recent months. Some retail chains have been closing units and most merchants are tightening up on inventory.

“Our initial assessment is this is more about consumer-spending trends and less about the category being hit hard,” said Phil Marineau, president and chief executive officer of San Francisco-based Levi Strauss, which succeeded in breaking its lengthy sales slump in the second half of last year, but saw its sales slide 6.4 percent in the first quarter and also expects a second-quarter dip. “Retail is very tough right now.”

While few merchants would argue with that assessment, they also said denim sales — particularly in fashion-driven categories including junior and contemporary sportswear — are slipping.

“The business has slowed down from where it was last fall,” said Daphne Pappas, vice president and divisional merchandise manager at New York-based Macy’s East. “There is a demand for new alternative fabrics. But denim is still a big portion of our bottoms business.”

Jeanne Sottlie, vice president of contemporary at Bloomingdale’s, which, like Macy’s, is owned by Federated Department Stores, said, “There was such a surge in denim last year because of the Seven trend. We have to put last year in perspective. It may not happen that way again.”

Sottlie was referring to Seven for All Mankind, a Los Angeles-based brand of premium jeans that took off last year, and attracted some imitators to its slim-cut styles.

Jane Elfers, president and ceo of Lord & Taylor, also based in New York, said, “There is still an interest in denim, but people are looking for other fabrics and are moving into different washes and treatments on alternative fabrics, like corduroy.”

Joan Kaner, senior vice president and fashion director of Dallas-based Neiman Marcus, explained that in rough economic times, “people are ready for color and newness.”

The reason is simple, she said: “None of us really need anything. It’s a matter of if they’re tempted to buy it.”

Executives described the application of finishing techniques developed for denim, like stonewashing and hand-sanding, to nondenim fabrics, as a way the category is expanding.

“I see things evolving, where not as high a percentage of jeans will be denim-based,” said Gordon Harton, president of Kansas City, Kan.-based Lee Co., a division of VF. “Other fabrics will be involved.”

He said Lee’s bottoms mix currently includes a higher proportion of nondenim pants than it has in recent seasons, though he expects that to change due to seasonal trends for the holiday season.

Even Gap Inc., which has promoted denim heavily in recent seasons, appears to have shifted its balance back towards khakis, another of its signature items.

The high-end vendors, which over the past five years changed the expectations of what a consumer might be willing to pay for a pair of basic-looking jeans, also acknowledged this trend.

“The demand for denim has slowed in recent months due to alternative fabrics,” said Bonnie Takhar, president of Earl Jean, a Nautica-owned brand that recently relocated to New York from the West Coast. “We are building our fashion-based business and introducing new fabrics such as washed twills, canvas that has been either washed, brushed or coated; washed suede and polished leather.”

While last year was a good one for many in the denim business, the category as a whole started to contract in 2002. STS Market Research, a Cambridge, Mass.-based company, found through polling that total women’s jeans sales last year slipped 3.7 percent to $5.26 billion, with average selling prices slipping 0.4 percent. That shrink rate outpaced the overall decline in sales for women’s sportswear of 2.1 percent.

Jeans companies said a fall-off in enthusiasm for denim, particularly in fashion-driven products, as opposed to basic misses’ and girls’ markets, is an almost inevitable by-product of the fashion cycle. After dozens of new names jumped into the jeans business over the past four years, there had to be a time of shakeout.

“There was just too much of it out there and it had to slow down,” said Michael Silver, president of Western Glove Works, the Winnipeg, Manitoba-based maker of Silver jeans.

Silver and executives at other core jeans companies said this is a process they’ve seen before.

“A lot of the more ‘sportsweary’ vendors turned their backs on denim and they’re going into other areas. They’re more mobile and they go where the wind blows,” Silver said. “We’re kind of happy that there’s less competition now for the denim market.”

Some jeans executives also pointed out that the high-fashion market is but a sliver of the broader category. While denim might disappear from the runway for a season or two, they reason, it’s not going to gather dust in Americans’ closets like polyester doubleknit.

“When denim’s on the runway, everybody’s very excited, but that’s a very small piece of the business,” said Angelo LaGrega, president of mass-market jeanswear at Greensboro, N.C.-based VF, who oversees brands including Wrangler. “With today’s consumer, denim is such a major part of their lifestyles, even when it’s not red hot, it’s still part of their wardrobe.”

He added that in the mass market, he has not seen a decline in consumer purchasing of denim at retail. While VF last month reported that its overall domestic jeans sales were off 7 percent in the quarter, LaGrega said that mainly reflected store closings by some customers and merchants working to cut inventory levels.

The denim that is currently selling, retailers and vendors said, is somewhat more refined than it has been in past seasons. The overdone washes, heavy whiskering and carpenter details have gone by the wayside in favor of slimmer, cleaner jeans. Some executives also cited capri pants as good spring sellers.

“The newness in denim is cleaned up — no whiskers, no yellow wash, tint, etc.,” said Macy’s Pappas. “We also see a return to more basic denim, some new trouser bodies and hardware details [such as] zippers, chains, belts, D rings. etc. The new categories in denim that have emerged are jackets and miniskirts.”

Even for the most fashionable of shoppers, retailers said, denim remains part of the mix.

At Scoop’s seven locations, owner Stefani Greenfield said, “One out of every five sales is still denim.”

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