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Denim Dish

Avondale Trims Loss<br><br>Avondale Mills Inc. narrowed its losses in its second quarter despite a slide in sales.<br><br>For the three months ended Feb. 28, the company recorded a net loss of $342,000, compared with a $1.7 million net loss a year...

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Avondale Trims Loss

This story first appeared in the April 24, 2003 issue of WWD.  Subscribe Today.

Avondale Mills Inc. narrowed its losses in its second quarter despite a slide in sales.

For the three months ended Feb. 28, the company recorded a net loss of $342,000, compared with a $1.7 million net loss a year earlier, according to a filing with the Securities and Exchange Commission. Sales were off 1.3 percent, to $141.6 million.

The firm’s apparel fabrics division saw operating income slip 13.5 percent to $6.1 million, while sales rose 0.9 percent to $123.7 million. The increase in sales reflected growth in the number of yards shipped, which more than offset a decline in selling prices. In the yarn division, Avondale reported a $561,000 operating profit, compared with a $2.4 million operating loss a year ago. Sales in that unit inched up 0.1 percent to $41.8 million.

The privately-held company, headquartered in Monroe, Ga., reports its financial results to the SEC because of publicly-traded bonds.

For the six months, the company posted net income of $1.1 million, which compared with a $10.1 million net loss a year ago. The prior-year results included a $6.5 million pre-tax restructuring charge. Sales were up 5.5 percent, to $308.8 million. — Scott Malone

Levi’s Signature to Europe

Levi Strauss & Co. is going global with its nascent mass-market brand, Levi Strauss Signature.

Joe Middleton, president of Levi’s Europe, Middle East and Africa, on Wednesday said the company intends to introduce Signature to value retailers in France, Germany and the U.K. by early next year.

“We’re shooting for two or three retailers in each of these countries,” said Middleton, who declined to name potential retail partners. “There’s huge potential. More than 40 million pairs of jeans were sold in value channels in Europe last year.”

Middleton said partners in Europe have already been contacted. A definitive list should become available before the end of summer.

Last October, Levi’s announced a deal to roll out its Signature brand to Wal-Mart’s more than 2,800 U.S. stores. The first shipments are scheduled to arrive this July.

The European version of Signature is largely based on the U.S. collection. “The jeans have been slightly modified for the European market,” said Middleton. “Even the value customer in Europe is slightly more fashionable [than in the U.S.].”

A pair of basic jeans is expected to retail here for the equivalent of $23 to $26.

The jeans do not have Levi’s trademark red tabs, a two-horse patch or rear-pocket stitching. Instead, they are branded with a patch on the rear bearing a facsimile of founder Levi Strauss’ signature.

“Between 15 to 20 percent of the jeans market in Europe is in value channels,” said Middleton. “We can’t ignore this market.”

Middleton said Levi’s competition in the segment would come mostly from private labels and small regional brands. “We expect to be the market leader in the category within two years,” he said.

Middleton added that the company would introduce Signature to other countries throughout Europe over the next few years. — Robert Murphy

Nod for Dockers Ads

The 2002 “Little Black Dress” advertising campaign for Levi Strauss & Co.’s Dockers brand is set to receive an Effie award from the New York American Marketing Association this June.

The ads were directed by Christopher Guest, who starred in “This Is Spinal Tap” and most recently directed “A Mighty Wind,” and who posed the question of what men would wear if they didn’t have khakis. The version of the ad that bowed during the 2002 Super Bowl featured three burly guys in cocktail dresses. The ads were created by San Francisco agency Foote, Cone & Belding.

The Effie awards are presented annually by the New York American Marketing Association. The Dockers ads are up against “A Diamond Is Forever,” the campaign for the Diamond Trading Co., and ads for licensed Harley-Davidson clothing in the apparel and accessories category. The three will receive Gold, Silver or Bronze Effies at the June 4 ceremony.

A total of 120 Effies, in 40 categories ranging from noncarbonated beverages to transportation, are to be awarded. — S.M.

Romano Expands

Mexican denim mill Grupo Romano is making a push into the U.S. market.

Chris Glynn, formerly the New York executive vice president of Kaltex America, last month joined Romano’s American sales representative, Edwardia Sales, as a partner. He will work with partner Jack Cussen to build the mill’s presence in the U.S.

Glynn said the privately-owned Mexican mill, which is also known as Textiles Denim, is in the midst of an investment program that will expand its total capacity from about 36 million yards a year to 50 million yards. About 60 percent of the company’s output is denim, though it also makes casual cotton twill.

He said the company in recent months has installed 100 new looms, four new spinning frames and a modern quality-testing lab. It’s capable of producing denim in weights from 4 to 15 ounces. The Mexican operation employs more than 4,500 workers.

“We’re trying to do things better, not just make more,” he said.

While Mexican textile and apparel manufacturers have lost ground in recent years as China has reasserted its dominance as a manufacturer, Glynn said that North American manufacturers still have some distinct competitive advantages.

He said of the apparel industry: “It’s not an inventory-based business. It’s a speed business. It’s about shortening cycle time.”

He said the company also is building its U.S. staff, which currently includes about 10 people in New York, the Southeast and San Francisco. The firm is increasing its investment in technology to make it easier for customers to track orders on a real-time basis.

“The customers have to know where their product is all the time,” he said.

In keeping with many apparel vendors’ desires to order completed garments, rather than making their own, the company also runs a cut-and-sew facility that produces jeans. He noted that a lot of foreign manufacturing investment flowed from Mexico into the Caribbean Basin following the 2000 passage of the Caribbean Basin Trade Promotion Act, and said it’s important for Mexican fabric manufacturers to expand into garment production to ensure they’ll have a market. So far, though, most of the garments it has made have been sold to Mexican consumers.

“We need to have strong garment manufactures in Mexico so we can be successful,” he said. “But at the end of the day, we’re interesting in selling textiles.”

— S.M.

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