Squeeze Looks to Expand
This story first appeared in the November 14, 2002 issue of WWD. Subscribe Today.
Two years after buying out his partners, David Greenberg has big plans for junior denim resource Squeeze New York, including expanding into the misses market and the tops arena.
His plan is for the misses line to follow the same merchandise scheme set in the junior business by design director Stephen Hardy. The line is currently being tested as a private label with stores, and plans are to launch it as a brand for fall 2003 retailing.
“Those misses customers, in their late 20s and early 30s, still want to look stylish,” Greenberg said during an interview in the company’s new 9,550-square-foot showroom at 1407 Broadway in Manhattan. “They still want to look young and hip.”
The misses launch marks the brand’s second expansion step in recent years. Last year, the company launched a large-size junior line and got a stronger response than expected. As have many other vendors who have expanded into large sizes for teens, Greenberg saw that plus-size junior shoppers are looking for the same styles available in traditional sizes. That prompted him to try to roll out junior styles in misses sizes.
He said current trends in the denim market — including a shift towards colors other than indigo and nondenim fabrics cut in traditional jeans silhouettes — “transfer to all size ranges.” For spring, Hardy said the line is focusing on fabric variations, including pigment-dyed linens in jeans silhouettes.
“They want fabrics that have a feel and a look that are not denim,” Hardy said of consumers. “This whole thing of going into alternate fabrics is going to be a mainstay for us going forward.”
Still, like many of his colleagues in the jeans business, Hardy denied that the interest in nondenim fabrics indicates that after a strong run of almost three years, consumers are losing some of their enthusiasm for the fabric.
“It’s not so much that they’re over denim, but that the consumer constantly wants something fresh and new,” he said.
Greenberg said the company, incorporated as Maran Inc. with 140 employees in five countries, is also looking at an acquisition in the better market of a company he declined to identify, other than to say its revenues were around $45 million. That would be a sizable addition to the firm, which, he said currently has revenues in the $100 million to $150 million range.
The firm is also starting to offer tops through its existing sourcing offices in Hong Kong, China, Bangladesh and South Africa, although, Greenberg added, “It would be nice if I could buy the right tops company.”
While the firm has been working to promote the Squeeze and Stephen Hardy names lately — it showed the line at MegaDenim shows at the last two editions of 7th on Sixth — Greenberg said private label is a key part of the business, representing 43 percent of sales.
“In today’s climate, you can’t live without the private label business,” he said. “When you have a brand, there is always somewhat of a risk factor because you have to put [production orders for] the goods in, prior to selling, a lot of the time.”
Greenberg said he sees the private label and branded businesses as complementary.
“If you have a brand, you can always do private label,” he said. “If your brand is in the stores, the major companies that do private label will know you because they see you’re a leader in your product category.”
Greenberg bought out his Chinese joint-venture partners’ stake in the company two years ago, but that move hasn’t diminished his enthusiasm for Chinese production. The firm currently produces 35 percent of its merchandise there, but Greenberg said he’d do more in China if he could get the quota rights.
“If I had my way, I’d do it all in China because they turn fast, have great quality product and reasonable prices,” he said. “The only thing that holds us back is the quota system.”
In 2005, when quotas on textile and apparel are dropped by World Trade Organization nations, he said, “China probably is going to become the place to do business for almost any kind of business. They will be more competitive without quota.”
— Scott Malone
Tarrant Gets Debt Waiver
Tarrant Apparel Group reported Tuesday that it has received a waiver of certain covenants under its banking agreement with General Motors Corp.’s GMAC finance unit.
The waiver brings the Los Angeles-based private-label casual-apparel maker into compliance with its banking agreement and is subject to quarterly review. On Monday, Tarrant said its third-quarter results, released Monday, violated certain covenants with GMAC as well as a leasing agreement with Bank of America.
Third-quarter results showed a marked improvement over last year’s performance as strong demand for fashion denim allowed Tarrant to swing back to black.
For the three months ended Sept. 30, the firm reported net income of $1.1 million, or 7 cents a diluted share. That compares with last year when the company incurred a net loss of $4.2 million, or 27 cents a share.
Net sales for the quarter climbed 20.6 percent to $94.3 million.
“Our top-line growth for the quarter was very solid due to our expertise in achieving the complex washes and finishes that our customers needed,” said chief executive officer Eddy Yuen in a statement. “This demand resulted in near-capacity utilization for the first six weeks of the quarter and drove significant year-over-year improvements on both the top and bottom line. Our continued focus on operating more efficiently, reducing overhead and improving margins in Mexico allowed us to improve our bottom line, even though we suffered some higher freight costs due to the West Coast dockworker strike.”
Greater efficiency was reflected in a decline in selling, general and administrative costs to 11.2 percent of sales. In last year’s quarter, SG&A accounted for 16.2 percent of sales. Higher sales and lower costs in turn led to a gain in gross margin to 15.1 percent of sales up from 12.9 percent of sales last year.
Overall, for the first nine months of the year, Tarrant recorded a net loss of $2.9 million, or 18 cents a diluted share. Those results included a $4.9 million write-off for the adoption of a change in accounting principle regarding the amortization of goodwill. Excluding that charge, the company would have posted net income of $700,000, or 4 cents a share, versus a prior-year loss of $2.1 million, or 13 cents a share.
Net sales for the period dipped 1.5 percent to $254.8 million from $258.6 million a year ago.
Looking ahead, Tarrant said full-year earnings should break even with last year’s before the cumulative effect of the accounting change.
— Dan Burrows
Lubell Gets Religion
The third time’s the charm — at least, that’s what Jeffrey Lubell seems to be hoping.
In his whirlwind career since joining the jeans industry in 1998, Lubell has launched and lost two major lines, Bella Dahl and Hippie Jeans. He’s hoping to break that pattern with his new entry into the jeans scene, True Religion Brand Jeans, due to hit stores in spring.
“I decided the best way to run the business would be to basically do it myself and register the trademarks and do all the necessary things to protect myself in this world,” Lubell said in a Tuesday phone interview. “My problems at Bella Dahl and Hippie [were] I was always looking for a production partner. I never had that ability.”
Last year, Lubell traded legal fire with Jolna Design Group, the current owners of the Bella Dahl and Jefri names, and later moved to Azteca Production International, where he launched Hippie. The 46-year-old Lubell said the suits with Jolna had been settled, but declined to comment further. Jolna officials could not be reached for comment. He left Azteca early this year. The company continues to sell the Hippie line under new management.
This time around, Lubell registered the True Religion trademark to himself and formed a corporation, The Indigo Group, to handle licensing. He is majority owner of that firm, and said his partner preferred not to be named. Production is contracted to a Gardena, Calif., factory.
The line includes five styles of women’s jeans, each available in five washes. The washes range from heavily faded to rigid washes done in basic boot-cut, five-pocket jeans, as well as styles with twisted leg seams that Lubell said drew their inspiration from Engineered Jeans — first introduced by Levi’s in 1999.
True Religion has an “evolutionary” mannish styling that Lubell said reflects that “there are a lot of women who love to wear their boyfriend’s jeans or husband’s jeans. This plays off that.”
Wholesale prices range from $58 to $98, and the line also includes men’s jeans. Lubell called the line “very focused,” and said, “in my past life, I came out with these enormous lines that had amazing sportswear fabrics.”
The spring line features mostly denim bottoms, with a few knit tops, though Lubell said he may begin to work other fabrics down the road. He’s targeting the line, which is being sold by sales representatives Lerner et Cie, at select specialty stores, and said he’s setting modest sales goals.
“I don’t need to do $60 million to make a nice profit here,” he said. “I wouldn’t mind having a small little business here that is profitable.”