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Jones Lands LEI
This story first appeared in the July 11, 2002 issue of WWD. Subscribe Today.
LEI, one of the three independent brands that reinvented the moderate junior jeans business in the Nineties, landed some big backing Wednesday.
Jones Apparel Group said it plans to acquire the Los Angeles-based brand’s parent company, RSV Sport Inc., in a $385 million deal. The acquisition, which adds LEI to Jones’ powerhouse jeans stable of Polo Jeans Co., Todd Oldham Jeans and Gloria Vanderbilt, is expected to allow the brand, which stands for Life, Energy and Intelligence, to boost its presence in categories like tops and footwear, outside its existing jeans base.
In addition to increasing LEI’s core jeans business, Jones president and chief executive officer Peter Boneparth, in an interview, said, “There is also a significant large-size opportunity there for juniors and we’re also talking about other categories.”
Mel Geliebter, president and ceo of RSV, said of the deal, “It will enable the architecture we have already built to expand in size and scope and continue to grow share of the market in all sectors, from jeans to tops to shoes, for all the licenses we do.”
LEI’s sales last year came to $248 million, though licensed products, which include shoes, knit tops, outerwear, watches, accessories and children’s clothing, brought in another $100 million in wholesale volume, Boneparth said in a conference call with Wall Street analysts.
While Jones, which racked up $4.1 billion in sales last year, produces footwear and tops on its own through subsidiaries, Boneparth said he planned to stick with LEI’s current licensors, which include Steven Madden Ltd. for footwear, for the time being.
“Our position on the licensing opportunities continues to be that where we have valid contracts we will honor them and assess the viability of taking them in house as contracts come up for renewal,” he said.
While the company currently has a license out for knit tops, it retains the rights to produce woven tops, which Boneparth suggested would be an initial area of expansion.
He added, “the shoe opportunity is under-penetrated, relative to the apparel opportunity.”
Jones produces footwear through its Nine West Group division, which is headed by president and ceo Rhonda Brown, a former Madden executive.
In a statement, Jones said the deal would boost its junior business, which also includes the Glo jeans line, to 11 percent of projected 2002 sales; increase its sales into the moderate retail channel from 23 percent to 28 percent of sales, and expand its sales to moderate national chains such as Kohl’s, from 12 percent to 15 percent of revenue.
Boneparth said that LEI does 60 percent of its sales to moderate chains, with the balance divided between department and specialty stores.
LEI’s main competitors in the branded moderate junior jeans market are Mudd Inc. and Paris Blues. While the relative strength of the jeans business over the past year has attracted several new players into the category and intensified price competition, Boneparth said he believed LEI was in a position to compete.
“We typically try to buy the strongest player in a category,” he said. “We have done that in LEI and think we have a defensible competitive position.”
Mel and Susan Geliebter, who founded the company in 1989, will continue to work on the LEI brand for five years. Mel Geliebter will also be taking on the post of ceo of the private label division of Sun Apparel. Boneparth said LEI would continue to operate as an independent division with its own staff and sales force.
“I’ve never believed there’s a lot of value in combining sales forces,” he said. “I think you want to keep the brand distinct.”
The LEI deal marks Jones’ second major jeans acquisition of the year, after acquiring Gloria Vanderbilt in a $138 million deal in March.
This LEI transaction includes $272.5 million in cash, $37.5 million in Jones common stock and the assumption of $75 million in debt. Wesley R. Card, chief operating and financial officer, said on the conference call that the acquisition will slightly boost Jones’ earnings this year, but give them a greater boost in 2003.
Maturing Miss Sixty
Miss Sixty is growing up. With a new ad campaign ready to launch, a few store openings planned and a fledgling line on the way, New York-based parent firm Sixty USA is coming of age.
The ads, shot by Mario Testino, showcase what Andrew Pollard, director of sales and marketing at the company, called a “more grown-up Miss Sixty with an emphasis on product.” The campaign will begin its rollout in the July issue of V magazine, with a six-page spread. Also, the company will showcase the ads on billboards in New York and Los Angeles to coincide with the new store openings.
The flagship store is a 3,000-square-foot location on West Broadway in New York’s SoHo neighborhood. Set to open in September, the store will house the full Miss Sixty collection, a new luxury line and a 10-piece special-edition denim collection. The company plans to open additional stores in Los Angeles, Miami, San Francisco, Chicago, Montreal and other major cities in North America.
The interiors of the stores are inspired by graphic designs of the Seventies. The architects, from the Florence, Italy-based Studio 53, transformed two-dimensional patterns into three-dimensional structures by taking wallpaper and textile patterns and creating furniture showcased in the stores.
In addition, the company plans to add a men’s line to launch in spring 2003. Called Sixty, the collection is heavily vintage-inspired.
Guess Steams It Up For Fall
Continuing its seductive ways, Guess’ fall ad campaign features scantily clad models set against a backdrop of sand dunes, mountains and blue skies.
Shot by Raphael Mazzucco in Death Valley, Calif., the ads portray Megan Ewing, Chris Brown, Minky Westhuizen, Patricia Barros, Jessica Ven der Steen and Alvaro Jacomossi in various scenes. The ads spotlight women’s and men’s apparel, as well as licensed products such as handbags, watches, jewelry, sunglasses and footwear.
The images are sexy and provocative, showing for example, Megan, in a bra top and jacket, being kissed by Chris on the beach.
The ads encompass three main themes: denim, hippie bohemian and Mongolian.
Paul Marciano, creative director of Guess, said the ad budget for fall is flat to a year ago. According to CMR, a Taylor Nelson Sofres company, Guess spent $12.3 million on media in the second half of 2001.
The campaign will debut in a 14-page portfolio in the August issue of Vogue. Gatefold units will run throughout the fall in Vanity Fair, Marie Claire, Jane, W, Interview and Teen People. Multiple spread portfolios and inserts will appear in Vanity Fair, Vogue, In Style, Lucky, W, Interview, Maxim, Teen People, V, Vogue Italy and L’Uomo Vogue.
Marciano said Guess will pull back a little from outdoor venues to focus on magazine advertising. However, it will continue to advertise outdoor in metropolitan cities such as New York and Los Angeles.
Parasuco’s International Expansion
With an Italian owner, Canadian headquarters and half its business in the U.S., Parasuco Jeans Co. is pretty safe in calling itself an international brand. But owner Sal Parasuco still believes there’s more for him to do abroad.
“We are really concentrating on becoming a global company,” he said in a phone interview from his St. Laurent, Quebec, office. “We’ve been opening up new markets.”
The company’s latest move has been signing a distribution deal with a Dubai company to sell its jeans throughout the Mideast, and establishing relationships with retailers in Israel. The company has also boosted its sales in Europe, which now represent 20 percent of overall volume, up from 8 percent last year.
Parasuco officials would not say what the company’s current sales volume is, though an industry source estimated the firm’s revenue at about $100 million.
The half of the firm’s revenues that don’t come from the U.S. are evenly divided between Canada and the rest of the world, which includes a Japanese distribution agreement.
Parasuco said he also aims to extend his retail chain, which now includes seven Canadian stores, into the U.S.
“For the latter part of this year and the next, we’ll have a big push into America,” he said. “We’re negotiating on some locations in New York and Los Angeles to open stores.”
In 2000, Parasuco first started his retail expansion, at the time aiming the have 20 stores in the U.S. and Canada by the end of 2001. His expansion plans were slowed by a number of factors, including the slowdown in the U.S. economy last year.
He added that the company has also expanded its direct wholesale presence in the U.S., opening a showroom in Los Angeles and planning to open more in Philadelphia, Atlanta and Chicago. While Parasuco said he doesn’t want U.S. sales to represent more than half of the company’s overall volume, he doesn’t want them to dip below that level, either.
While the current focus is on the U.S. and Mideast, Parasuco said in a year’s time he wants to start selling in China.
“We’ve had some inquiries,” about selling in China, he said. “We have a setup now where we’re making things in Italy and in China to ship to Canada and the States. We could ship goods from Italy to China, as well.”