Diesel Returns to Its Roots

Only Diesel could make the seemingly incongruous mix of Moby, Naomi Campbell and the town of Bassano del Grappa’s marching band look as natural as a pair of worn-in jeans.

In true Diesel style, Renzo Rosso went the proletarian route to celebrate 25 years in business and held an all-day festival on Saturday at his Italian hometown in the hills of the Dolomites instead of at a New York nightspot or Milan discothèque.

“I have an incredible passion for this town, this area and its people. This party is for you,” Rosso told employees as he kicked off the day’s festivities, which were rumored to cost more than $2 million. Wearing dark-rinsed jeans, a black leather motorcycle jacket, big black shades and his trademark disheveled hair, Rosso looked every part the rock star.

In the northeastern Italian region known as the Veneto, he and his party generated more buzz than the Venice film festival just miles away.

Part state fair, part Diesel-land, the 12-hour event, held in a huge park, mixed the fashionable with the downright bizarre. An acrobat spinning from a hot-air balloon hovered over the crowd, which, at its peak attendance, surpassed 25,000. A pint-sized Elvis impersonator walked with two grown women dressed in head-to-toe French poodle costumes — snout and all. Later in the night, women dressed as nuns stripped to the pop song, “It’s Getting Hot in Here.”

The faux sisters in habits were just one part of the half-hour-long retrospective fashion show, an ode to some of Diesel’s most famous ad campaigns.

While most of the people that turned out for Diesel Live 25 were there to see Moby and Italian pop star Jovanotti play, it seemed the mayor of Bassano was taken with Naomi Campbell, who sported a fuchsia tartan miniskirt during the official ribbon cutting.

Naomi, who was flown in via Rosso’s private helicopter, meanwhile marveled at the similarity between Rosso and his two sons, Stefano and Andrea.

“They look just like him; it’s amazing,” Campbell told her boyfriend, Matteo Marzotto, who never left her side.As for Rosso, he said the party was about family, friends and celebrating his hometown. As the sign on the VIP lounge said: “New York is great. Miami is fun. Paris is pretty. London is hip. Bassano is home.”

Levi’s Cuts Jobs

Continuing its effort to restructure itself and turn around its sales slump, Levi Strauss & Co. on Wednesday outlined a series of changes, including plans to reduce its workforce by about 650 people and refinance its current debt.

Referring to the job cuts, president and chief executive officer Phil Marineau said in a phone interview, “The themes are becoming faster to market, more responsive by individual market segment and lower cost.”

The company plans to eliminate 350 of its 5,042 U.S. staffers and 300 of its roughly 4,600 employees in Europe. The latter group of cuts is subject to European Union approval. Worldwide, Levi’s currently has about 12,000 staffers.

Levi’s also plans to replace its current $850 million in credit facilities with a pair of loans worth $1.15 billion and secured by its assets and trademarks.

Marineau said of the new debt, “It gives us the flexibility. It’s less restrictive in terms of the covenants, which gives us the flexibility we need to make changes on a timely basis.”

He said Levi’s had been bumping up against the covenants of its current loans and would seek waivers to carry it over until the new loans were in place. While he did not disclose details of the current covenants, commercial loans typically have stipulations about the sorts of assets a business must maintain and the sort of margins and financial returns it must generate to remain in good standing.

In response to the news, Standard & Poor’s lowered Levi’s corporate credit rating to “B,” from “BB-,” citing the company’s “leveraged financial profile.”

In addition, the company revealed preliminary results for the third quarter ended Aug. 24. It said it expected to report sales later this month of about $1.1 million, representing a 6 to 7 percent increase on the $1 million in sales reported in the same quarter last year. That increase would be enough to offset the 2.9 percent sales decrease the company had recorded in the first quarter.The San Francisco-based company said in a statement it expected operating income for the quarter to be between $95 million and $100 million, roughly comparable to the $96.7 million reported a year earlier. It said net income will be in the range of between $24 million and $28 million, well above the $13.7 million reported last year. Final, precise results will be released Sept. 30.

Marineau said the job cuts would result in two significant changes at the company. First, he said, they would streamline product development: “We are trying to have a go-to-market process that, baseline, is 7 1/2 months from design to delivery into the stores. Now we’re at about 10, 10 1/2 months. We believe a 7 1/8-month cycle would put us in a very competitive position.”

Secondly, he said, the company plans to centralize its sourcing operations. Currently, its American, European and Asian divisions maintain separate sourcing staffs and operate independently, producing products in 50 countries. The company plans to consolidate sourcing into one unit, based at its headquarters in San Francisco with staffers around the world.

While many apparel producers are expected to reduce the number of countries in which they source products in 2005, when quotas on apparel and textiles are to be dropped by the World Trade Organization, Marineau said Levi’s isn’t planning a major change in how widely it produces garments.

He said he thinks there will be changes in tariffs and other trade-controlling mechanisms that will limit the overall worldwide changes in 2005. Along with the whole apparel industry, he said, Levi’s faced intense price deflation through the first three quarters of the year, though he said a pickup in demand during the back-to-school season made him hopeful the environment might be changing.

Marineau said he’s been “very pleased” with the performance of the Levi Strauss Signature line, which bowed at Wal-Mart Stores over the summer. He acknowledged that, without that launch, Levi’s overall sales for the quarter would not have been up.

However, he said, since the Signature line launched, retail sell-throughs of the Levi’s and Dockers brands have also been on the rise.“There’s been zero cannibalization on Levi’s Red Tab and Dockers,” he said.

— Scott Malone

Sassoon Sashays Back

When a company is looking for a way to reinvent itself, sometimes the best strategy might be to turn to the “What Ever Happened to...” file..

In April, Harmon Seymour signed on as chief operating officer of a New York accessories company named BIB-TC Group and was asked a pretty big question.

“The question was how can we become a bigger force in the industry?” he said. Along with a team of other executives, including founder and chief executive officer Gail Binder, he developed a simple answer: “The best way was to have a brand name,” he said in an interview last week.

Simple enough, but in a world where everything from motor oil to heart stents is branded and brands are backed with millions of dollars in promotional activity, finding a name that’s available and appealing is not an easy task. So Binder started reviewing records of brand names that had been abandoned by their owners.

“Sassoon was one of the names that had just been abandoned,” she said. “We registered it that day.”

In the late Seventies and early Eighties, Sasson jeans — with one “o” — was a well-known brand and ran into legal trouble with the owners of the Vidal Sassoon trademark, which was used on hair care products.

Today, Wal-Mart owns the Sasson brand, but does not currently use it. Procter & Gamble owns the Vidal Sassoon name. It has pulled the products bearing that name from the U.S. market, though they are still sold overseas. Vidal Sassoon himself has filed a lawsuit against P&Gin an effort to get his name back.

Harmon said he wasn’t expecting to have any legal trouble over the name.

“Absolutely not,” he said when asked if he anticipated lawsuits. “We have very good attorneys. We are Sassoon. We have absolutely nothing to do with Vidal Sassoon or Sasson. This has nothing to do with any of them.”But looking at a strong jeans category in which several retro brands have recently made comebacks — Sergio Valente and Jordache among them — Binder saw an opportunity.

So they founded the Sassoon Group Inc. and began preparations to launch product. The company, at a downtown party Wednesday night, was set to unveil a line of women’s jeans and sportswear for the spring retail season that it intends to begin shipping by the end of the year.

The jeans are snug-fitting, reminiscent of Seventies looks, are made in Asia and will wholesale for $13 to $14, Harmon said. Target consumers are women aged 17 to 34, and the company plans to sell its wares to national chains and moderate department stores.

“It hugs the body,” Harmon said of the look. “A young girl always wants the garment to hug the body. She wants her butt to look good.”

The company is expecting the brand to generate sales of $30 million to $50 million a year and has signed on a U.S. sales force of 12 representatives across the country, with another four working in Canada out of a Montreal office.

Harmon, who for the last decade worked as a consultant, said the company is planning a TV ad campaign to back the brand, to hit the small screen in mid-November. He declined to offer many details on what the ads would look like, saying only that it would feature a dancing letter “s” that would transform into things and that Sassoon had budgeted $1 million for the campaign.

While Sassoon is a name with a past, Binder acknowledged that few of the brand’s new target consumers are likely to remember its history. Still, she contended, it’s a name that exists in what she described as a “floating cloud” of cultural memories.

“The kids of today don’t really know what Atari was,” she said, referring to the early home video-game machine. “But they know of Atari.”

— S.M.

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