Following a first half that was soft for many jeans companies, executives said they’re hoping for an uptick over the rest of the year, though few sources are predicting strong growth.
“Business is holding its own, is the best way to say it,” said Ron Gelfuso, executive vice president of sales at New York-based Mavi America Sportswear. “When you look at the different people that I do business with and I speak with at the retail level, many of them are flat, some are a bit ahead and some are down. But nobody is really breaking out with substantial numbers in either direction, plus or minus.”
The wet, cool spring in particular has left many retailers with heavier inventory backlogs of spring jeans and shorts, which has led to slow and diminished ordering for the back-to-school season, which remains a critical time for the jeans sector. Vendors said the unanswered question is whether retailers have correctly planned for a soft season or whether demand will exceed expectations and leave them scrambling to chase the business.
At New York-based junior resource Mudd Inc., president Dick Gilbert said the inventory issue is a major one facing the jeans market right now. He said many retailers did not appear to be “very comfortable” with their spring inventory hangovers.
“I think a lot of them have overbought a little bit,” he said. “The spring season was rocky because the weather was so ridiculous and they got jammed. They’re promoting shorts to clear them out. When it’s in the low 60s in New York till June 25, they get stuck. They’re promoting wildly to get the inventory out of there.”
Still, he contended early sales on fall goods suggests there may be a pickup for the b-t-s season.
“The very early stages of back-to-school retailing seem more than promising,” he said. “The turns are running right in line with where they should be for a good back-to-school.”
He said jeans with light washes and ornaments like belts and chains have shown a strong early performance.
John Kourakos, president of sportswear at the Warnaco Group Inc., who oversees the CK Calvin Klein Jeans business, said he’s also seen a pickup in demand.“In our women’s business, we have see a definite uptick in our business and a positive momentum in the last month to six weeks,” he said. “We hope that will transition into a strong back-to-school and obviously fall and holiday.”
He said that while there is a lot of concern about the amount of apparel inventory at retail these days, he believes retailers were overstocked on jeans, which suggests that an acceleration in sales could translate into reorder activity.
Still, not all executives shared his bright outlook.
Vendors said the inventory overload has taken a particular bite out of the high-end jeans business, as styles that normally carry price tags of $100, $125 or even $150 wind up in off-pricers, heavily marked down.
“You’ve seen a number of the mid-priced, over $100 jeans companies that have tremendous growth and success and now you’re finding their products in many forms of discounters and clearing stores,” said Andrew Pollard, director of sales and marketing at the New York office of Italian firm Sixty Inc. “That, for sure, has to affect their longevity. We’re very careful on our inventories and although we like to offer stock to our customers, it’s always limited because we’re very much driven by fashion.”
At Diesel USA Inc., chief executive officer Andreas Kurz acknowledged inventory can be a thorny balance.
“I think our wholesale accounts are very well stocked and probably the sell-throughs have not been in general as they have planned,” he said. “I think the trend is there to try and get the vendor or the supplier to carry all the inventory. However, we keep telling accounts that with shorter [product] lifecycles, it’s going to be very hard to have the right stock in stock. We do what we can, but there comes a point where we tell them ‘You have to take a certain risk and we are willing to take a certain risk.’”
Still, at the largest jeans companies, executives said keeping things lean is likely a wise approach, given the uncertain economic environment.
“After these last six months, we believe the safe assumption is that things don’t get any better,” said Phil Marineau, president and ceo of Levi Strauss & Co. of San Francisco, which recently reported a $37.9 million net loss for the first half, as its sales slid 2.9 percent to $1.81 billion, which the company blamed on the weak retail environment.Marineau said he’s not expecting to see things change in the coming months. “We should plan for that kind of environment and be pleasantly surprised if they do,” he added.
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