LOS ANGELES — Pursuing its quest for brand-name products, Tarrant Apparel Group has secured the U.S. licensing rights for French line Alain Weiz and is launching the product exclusively at Dillard’s Inc. for spring.
The Weiz line, known for its plus-size wares with a fashion edge, represents the fourth private brand in the Tarrant stable, which licenses or buys stakes in the clothing companies. Its American Rag Cie juniors’ program is in 180 doors of Federated Department Stores. Tarrant also has exclusive distribution agreements with Wet Seal for No! Jeans and Kmart with Gear7 urban apparel for young men. It also has a deal with Cynthia Rowley for denim and ready-to-wear, bowing for fall 2005.
“The huge success of American Rag has opened the doors to new relationships,” said Gerard Guez, chairman of Tarrant. “We’re pleased to be working with Dillard’s and building Alain Weiz into a lifestyle brand.”
As department stores struggle to find their identity, exclusives provide an avenue of growth opportunities.
“It’s a major initiative on our part to differentiate ourselves from the competition and we plan to look for more exclusive product,” said Jim Stockman, vice president and general merchandise manager for Dillard’s.
For Tarrant, the expansion of its branded division is a change in strategy for the one-time manufacturer of private label clothing, which announced the sale of most of its Mexican manufacturing operations in August. Significant debt — bank borrowings and long-term obligations soared from $36.7 million in 1998 to around $107 million in 2002, according to Tarrant’s 2002 annual report — and the cost of maintaining the operation during slow periods led to Tarrant’s decision to unload the property. The mills, which employed 12,000, ran into unionization efforts and accusations of labor violations.
“It was not an operation we could sustain for 48 to 50 weeks,” Guez said in an interview at his 16th-floor penthouse office in West Hollywood. “Private label is a business that comes with huge peaks and valleys.”
The transition has come at a price.
With its stock trading recently under $1, the company has been warned by Nasdaq of a possible delisting. But it has rebounded in recent weeks and Thursday closed at $1.27, down one cent. The stock hit a high of $48.38 in 1999.Tarrant said last month it was anticipating a steeper loss for 2004 driven by currency-related charges and significantly softer sales in the second half of the year as retailers scale back orders after a lackluster back-to-school shopping season.
As a result, Tarrant projects a net 2004 loss of between $96.9 million and $98.9 million on revenues of $157 million to $162 million, which compares with a net loss last year of $35.9 million on sales of $320.4 million.
Guez said, however, the company has reached its nadir and would make a $7 million to $11 million profit next year on revenues of $220 million to $240 million. Those revenues are split between private label denim and sportswear production (at $165 million to $175 million) for companies such as Sears, Roebuck & Co. and J.C. Penney Co. that Tarrant outsources to a dozen factories in China and Hong Kong, along with the private brands business (at $55 million to $65 million).
He said the American Rag business would grow to 230 doors by spring and be in all company units by the end of 2005. A kid’s line will launch in fall 2005 and licenses are in development for swimwear and accessories. Wholesale volume for the line should hit $25 million to $30 million by next year and to maintain momentum, Guez said he’s launching a major holiday promotion. “American Idol” winner Fantasia Barrino will headline a concert at a Macy’s store in New York.
The path of brand exploitation is putting the company in good stead with industry observers.
“Branding is the key to successful retailing today especially at middle and upper levels,” said apparel attorney Benjamin Seigel. “Getting your brand identified with someone who will market it is the right formula and Dillard’s is someone who could do them a world of good.”
Stockman of Dillard’s said the Alain Weiz line offers a contemporary interpretation in the plus-size category. It will hang in that area next to department anchor Lauren by Ralph Lauren, he said. First hitting 80 stores in a test run this month, with mostly denim jeans and tops, the presentation will expand to 200 styles and 150 stores by February.The Alain Weiz collection for Dillard’s will include product crafted from denim, rayon, linen and cotton in modern styles and subtle details.
Among the highlights are cropped pants with laser cuts or studded hems, nylon pants with taping down the legs and a ribbed waist, denim pants with split hems and green stitching, blouses with tulle fringe and suit jackets embellished with multiple buttons and origami-style appliqués. Retail prices range from $70 to $200.
Guez said the line will expand into the misses’ category by fall 2005. Licensing deals for accessories, such as belts, handbags, shoes and sunglasses, are also on the drawing board. He projects the line to pull in $15 million to $20 million in wholesale volume in its first year.
Meanwhile, Gear7 is a line in which Tarrant acquired a 75 percent stake five months ago and sells to 1,500 Kmart doors. In-store shops are expected to bow in two months at two Kmarts, in Manhattan and in Los Angeles. It’s expected to generate $20 million to $30 million at wholesale by next year. And, No! Jeans delivers $18 million to $20 million in wholesale volume.
Finally, Tarrant’s closed on a $45 million factoring loan from GMAC Commercial Finance in October.