Joe’s Jeans Adds Else for Macy’s

Firm registers small fourth-quarter loss as retail results shine.

A look from Joe’s Jeans’ new Else brand sold exclusively at Macy’s.

LOS ANGELES — Women who covet premium denim trends but balk at paying more than $80 for a pair of jeans now have another option: a moderately priced line called Else that is produced by Joe’s Jeans and sold exclusively at Macy’s.

This story first appeared in the February 29, 2012 issue of WWD.  Subscribe Today.

Rolling out this spring to 141 doors and the retailer’s Web site, Else represents a move by Joe Dahan, creative director of Joe’s Jeans, to bridge the gap between the high and low ends of the denim market. The 25 stockkeeping units in Else’s inaugural collection include a jean jacket, skirts, shorts and four fits of jeans. Basic styles such as boot cuts in dark washes make up half the line, with the remainder comprising novelty looks like skinny jeans dyed coral, mustard, thyme green and sienna.

Although Dahan oversees Else and the startup brand leverages the 11-year-old parent company’s infrastructure, a separate team handles design and production. To keep denim prices between $68 and $78, Else uses less expensive fabrics than Joe’s and manufactures in China. Joe’s, produced in the U.S. and Mexico, opens at $158.

“This isn’t about creating a cheaper jean for the girl that is wearing Joe’s Jeans,” said Marc Crossman, chief executive officer of the City of Commerce, Calif.-based firm, who declined to provide financial forecasts for Else. “It’s about addressing a customer who isn’t in the market or aspires to wear a premium denim but can’t afford it.”

The line, aimed at women ages 18 to 25, will be sold in Macy’s Impulse department.

Even in the lower price range, Else faces stiff competition. In addition to trendy fashion churned out by the likes of H&M, Express and Forever 21, new brands such as Isaac Mizrahi Jeans are launching with an eye on the budget-conscious fashionista.

“I think [Else] addresses a very broad market,” Crossman said. “The addressable market is so much larger at this price point than it is at the higher price point.”

Joe’s Jeans disclosed plans for the new line Tuesday as it reported a small fourth-quarter loss on improved revenues.

In the three months ended Nov. 30, the company recorded a net loss of $268,000, or 0 cents a share, versus a year-ago profit of $817,000, or 1 cent. Analysts had expected the earnings per share result to match the figure for the 2010 quarter.

Revenues were up 7.7 percent to $25.4 million, from $23.6 million in the prior-year quarter, as wholesale revenues were flat at $19.5 million, while retail revenues rose 44.1 percent to $5.9 million from $4.1 million. Retail sales benefited from expansion to 22 stores, versus 17 in the fourth quarter of 2010, and a 12 percent increase in same-store sales.

“We commenced the quarter with the opening of our flagship in New York City and continued on an upward trajectory for the entire quarter,” Crossman said. “In fact, our same-store sales for the first quarter of 2012 are tracking at the same pace we saw in the fourth quarter.”

The share of sales attributable to retail operations rose to 23.1 percent from 17.3 percent a year ago. Ten stores are planned for the current year.

Crossman noted that costs were driven up by the company’s “55 Colors” ad campaign, which caused the bottom line to contract, but also helped sales momentum. Ad costs are expected to decline in upcoming quarters.