Fashion brands are scrambling to protect their companies, as stores cancel spring orders amid the coronavirus pandemic.
Many said they’re trying to negotiate with stores and push the deliveries back a few weeks since the brands have already produced and paid for the merchandise. Others have accepted their fate.
Others, such as Ramy Brook, have furloughed their employees while giving them health-care benefits, while firms such as Elie Tahari permanently shut down the company March 20 with immediate termination for all its employees. Rebecca Minkoff, which is continuing its e-commerce business, has laid off all of its employees in its wholesale division.
Lafayette 148 confirmed that stores canceled the line’s spring merchandise that hasn’t come in yet.
“Spring is cancelled. Whatever hasn’t been shipped is canceled,” said Deirdre Quinn, cofounder and chief executive officer. Asked what she does with all the merchandise, she said, “I have one outlet.”
“Luckily for us, we had tightened up our inventory a lot in the past year. It was discipline for the future of the business model. We decided to tighten a lot. That was good luck,” she said. “We have a tight window. I wasn’t able to stop spring. What was manufactured, if it’s not here, it’s on its way. Basically, April and May groups were canceled.”
But she said Lafayette 148 has a direct-to-consumer catalogue that it had already printed, and they were able to slow down the drop of that book from early April to closer to the end of the window. “And now it’s exclusive product,” said Quinn.
When told that some smaller firms said stores hadn’t canceled spring orders yet, Quinn said that maybe the stores know that if they cancel the little guys they’ll put them out of business. “We’re pretty big, depending on when business turns around, they can come back to me, because my stuff sells, but they have to get rid of what they have. I’ve accepted my fate. I ran my numbers, I’m running my business on the fact that spring isn’t going to happen for me,” said Quinn. “I’m going to have to take those units and get creative.”
The brand hasn’t discounted merchandise on its own web site yet, although she knows others have.
Quinn said her employees are her biggest asset, and she hasn’t had to lay anyone off. “We’ve spent 24 years building this company, and I’ve had people with me for 24 years. I have full intentions of weathering this storm and staying in business,” said Quinn.
“As owners of the company, we have put our earnings completely on hold, we have asked our employees across the board to take a 15 percent pay cut. It’s really hard. We told them this morning, [Monday].”
She said she didn’t have to lay anybody off, unless they came from an outside service agency, such as a receptionist. “It can change from week to week, but I don’t want to do that. I truly believe when they get it together, those of us who figure it out will survive it,” she said.
The company owns its factory in Shantou, China, which now doesn’t have the work since stores canceled the orders. She said they hadn’t cut pre-fall and fall yet. “I know that’s not the case with everybody else. Having the tightest window in the world is good and bad. If everyone else gives discounts because they have the goods and they have no choice, we might be cut [discounted] more.” She noted that she can’t control what retailers do for spring with the merchandise on their web sites. “But I can control what happens starting with pre-fall and fall. I truly believe we are an important vendor and a good partner,” she said. Lafayette 148 has 25 stores globally.
She said they’re shaving back style-wise about 20 percent, but they can react again since they have the fabric. “If business comes back strong in our stores, I’ll be able to react. Our advantages are our disadvantages, and our disadvantages are our advantages. The game is how much nerve to do you have to withstand it all? It’s like a roller coaster ride. You have to have a good stomach.” she said.
“One day at a time, that’s the way we’re working,” added Quinn.
She said her sales people are working at home, revising the orders. The design team is working on the next season and it’s going to be smaller. They’re working on resort for November-January delivery. That is expected to be shown in June.
One alternative would be to put the buys together and virtually show retailers. “In some ways I look at this as maybe this is a new way of working in the future,” said Quinn.
Lafayette 148 has 300 employees in the Brooklyn Navy Yard headquarters, and 50 employees outside New York.
The company is partnering with the Economic Development Corp. and the Brooklyn Navy Yard to make personal protective equipment for New York-area hospitals. Over the weekend, one of Lafayette 148’s pattern makers created patterns for surgical gowns, which were then digitized and sent off for prototyping. They have sample makers on standby waiting for instructions from the group to start production as soon as they get the go-ahead. “We’ll farm it out to anyone who wants to help us sew,” said Quinn.
Rick Darling, chief executive officer of Global Brands Group, said that retailers have canceled spring orders. His roster of brands includes Juicy Couture, Spyder, Sean John, Jones New York, Ellen Tracy and Tahari Arthur S. Levine.
“We have been in close contact with our retail clients and are working their cancellation requests. Given the circumstances with stores closed for an unknown period of time, we would expect a fairly significant impact on spring/summer orders,” he said.
At this stage, he hasn’t had to furlough corporate employees. “We have downsized our warehouse associates and have closed our retail stores in the U.S. and Europe. I think the question of furloughs or other reductions needs to be reviewed as we get better visibility into how long the retail closing lasts,” said Darling.
The company continues to work on fall and holiday programs and is in the process of developing spring 2021. “All of our people in the U.S. and Europe are home and we have provided all of the means to communicate and use our systems to look forward to the other side of this. I am actually really pleased at how well that is working,” said Darling.
Asked what he plans to do with the spring merchandise that’s been canceled, he said, “We are working through that with our supplier partners.” He isn’t halting production of fall merchandise in its factories. “At this stage, we have impacted spring/summer, but are moving forward with fall and holiday. Those orders could be adjusted as we get a better feel for the market,” said Darling.
Ramy Brook Sharp, founder and co-ceo of Ramy Brook, the advanced contemporary firm, said that her orders haven’t been canceled yet. “They understand we have product in the works, and nothing’s been officially canceled,” she said. “It’s a dialogue.”
She said that on Monday she had to furlough all of her company’s 45 employees, but would be paying their health insurance. “We’re continuing to pay health insurance and also paying any accrued sick and vacation days,” she said. She is paying health insurance on a week-to-week basis. The intention is that the employees will be able to return to their jobs when this is over.
Sharp said the company would continue with its e-commerce. Up until a week or two ago, “we were doing really well,” she said. “I really believe once we get through this we are going to soar. There will be changes, but I feel confident we’ll get through this.”
They’re in the process of making the fall line, which has been designed and sold at market. All their orders are in. They are receiving prototypes for November, December and January. “I’m continuing to work and move ahead,” she said. Right now, she’s not making any changes in the fall production. She produces in China, India and Peru. She makes her denim in L.A., which has come to a halt.
She also said her company is keeping its showroom at 231 West 39th Street in New York.
“It’s so sad. You have to do whatever it takes to keep a business afloat,” she said. “There still is a need for product. We’ll come out strong. That’s my whole message. If I have to do 100 jobs myself, that’s what’s I’m going to do. Maybe 20,” she said.
Rebecca Minkoff, which still has a sizable team, decided to lay off its wholesale employees. They still have full design and operations teams in place.
Uri Minkoff, ceo of Rebecca Minkoff, said that with stores shut down and not taking in product, the company decided to let go of people in wholesale and customer service. “We can always scale up,” he said. As Rebecca Minkoff is a direct-to-consumer company for now, he said there are certain functions that are tied to what they can control over the foreseeable future. He said he wanted to give the wholesale employees the best opportunity to maximize whatever the government is giving them. “We’ll hire them if stores open up again,” said Minkoff.
“The big thing is we have the proper full complement of the team needed to run a direct-to-consumer business in what looks like will be at least a 60-to-90-day timeframe. We have design, marketing, operations, finance and shipping,” he said. There’s also a skeleton team that can service whatever store is open.
Discussing cancellations, he said some stores will allow spring goods to flow in late, and those that would traditionally ship in April can ship in June. Other stores are trying to cancel spring and jump into fall. “Our position is we have a legally binding P.O. [purchase order}. They legally can’t cancel,” said Minkoff. He said that’s how he’s been spending his days, with many back-and-forth negotiations.
“The ones that cancel say they’ll just jump into fall. Obviously that’s tough, but it doesn’t give me a great taste to want to work with them, and we’ll still have to find places with those products,” he said.
Elie Tahari didn’t return numerous phone calls seeking comment, but sources said that the business shut down permanently Friday without any severance packages.
Susan Sokol, cofounder of the High Alchemy showroom, a luxury showroom of emerging fashion and accessories designers, explained that she is in frequent contact with retailers to prevent cancellations.
“We’re trying to be supportive to our 20 designers who are from all over the world,” she said. “What we’re trying to do is be sensitive to the retailers, but also be extremely supportive of our small designers,” said Sokol. She said that if orders got canceled, it would have a huge impact on a small designer, who has already invested money in raw materials and labor.
She believes that when stores reopen, hopefully sometime in the spring, they’ll be sitting on a lot of spring merchandise, which arrived in the stores in February and March. “We’re looking at May/June deliveries and pushing them out so it’s almost a fall delivery,” she said. Since a lot of companies offer buy now-wear now merchandise, May/June merchandise can be pushed a few weeks into August. “Most of our designers do transitional clothing,” she added.
She also feels that the resort market should move from early June to later in that month, or have designers video their look books and work with retailers to do a virtual market. “The industry needs to come together with leaders and collectively agree to come up with a solution to have that market later,” she said, adding that especially since factories are closed, a resort line wouldn’t be ready for early June. Also she questioned whether people would be comfortable traveling to their factories.
For resort and pre-spring, she’s also suggesting that her designers keep their lines smaller and focused. “If we have it by the end of June, we’ll do it virtually and Skype, there are all different ways to think outside the box,” said Sokol.
“I feel the fashion industry in the U.S., where New York leads the pack, it’s very important for the industry to work collectively and come up with a united approach to the next pre-fall market.” said Sokol.
Anthony LoRusso, senior vice president of wholesale at Eileen Fisher, said, “We are committed to sustaining our long-term and newly entered partnerships. In this fast-changing landscape, we have been connecting more frequently than ever to address how we shape the immediate and future demands of our businesses together. We are working strategically to achieve the strongest scenarios we can at this time.” He declined to be specific about what he’s doing and whether Eileen Fisher merchandise for spring, that hasn’t been delivered yet, has been canceled.
Minnie Rose sent a letter to its retail partners explaining a new program it developed called #MinnieRoseCares. It’s an opportunity for its retail stores, which may not have an e-commerce business or Instagram accounts, to generate sales while their stores are shut down. They are asking their stores to e-mail their customers and let them know that if they buy something on minnierose.com, and mention that store at checkout, the customer gets a 10 percent discount, the store gets a percentage, and a percentage will be donated to # nokidhungry. “This is my way of paying it forward,” said Lisa Shaller-Goldberg, president of Minnie Rose. “I am extremely grateful for all of the customers I have who are loyal, who love and support Minnie Rose over 18 years, Without them, Minnie Rose would not have become the success that it is.”
She said she’s not laying off anybody. “We’re taking it day by day, and I’m waiting for what the government is doing to help. The most important thing is the loan that will keep employees paid, so I don’t have to lay off people.” She has 20 employees at her company.
She said stores are still writing fall orders and seem confident things will bounce back. “Until fall, I have to keep the business going. That’s the biggest challenge right now.” Ironically, she said January and February shipping was the best it’s been in years. “Being a seasonal business, that’s a big deal for me.”
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