with contributions from Khanh T.L. Tran
 on February 22, 2016
WWDMagic trade show

LAS VEGAS – Hangover. The industry appeared to be nursing a bad one coming off a disappointing fourth quarter and executives here seemed to indicate that 2016 won’t be anything to write home about either as old ways of doing business are turned on their heads.

The takeaway message from the Vegas women’s wear trade shows: It’s tough out there.

“Business has been challenging so you have to be really creative,” said Stephen Krogulski, chief executive officer of the OffPrice show.

One of the few bright spots this time around may have been in the less fashion-forward, off-price and fast-fashion channels as buyers, for the most part, flocked to tried-and-true items at affordable prices.

“You can find some opportunistic buys. You can get them in your store and get that return sooner rather than later,” Krogulski said. “People come to write orders. People come to OffPrice to pay for their trip and then they can go to the other shows and get some direction.”

He mentioned, based on anecdotal commentary from vendors, that attendance from international buyers appeared to be up this session.

Miami-based beach and resortwear company India Boutique tends to attract the crowds at OffPrice with dresses selling between $3.50 to $12 wholesale. Owner Jay Gitu said its customer base ranges from mom-and-pop stores to larger beach chains such as Bealls and noted an uptick in business this time around.

“I can see a difference in the crowd,” Gitu said. “I can see enthusiasm and they want to buy more this year. There are definitely more walk-ins this year than before.”

Speed-to-market is still a huge driver in the juniors and young contemporary market. Several exhibitors, including She + Sky, which was formerly called Ya Los Angeles, packed collections scheduled to be delivered in May. At L.A.-based Everly, watermelon prints and other spring designs that its team created were popular.

“Most people had such a slow end to the [2015] year that they’re looking for something fresh and new,” said Everly co-owner Adriana Leaw, stepping back from the bustling booth that priced nearly everything between $45 and $70 at retail.

Nevertheless, the brands that featured fall items managed to find an audience. THML Clothing from Vernon, Calif., said buyers from Canada and the Pacific Northwest purchased capes and fringe-accented sweaters. Jackets also sold well for Signorelli, which, under the creative direction of Disney star-turned-fashion blogger Ashley Tisdale, took an edgy turn, mixing olive green cotton with black fake leather sleeves and studs.

The brick-and-mortar specialty stores accounted for the majority of sales at WWDMAGIC. Some executives noticed a downside to fashion’s e-commerce boom. “We’re seeing a bigger weakening online than in our boutiques,” said BB Dakota ceo Gloria Brandes. “It’s too much competition.”

Retail’s changing,” said Michael Gross, sales manager at New York-based BenElias Industries Corp. “We have a lot of competition that we never had before so on the backend of our purchasing it’s gotten tougher and tougher to select the right merchandise with all the developing middle class in southeast Asia and China. They don’t want to get rid of the goods anymore; they want to keep them in the country because they can sell them to local retailers and not have to go through the export situation.”

That’s meant strengthening relationships with factories and about three years ago the company, which showed at OffPrice and represents hundreds of men’s, women’s and children’s brands, began expanding its portfolio by adding designer goods such as Elie Tahari — the dresses in the range of $20 to $30 wholesale proved very popular in Vegas — Elizabeth and James and BCBG.

“We’re in Macy’s discount stores. We’re in Nordstrom’s discount operation. Bloomingdale’s is up all the time purchasing goods,” Gross said. “We have our moderate business, which drives a substantial portion of our business and pays all our checks, and then we’ve added the new [designer] dimension to the company, which is growing.”

Upstairs from OffPrice, Agenda trade show founder Aaron Levant said he wasn’t sure what to expect, considering the large contingent of streetwear brands for the Las Vegas iteration of his show. It’s a market segment that’s coming off a particularly rough number of years.

“I don’t know if it was the actual state of the market or that industry or those two things combined, but I think there’s been a lull and just morale across the whole industry [is down], so going in I wasn’t sure what to expect. But it’s been a really good show,” Levant said.

Investor appetite for brands is on-trend among the bankers and others in the financing space, who come to Vegas to take the pulse of the industry.

“It’s about what is lifestyle driven,” said Nedenia Dender, director of business development for Samsung’s fashion division at C&T America. “This model goes back to where companies want to grow. In 2016 everyone’s looking at their business.”

Samsung C&T America provides alternative financing to fashion companies, a topic of conversation during one of the WWDMAGIC seminars.

She predicts more licensing and strategic acquisitions this year for those businesses with the means to do so.

Brien Rowe and Michael Smith, managing directors in the Costa Mesa, Calif., and Seattle offices, respectively, of investment banking firm D.A. Davidson have come off a particularly busy few years for deal activity. They said if anyone stands to benefit it’s likely the active and outdoor sectors rather than pure fashion plays.

The two, who walked the Vegas trade show floors last week, noted a bit of fear — fear of missing out — now driving the market when it comes to industry companies looking to raise capital or sell.

“Everyone’s coming into this quarter with, call it, realism and sobriety,” Rowe said.

He noted stark contrasts in trade show floor activity between contemporary and the more fast-fashion vendors, based on his own observations walking the Mandalay Bay Convention Center and then the Las Vegas Convention Center, as an anecdotal barometer of the general business environment.

“There seems to be way more energy and activity here [in juniors/young contemporary] and we’re seeing it in brand performance and client performance where the more expensive, contemporary brands are losing share and buyers are paying attention,” Rowe said. “Retailers are being very careful with their open-to-buy dollars and that goes back to fourth-quarter concerns.”

On the initial public offering side, it’s slow with little near-term activity in the forecast. If anyone has a shot at raising money from the public markets, it will be the fashion-tech companies that can prove themselves to investors, which have gotten much savvier when it comes to that market segment, Rowe said.

“It’s just a more cautious market, even though I think it’s going to be a good year from a deal perspective. It’s hard to believe it’s going to be better than it has been,” Smith said.

Bankruptcies, like those of Quiksilver Inc. and American Apparel Inc., may continue this year, but it will remain on the retail side, Rowe predicted, pointing to the general business environment and legacy leases many companies are now burdened with.

“No one wants to take risks right now,” Rowe said. “The buyers don’t want to take risks certainly and the manufacturers know where the buyers’ heads are so everyone’s narrowing down the selection and curating down into something that’s tight and salable.”

As is often the case in any business and particularly in apparel, relationships matter. As BenElias’s Gross pointed out: “You lose one [retailer] and then another guy pops into the picture. That’s why it’s important to maintain relationships within the industry because you never know how it’s going to come back to you.”

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