Vernon, Calif.-based Catwalk to Sidewalk Inc. will be pounding the pavement as part of an ambitious plan to significantly scale its business over the next three years.
The company, which owns a portfolio of six brands — Pleione, Ro&De, Ro&De Noir, Bellatrix, Robin K. and Konus — is pulling the trigger on an ambitious growth plan that has it projecting $1 billion in volume by 2019, largely through the scaling of its distribution model but also through company-owned stores via its contemporary Ro&De Noir label and unisex streetwear brand Konus, according to chief executive officer and co-owner Billy Kang. The company counts Nordstrom, Urban Outfitters and Anthropologie among some of its largest retail accounts and employs about 170 workers across its Vernon headquarters and showrooms in Los Angeles and Seoul.
It’s Ro&De Noir and Konus, both of which are the most recent brand launches, that will serve as linchpins to the growth strategy in the near term. The company has nine Konus-branded stores and nine Ro&De Noir stores in Korea, with future expansion in Asia focused mainly on Japan and China. The company’s shopping for space to open its first-ever Ro&De Noir and Konus-branded stores in the U.S. this year, eyeing high-profile streets such as Robertson Boulevard and Melrose Avenue. It also thinks it can grow its retail footprint in Europe this year as well.
Kang declined to say what the company’s doing in annual sales other than to call it a midsize company. He’s projecting anywhere from 35 to 50 percent growth this year followed by growth of as much as 100 percent annually over the next two years to reach the $1 billion sales target. That would put the company at an estimated $150 million to $200 million in current annual sales based on those projections.
It’s a long ways away from where the company started in 2004, making what Kang described as “low-margin, cheap sportswear” with his wife and designer Jenny Kang.
Jenny is the designer and started the company. Billy, who had his own company in the California Market Center, was selling Jenny’s line to retailers when his wife decided she wanted to begin selling in the majors market, a move that prompted the merger of their respective businesses. “So I’m her sales rep and she’s my designer,” Billy said.
Their very first order for T-shirts, priced at $3.25 wholesale, totaled $11,000 — a hefty chunk of the $18,000 in personal savings they used to start the company. Jenny, when doing her calculations, realized she didn’t have enough fabric and made each piece slightly smaller when doing the grading. “It looked like kid clothing,” Jenny said.
Billy, not realizing what she had done, went to drop off the order. His customer opened the boxes to inspect the merchandise and looked at Billy in disbelief, noting his delivery was children’s sizes. The customer could use the size large shirts, which only amounted to about $3,000 worth of product. Billy called Jenny, yelling. By the time he came back home, he had calmed down, only to find his wife’s eyes swollen from crying. He assured her he’d take care of it and ended up recouping the $8,000 by selling it to a closeout business a week later. “So we had nothing lost, only time,” Billy said of the lesson learned.
The company’s managed to ride the waves in business largely due to its ability to be nimble with the changing business environment. Catwalk to Sidewalk began with low-margin product and by the early aughts was selling predominantly in the juniors space to retailers such as Charlotte Russe and Wet Seal. And then came the Forever 21 factor.
“Forever 21, they started from jobbers,” Billy said. “So when they [had] one, two, five stores, they start[ed] with jobbers and [knew the cheapest] they [could] get each piece. Also, they’re a private company, not a public company and all the public companies have to make a certain margin. So when we sold to all the big department stores or chain stores, we [had] a 30 to 35 percent markup but [Forever] 21, had less than a 20 percent markup…. And then [retailers in] similar markets to Forever 21 asked for the same price as Forever 21 and then the entire juniors market [was] gone after that.”
Fast forward to now and the trick is focusing on quality, Billy pointed out. The company, like most others in the space and beyond, was hit by the recession. Catwalk to Sidewalk at that time also dealt with a quality issue—large returns that nearly wiped its business out—which prompted it to come up with a set of guidelines for its factory partners.
“I learned at that time, without quality we cannot survive in this market,” Billy said. “So I met with all our partners to make sure they followed our guidelines.”
Billy and Jenny remain 100 percent owners, turning down investment offers and most recently declining on a bid from another company to buy their business.
“If you have investors…then the business model changes because an investor comes in and they want to just profit,” Billy said. “They want [to make] money through this company or to sell this company. But this is the fashion industry. We [want to set] our own goal [with our] own style.”