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Two thousand nineteen was a tumultuous year for American fashion, and a telling one. While major European luxury brands garnered reams of media attention, its denizens often registering seemingly limitless growth, the U.S. designer world operated in a state of traumatic flux, its shifting fortunes reflected in a diminished collective global profile and a number of major-name shifts and closures.

In fact, American fashion has been challenged for some time, a reality many of its participants acknowledged when WWD surveyed them in September 2018. But it all came together in a stunning whirl this year, with a series of touchstone events that brought into sharp focus the struggle of American businesses to compete at the luxury level.

Arguably, the company that experienced the most upheaval this year was Calvin Klein Inc., following the abrupt departure in December of Raf Simons, chief creative officer, over differences in brand direction. Simons’ avant garde designs and rocky tenure were a huge and costly experiment — a $240 million debacle — for the Calvin Klein business.

Following the split with Simons, CKI exited the Collection business, shuttered its Madison Avenue flagship (which went from minimal to maximal in a yellow makeover), closed its Milan office, laid off scores of workers, and licensed its women’s CK Jeans to G-III Apparel Group.

Derek Lam also pulled out of the designer arena, opting to focus on his 10 Crosby contemporary collection. Zac Posen shuttered suddenly, shocking the industry. And Proenza Schouler’s Jack McCollough and Lazaro Hernandez significantly modified their creative course, veering away from the lavish, high-minded artisanship on which they established their reputations toward more pragmatic (read: more wearable and affordable) fashion after last year regaining control of their company in a partnership with Mudrick Capital Management, which specializes in distressed investments. In addition, Milly, the contemporary sportswear firm, experienced a marital break-up of its cofounders and changed ownership (sold to MMJ LLC, a wholly owned subsidiary of S. Rothschild) and its cofounder and designer Michelle Smith departed.

Other businesses brought in new investors this year, namely Jason Wu and Gabriela Hearst, as well Rebecca Taylor and Parker, which were both acquired by Vince Holdings. Elizabeth and James, which struggled as a contemporary line in department stores, got a new distribution deal exclusively at Kohl’s. And Tommy Hilfiger closed its 22,000-square-foot flagship at 681 Fifth Avenue.

The year also saw several high-level management changes among American brands. The most recent is the departure of Anna Bakst, chief executive officer of Kate Spade Ltd., who is exiting her role following weak results. Steve Shiffman, ceo of Calvin Klein Inc., was succeeded by Cheryl Abel-Hodges, and Marie Gulin-Merle, chief marketing officer of CKI and chief digital officer of PVH Corp., also departed the company in October and joined Google. Victor Luis, ceo of Kate Spade parent Tapestry, Inc., was succeeded by Jide Zeitlin, and Andrew Rosen, ceo of Theory, stepped down from the company he cofounded and became an adviser to the brand.

Meanwhile, Tom Ford took over the chairmanship of the Council of Fashion Designers of America after Diane von Furstenberg’s long, storied run. Ford, who spent most of his career in Europe before relocating to Los Angeles several years ago, approached the position with the belief that fashion is global and American fashion better get with the program to be taken seriously on the global stage.

I think the future of American fashion is to become international,” Ford, then chairman-elect, told WWD in March. “One of the things that struck me the most moving back to America is the isolation that all of us living in America feel in every industry.…Yes, we’re Americans, we live in America, we work in America, but that’s not the key to our future. That’s certainly not the key to the luxury industry or to the fashion industry, because everything today is global. So I think the perspective of someone who has spent most of his [career in Europe] — I do think I can bring to [the CFDA] a global perspective.”

To initiate his tenure, Ford hosted a dinner for young designers and international press to open the spring 2020 season. His global initiative is starting just after some former American wunderkinds returned home from showing their collections in Paris. The Proenza duo and Rodarte’s Laura and Kate Mulleavy both returned for spring 2019. After showing in New York, the Mulleavys opted for Los Angeles the last two seasons. Hernandez and McCollough followed their Parisian stint with a show that was all about denim, a move that unintentionally fueled the question of whether American brands can successfully do luxury.

The Mulleavys and Proenza designers hail from the generation that arrived into fashion consciousness in the late Nineties and early Aughts. Talented, charming and fresh, and benefiting from the reflected glory of American forebears then ensconced at major European houses — Ford at Gucci, Marc Jacobs at Louis Vuitton, Michael Kors at Celine, Narciso Rodriguez at Loewe — many became instant fashion stars, taking global fashion by storm on the strength of new ideas and, in almost every case, a traditional wholesale-based model. Then the financial crisis hit, technology exploded, direct-to-consumer started to take off and the European luxury groups continued their growth-turned-superpower domination, all of which converged to rock the worlds of America’s former fashion darlings. No longer the new kids on the circuit, they have found fashion’s current landscape often dicey and sometimes treacherous to negotiate.

Lam always functioned a bit apart from the media fray. He set up his business in 2003, on an aesthetic platform of chic, polished, sportswear-based day clothes. In July, he and his partner-ceo (and husband) Jan Hendrik-Schlottmann confirmed their exit from the designer arena, saying they were putting that collection “on hiatus” to focus on the Derek Lam 10 Crosby contemporary brand, which now accounts for 70 percent of their company’s overall business.

“We had a challenging last three years with the changes and the uncertainty in the business and fashion in general. It became untenable to have two brands for us. 10 Crosby has been really growing, so that just makes the most logical sense,” Lam said.

As for that goal of increasing the brand’s international presence, Hendrik-Schlottmann noted that once upon a time international stores came calling, but not anymore. In the lead-up to the financial crisis, the Derek Lam Collection business was 50 percent international. By the time the partners pulled the plug on it, that number had plummeted to almost nil. Hendrik-Schlottmann maintains that, to recover from the crisis, “the big brands forced the independent retailers to buy their ready-to-wear if they wanted their bags and shoes,” which in turn greatly reduced the open to buy for smaller fashion brands. “That’s what it means, competing with these big brands…we were maybe a little naive to think that we could.”

Yet Lam acknowledged that more than economic forces have been in play, noting the culture’s increasingly casual lifestyle, and the decline of considered, purposeful dressing. “Daywear, at a designer level, traditional daywear — no one cares about it anymore,” he said.

Zac Posen clothes were just the opposite. Though he recently focused on building his brand’s daywear, Posen’s reputation was based on major, impeccably constructed and often visually elaborate event dresses that attracted a red-carpet following including everyone from Michelle Obama, to Gwyneth Paltrow to Rihanna, to Claire Danes to the Naomis (Campbell and Watts).

Crafting such gowns takes deep pockets. After owning a majority stake in the brand for 15 years, Ron Burkle’s Yucaipa Cos. wanted out, and it was no secret that Posen had been seeking investors for some time. Still, the sudden shuttering of his company in November came unexpectedly, sending shock waves through the industry.

Calling the sudden closure “horrible,” “pretty intense” and “surreal,” Posen said that the decision was “surprising and immediate,” after an intense search for a backer that ultimately didn’t come to fruition. “My partners and I tried everything possible within our means to find solutions to keep it going. I have been trying to find the right strategic partners at this tough time in retail and in the industry. The clock ran out,” he said.

[At presstime, it was learned that Posen’s trademark has been sold to Centric Brands, which plans to develop a robust sportswear and licensed business for Posen, although his role remains undefined.]

Conversely, for Proenza Schouler, the clock kept ticking after Mudrick’s investment last year allowed Hernandez and McCollough to buy back the company from its former investors, a group including Castanea Partners, Irving Place Capital ceo John Howard and Andrew Rosen. With a year of their new ownership situation behind them, the designers talked to WWD about the challenges they faced in the past and continue to face, and the steps taken to secure their brand’s future. Much had to do with cleaning up and modernizing operations under the watch of new ceo Kay Hong. “Having Kay has been game changing to the whole business,” McCollough said.

Then there was the matter of what the heck were they doing creatively, and for whom. The designers’ artisanal approach had become increasingly experimental, two characteristics that only heightened during their Paris stint when they showed on the couture schedule. Upon their return home, they knew things had to change.

The spring 2019 denim collection was symbolic and necessary; It was done last-minute, with no access to Italian mills, which were closed. The designers had access to Japanese denim, so the concept of returning to the U.S. with a denim lineup made sense. It also made for an important palette cleanser. Hernandez and McCollough call their first meeting with Hong “a reset,” during which they focused in on two basic questions: “What are we doing and who is this woman?’

Ultimately they decided to hyper focus on an intelligent, urban woman who loves fashion but doesn’t live for it. “What American designer is speaking to the real adult working women, like the people Calvin [Klein] used to address, the people Donna [Karan] used to address, who is speaking to those women?…The pool is much smaller than it maybe was a couple years ago,” Hernandez said.

That woman has become the sole focus of their creative efforts. They’re now offering her approachable clothes, still with plenty of interest, as indicated in their strong pre-fall 2020 offering. They have also redirected their Proenza Schouler White Collection to her  as well, ditching its former street vibe for a more sophisticated look for their woman’s “off-duty life.”

Will it be enough for the business to ultimately thrive? McCollough and Hernandez know they’re in a battle. They are optimistic, and unfazed by those in the industry who muse about whether they can make it work. “We are taking all the steps that we need to do to recalibrate to the new reality of the way the world works…” Hernandez said. “Our intent is still to obviously be creative and have fun.…But it’s also a business and we are determined to turn this into a real business. Very few people have been able to do that in American fashion.”

Market experts agreed that it was a challenging year for American fashion.

“It was the year that was. I think the change of the retail environment is really the key piece,” said Andrew Jassin, founder and managing director of Jassin Consulting. “The area where people relied upon being consistent has changed dramatically.” Jassin pointed to the death of Barneys New York and the changing landscape at stores such as Saks Fifth Avenue and Neiman Marcus, whose parent companies are having their own challenges. “None of the designers can rely on those stores as the core of their business planning, or activities going forward. Because they [the stores] are not sure what they’re doing.”

Jassin pointed to some businesses that are doing well, such as Rag & Bone, Gianni, Love Shack Fancy, Isabel Marant, Tibi and Alexa Chung, and companies like Ralph Lauren, who have their own stores. He said brands need to have multiple touchpoints with the customer and use social media and technology effectively.

“I think designers have to be relevant. Companies have to be relevant, and that’s a change. Millennial customers, who seem to be everyone’s attack and target, are not typically branded consumers. They’re fashion consumers, they buy trend-right product, but they’re not really the ones that support brands, unless the brands are connected to social media,” said Jassin.

Gary Wassner, president of Hilldun Corp., the factoring firm, described the year as “tumultuous.” He noted that there used to be a much longer timeline where a retailer could test a brand, and accept mediocre sell-throughs before dropping it. “But now, they don’t have the luxury of sitting back, because that padded profit isn’t there,” said Wassner.

Of the  400 brands that Hilldun factors and finances, the top 20, in terms of volume, have seen year-over-year and month-to-month increases. They’re selling to brick-and-mortar retailers, direct-to-consumer channels, Stitch Fix, Moda Operandi, Rent the Runway. Many of them have opened their own stores.

He disagrees that American fashion is no longer relevant. He said it may not be relevant only in certain categories, such as luxury eveningwear and handbags.

“What we mistake is the power of LVMH and the power of Kering. We don’t know which of their brands are profitable and which aren’t, we know the company is. They can afford losses and they can afford to build a brand over years until they reach a point they can start making money. We don’t have that timeline here, particularly the small, independent brands that rely upon their own capital and friends and family and factoring and financing. They are restricted. They can’t pump the marketing dollars into these categories as the European brands do. We see more growth and more visibility, but our top 20 are profitable, they’re consistently growing. They’re of all different sizes. Some are $250 million brands,” said Wassner.

“What we encourage is you can be a $30 million company and make more money than a $250 million company,” said Wassner. “If you’re privately owned, you have to figure out what your real goals are. Do you want to be a megabrand that’s always strapped for cash? Does top line always matter? For an independently owned company, it’s what do I take home at the end of the day? What’s going to help me increase that?”

 

FOR MORE STORIES:

Bridget Foley’s Diary: Tom Ford on CFDA, Houses — and Melania Trump

Zac Posen Trademark Reportedly Sold to Centric Brands

Cost of Calvin Klein Fallout Bigger Than Thought

Bridget Foley’s Diary: Proenza Schouler: Forging the Future

Zac Posen Shuttering Business

What’s Next for Calvin Klein Following Raf Simons Split?

Derek Lam Talks National Design Award Win, Streamlining, Being Centered in Fashion

 

 

 

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