DENIM DISH

Byline: Melissa Drier

S&P Takes a Look at Levi’s
Standard & Poor’s on Wednesday said it may downgrade the debt ratings of Levi Strauss & Co. due to concerns about the company’s sales and earnings trends.
“The company continues to be challenged by a consumer shift toward designer jeans and the popularity of private-label brands,” the ratings agency said. “Results from Levi Strauss’s transition from a manufacturing-driven company to a more marketing-oriented company are being realized more slowly than expected.”
S&P said it placed Levi’s long-term corporate credit, senior unsecured credit, bank loan ratings, short-term corporate credit and commercial paper ratings on CreditWatch with negative implications.
The possible downgrade also reflects concerns that Levi’s second half and full-year fiscal financial results and credit protection measures will fall below expectations, following negative first-half sales and earnings trends, S&P said.
“Despite a significant restructuring charge and cost-reduction efforts, year-over-year earnings trends remain negative,” S&P said.
As reported, Levi’s on Tuesday named a new president and chief executive officer to help shore up operations. Philip A. Marineau, who had been president and chief executive at Pepsi Cola North America, will start at Levi’s on Sept. 27.

Rock On
Jeanswear departments resemble concert halls these days, thanks to a rash of performances or personal appearances during the crucial back-to-school period.
Hip-hop singer Eve recently performed for a crowd of almost 500 at the Guess shop in Macy’s Herald Square in New York. The 20-year-old, dressed in Guess raw denim from head to toe, also signed autographs. Those who made a $50 purchase received a free autographed CD.
Pop sensation Britney Spears also continues to make the rounds for her concert-tour sponsor Tommy Jeans. She was slated for an autograph-signing session Wednesday night at the Tommy Jeans shop at Macy’s Herald Square.
Meanwhile, at the WWDMAGIC and MAGIC International trade shows last week in Las Vegas, Levi’s had hip-hopper Wycleff Jean performing for retailers and editors at the Hard Rock Hotel. Jean wore jeans on stage: Levi’s, of course.

Khaki Book
Later this month, Dockers will release “Khaki: Cut From the Original Cloth,” a 156-page book filled with images by acclaimed fashion photographers and filmmakers of famous people wearing khakis. Contributors include Sante D’Orazio, Annie Leibovitz and Peter Lindbergh. Richard Martin, curator of The Costume Institute at the Metropolitan Museum of Art wrote an essay on the history of the garment.
Although the late Nineties have been characterized by a renaissance of khakis, celebrity wearers from the past include Albert Einstein, James Dean and Ava Gardner, the book says.
Proceeds from the sale of the book benefit the Elton John AIDS Foundation. The book will soon go on sale at dockers.com and in bookstores for $50.

Building Up Retail Energie
It’s shop time for Sixty SpA, the Italian producers of the trendy Miss Sixty, Energie and Killah Babe jeans and streetwear collections. The first German Sixty flagship just opened in Berlin. The three-story, 6,000-square-foot space houses all three jeanswear brands.
But that’s not all. In addition to triple-brand stores in London’s Covent Garden and in Amsterdam, a Killah Babe store opened in Rome last month. A Tokyo flagship is due to bow this week. A second London store, a Miss Sixty location, is expected soon. And a five-level, all-brands emporium will debut in Milan in the middle of October. Next up: a Miss Sixty shop in New York, which owner Vittorio Hassan said he hoped would open next year.
The Berlin flagship is the only company-owned store planned for Germany, one of Sixty’s most important export markets, with sales growth there double the company norm of 10 percent. The store is clearly divided into Miss Sixty, Energie and Killah Babe departments, with Miss Sixty housed on the second floor, the men’s brand Energie on the ground floor and Killah Babe junior streetwear in the basement. To entertain shoppers and encourage hanging out, there’s a magazine rack and an alcove with 10 video screens.
The store’s overall look is very clean, surprisingly so for a brand known for its wild and wacky booths at the leading jeans trade fairs. Hassan, in fact, acknowledged that the Berlin branch should be “a little bit crazier.” According to the sales staff, more radical and extreme styles sell faster than basic jeans.

Chic Buys Sierra Pacific
Chic by HIS Inc. said it had acquired the principal assets of Sierra Pacific Apparel, a manufacturer of private label jeans and casual pants and shorts based in Visalia, Calif.
“The addition of Sierra Pacific is another important step in our plans of rebuilding and restructuring our company,” said Daniel Rubin, Chic’s chief executive officer. “Sierra broadens our customer base significantly, and along with our recent acquisition of Stuffed Shirt, moves us further along in the private label business as a complement to our rejuvenating Chic branded business.”
Rubin told WWD that Sierra, with annual volume of around $20 million, primarily sells private label products to Gap, The Limited and other specialty chains, and said he expected private label sales “to become a very significant part of our business in coming years.”
Rubin noted that Chic traditionally had “minimal” private label sales and it had primarily served the mass channel; Target and Kmart accounted for 55 percent of U.S. sales last year.
Chic acquired Stuffed Shirt — a $35 million maker of private label jeans and coordinated separates; J.C. Penney is its major customer — for $4.3 million in January.
Rubin also said the acquisition would “further utilize our great capacity” in plants in Mexico.
Jeffrey Paul, who will continue as president of Sierra Pacific, said, “This is an exciting opportunity to supply our customers with greater volume through Chic’s state-of-the-art Mexican facilities while retaining the flexibility of our Visalia operation.”
Rubin also said Chic’s $12 million fall advertising campaign to relaunch Chic by HIS jeans was being well received.
“It’s having a very positive effect on our business,” Rubin said.
In the half ended May 8, Chic’s loss narrowed to $6.2 million from $21.7 million a year ago. Sales shrank 8.9 percent to $121.2 million from $133.1 million; U.S. sales declined 14.1 percent to $70.3 million and European sales fell slightly to $50.9 million.

Lee Day Update
Gearing up for the fourth annual Lee National Denim Day on Oct. 8, a fund-raiser for the Susan G. Komen Breast Cancer Foundation, the Lee Co. has registered more than 11,000 companies to date. The deadline to register is Friday, Sept. 17.
Last year, more than one million employees at 18,000 companies participated. This year’s campaign goal is $6 million. Last year’s event raised $5.5 million.
To promote the event and drive registration, actress Patricia Arquette, this year’s spokeswoman for the event, has appeared on numerous talk shows. She’s also slated to do a national radio tour today during the crucial morning rush-hour time slot. Arquette lost her mother, Mardi, to breast cancer two years ago.
Those wishing to participate can call (800) 688-8508, ext. 401, or visit the Lee National Denim Day web site at denimday.com/den. Participating companies receive instructions, posters, paycheck stuffers and sign-up materials. Employees of participating companies who donate $5 may wear denim to work.