FOR JEANSWEAR FIRMS, FIVE-POCKET FORMULA NO LONGER ADDS UP
Byline: Janet Ozzard
NEW YORK — For the jeans crowd, growth isn’t coming easy anymore.
Denim manufacturers are finally seeing a dip in their numbers after three or four go-go years when, it seemed, all manufacturers had to do was ship product to make a profit.
Now, they have to work for it.
Heading into 1996, manufacturers say that to keep ahead of the game, and even turn a profit, brands have to market, merchandise, advertise, stay on the trends, keep replenishment flowing, accommodate retailer demands and think international.
And even then, it doesn’t always work. This year’s back-to-school, generally the most fruitful period for denim, was lackluster, although manufacturers said there’s been some movement for the holiday season.
But the core five-pocket jeans business stalled for many, and while fashion looks such as dresses, skorts and overalls picked up speed, it couldn’t make up the volume lost in other areas.
For next year, manufacturers are looking to new darker washes, stonewashing and other abrasion techniques to excite business on the retail floor. Fashion trends are expected to include a continued interest in slim fits, as well as carpenter pants, wide-leg jeans and hip-huggers.
“The fashion is a bit all over the place,” said Maurice Marciano, chairman and chief executive officer of Guess Inc., the Los Angeles jeanswear company.
Guess plans to work on advertising and other image-building techniques to build loyalty with a consumer who is being increasingly wooed with heavily advertised, competitively priced private label brands such as J.C. Penney’s Arizona and Sears, Roebuck’s new Canyon River Blues.
Guess took some big hits to its bottom line during the year, reporting a sales decline of 52 percent in the third quarter on top of a 16.3 percent drop in the second quarter.
That stemmed from some protective moves made by the company to restrict its distribution, said Marciano.
“I believe in a narrow distribution and an expanded product line,” said Marciano, explaining his strategy for next year. “If you want to keep the brand name clean, you have to have very controlled distribution. It’s too easy to put a name all over the place.”
Marciano said retailers now demand that vendors tag and hang merchandise and deliver on strict schedules.
“And they don’t want to pay more for the garment. We just deal with it,” he said. “They want to get leaner and more efficient, and pass the burden on to the suppliers.”
To rebuild sales, Marciano said he plans to add some licenses to Guess’s already considerable list, open some new stores domestically and continue to push internationally. Guess has franchises and licensees throughout Europe and Asia, as well as design headquarters in Florence to develop product for that market.
In addition, Paul Marciano, president of the company and director of its advertising and marketing, is preparing an ad campaign that will include some TV as well as print and outdoor.
VF Corp., which owns the Lee, Riders and Wrangler brands and holds a license for the Marithe & Francois Girbaud brand in the U.S., was another company that started the year strongly and lost ground in the second half.
“If you look back, 1995 started out well for all the VF brands,” said John Schamberger, chairman of the company’s Jeanswear Coalition. “May and June were particularly good for us, but back-to-school did not come, although some weeks in November were very, very good.
“Going forward, we’ll see modest increases. Darker colors and looser fits, as well as denim items, are picking up steam, and it shows the consumer is interested in variety. The jeanswear business comes in cycles, and we’ve had a good run for the last five or six years.”
To keep consumers focused on branded merchandise, the Lee brand has expanded its advertising and sponsorship, which will include the Summer Olympics.
“We’re spending more on the front end, in media and in stores,” said Schamberger. “I think you’ll see that the brands that are really meaningful to the consumer will gain strength. We’ve made our forecast in the last couple of months, and going forward we’re concentrating on fashion jeans, T-shirts and tops, which we think could make a good business. We’re looking for modest growth in the first half.”
Levi Strauss cut against the grain with another banner year, according to Margie Hanselman, merchandise manager of the company’s jeans for women.
The $6.1 billion jeanswear giant, based in San Francisco, reported robust junior sales during an otherwise sluggish early fall. That, and a swelling international business, pushed its profits ahead 33.5 percent in the third quarter on a 9.5 percent rise in sales.
“The strength of the brand franchise is what allowed us to have a good year,” she said. “We did some things specifically to keep the momentum. We totally changed the fit of the 501 this year, to a ‘guys-fitting’ jean. That, along with the print campaign, really helped, especially with young girls. It showed them, hey, Levi’s really has stuff for me. The 501, along with the looser fitting 505 and 560 jeans, were great for us.”
Hanselman said the company’s fashion-forward SilverTab line also showed good increases this year, and said she’s in conversations with key accounts such as Bloomingdale’s to increase the buy.
“SilverTab really got established during 1995, and it’s selling like gangbusters,” she said. “Most stores still have a fairly small selection — it’s somewhere between 5 percent and 8 percent of their total buy — but they’re saying they want to increase it to as much as 25 percent of their mix. SilverTab quadrupled this year, and it will probably quadruple again next year.”
She said dark washes are already demonstrating good sales.
“For newness, the customer who already has a stonewash jean bought the new dark washes and the very abraded looks,” she said. “The key focal point in newness is fit, whether it was the guys’ fit or a loose fit. Newness in finish was the core extension of abraded and dark looks.
“We saw a renewed interest in the looser and relaxed fits. It started to take away from the slimmer fit for everyday. I don’t mean that the slim fit is dying, not at all, but women tend to wear it for a special occasion, like going out at night, and not as much for just hanging around with their friends.
“I don’t see much change for the fashion cycle in 1996. We have a lot of opportunities in the junior areas, both in terms of fashion items such as shorts, skirts, skorts and dresses and related items. But I honestly think the core extension will get much stronger at the two ends of the spectrum – the abraded looks and the dark washes. That’s the way people can buy something new, in the fit they love.
“The next trend will be rinsed denim. It’s not rigid denim — it’s been washed and preshrunk — but it’s very dark and doesn’t have the abrasion of the stonewash looks.”
Sun Apparel, the El Paso, Tex.-based jeanswear manufacturer, scored a major licensing coup this year with the signing of Ralph Lauren’s jeanswear business. That, along with the Todd Oldham jeanswear license — which just started to ship to a few retailers — will make 1996 a banner year for the firm, according to the firm’s president, Eric Rothfeld.
Sun Apparel also produces two brands of its own, under the X-Am and Code Bleu labels. At the beginning of 1995, Code Bleu introduced a Lycra spandex and cotton jean named “Miracle Boost.” Sales of that jean, said Rothfeld, have been “disappointing.”
“I think it has to do with the retailer and how it was merchandised,” said Rothfeld. “In Europe, where the ads were used more prominently, it sold better.”
The Miracle Boost jeans ad featured the back of a nude woman, whose derriere was wrapped in a purple bra-like structure to indicate the jeans’ boosting capability.
Despite Miracle Boost’s slow sales, Rothfeld said the Code Bleu misses’ denim line held its own in department stores, while the junior mass brand X-Am “has done very well for its first full year out, despite tremendous confusion and instability in the mass retail arena.”
“There’s a general trend away from cookie-cutter replenishment,” Rothfeld said. “Manufacturers that have a degree of flexibility, and can do a wide-leg jean or find interesting finishes, are going to do well. There is a lot of interesting fashion out there, and as a vertical company, we can take advantage of that.”
Rothfeld said that while he understands the threat brands feel from private label, he feels that area “is more in touch with what sells, because it’s run by retailers.”
“All the trending I see is not in branded,” he said. “This business is going to be about who can react and who can test fastest.”
Jordache, the mass market jeanswear company here, did well during the year with denim sportswear that had a fashion slant, such as corduroy and stretch fabrics and in wide leg, overall and carpenter pants styles.
Executive vice president Liz Berlinger pointed out, however, that the five-pocket jeans had “slower movement” than in previous years.
“Stores are more difficult on several issues,” she said. “They are not planning business far enough out and ordering closer to season, which makes it difficult for us to plan our business accordingly. In addition, due to the weak selling environment, retailers are overstocked and unable to reorder back into items and classifications that are selling well. All of this hampers our efforts to maximize our sales potential. And we’re forced to buy less up front, to avoid possible inventory problems.”
Corporately, the company is planning a 25 percent increase domestically, fueled by fashion and by licensing ventures. Internationally, said Allen Wollins, director of licensing, Jordache is looking for a 20 percent increase next year on top of this year’s 25 percent increase.
“The retailer has open arms in terms of new things,” said Robert Luehrs, president of Chic/HIS, a mass denim resource here. “Darker denim, a darker blue-purple wash, and tighter-fitting jeans for juniors. I think the business was soft because the customer was tired. We’re going to see a lot of newness, and a fallout of basic manufacturers who are, in many cases, fringe suppliers. We want to be a basic powerhouse, but in the meantime, we want to supply the fashion, too.
“Of course, there’s the margin squeeze all around. I don’t care if you’re making jeans or toothpaste, you’re in that squeeze. It’s going to be difficult for the stores that didn’t go bankrupt, because those that did own their merchandise, and they’re creating an atmosphere where they’re selling goods for a very, very low price, because they’re off the hook on receivables. The bankrupt stores are going to have a terrific season.”