COAT FIRMS STRATEGIZE A BETTER FALL
Byline: Arthur Friedman
NEW YORK — Outerwear manufacturers are lamenting what many are calling “a lost season” and looking for ways to perk up sales for fall ’95.
Most of the blame for the lackluster season is being pinned on higher-than-expected temperatures in key parts of the country.
Merchants and vendors came into the season with high hopes, thanks to a ’93-’94 fall-winter season that was one of the best in years.
Coat executives were also optimistic that consumers would remember last year’s brutal winter that brought record snowfalls to the Northeast. Retailers bought early and deep, and manufacturers were experiencing strong pre-season bookings.
But apparel in general lagged behind overall retail sales in the fourth quarter, and unusually warm weather in the vital November-through-January selling period — notably in the Northeast and Midwest — left stores with huge inventories and demanding big markdown money from vendors.
The tough season is probably best reflected by results at one of largest coat retailers in the country — Burlington Coat Factory Warehouse. Profits at Burlington Coat fell 23.1 percent in the second quarter ending Dec. 31, to $43.1 million from $56.1 million a year earlier.
In the quarter, sales advanced 5 percent to $659.9 million from $628.7 million, but same-store sales were down 8.5 percent. Another telling figure were inventory levels, which rose 32.8 percent to $529.9 million from $399.2 million a year earlier.
The area that continues to show the most action is active outerwear — from down-filled anoraks to functional, casual jackets — and rugged looks such as shearlings or short wools. The casual side of outerwear should continue to grow next season, executives said.
Now manufacturers face an uphill battle — convincing stores to buy outerwear in a timely manner and to be patient with the weather. All makers agree it won’t be an easy task.
Ted Goldsmith, chairman of Bromley Corp., which makes the licensed Anne Klein, Anne Klein II, J.G. Hook and Evan-Picone coat collections, said it started as a record year in September and October, only to fall flat when the unseasonable weather hit in November.
“A lot of reorders were never confirmed, leaving manufacturers with work in process,” Goldsmith said. “The stores came into the yearend with high inventories, which they either had to dispose of or carry over.”
The shift to more casual apparel changes the type of merchandise the coat market is designing and puts coat companies in competition with firms more known for their sportswear, Goldsmith said. Add to the mix private label outerwear, which is particularly strong in catalogs, and the branded coat business becomes squeezed, he said.
“We feel the wool business can be better than it has been, and we’re making a major effort in fabric development for next year,” Goldsmith said. “If the consumer is buying more casual coats, then dress coats have to be more luxurious.”
Goldsmith said product development has become a year-round effort for coat makers, as it becomes increasingly important to “make our product as interesting as we can, without taking too much risk.” As coat firms continue to feel a pinch on margins, Goldsmith predicts sourcing will turn offshore even more to control costs.
The promotional atmosphere of the coat market is not going to change, Goldsmith said, because “promotions create traffic and because the consumer has grown accustomed to it.”
“The weather was a factor, no doubt about that,” said Douglas Hillman, president of the wholesale division of London Fog Corp. “However, in dissecting the business, we found our cloth outerwear, which makes up close to half our sales, did exceptionally well, especially fur trims on microfiber and poplin active and casual bodies.”
Hillman said London Fog’s core rainwear business was soft, as was wool and leather, two categories it does not produce. He admitted that rainwear business in department stores, often anchored by London Fog, was also hurt, but by “the London Fog factor.”
“We were late getting merchandise onto the selling floor in September and October,” said Hillman, who acknowledged that poor planning and a shift to offshore production hurt deliveries.
For the upcoming fall season, London Fog is continuing with its signature brand and its Towne by London Fog lower-priced label, which Hillman sees as having the most potential because of its lower prices. An overall return to more feminine looks with functionality, such as zip-out liners and collars, will be important in the fall collections, Hillman said.
Hillman said he’d like to see stores offer dollar discounts instead of percentage discounts. For example, a London Fog coat retailing for $200 could be offered at $50 off, or a 25 percent discount, which would draw in consumers and give them a good value without taking deeper discounts such as 35 to 40 percent off, which he says “destroys everyone’s margin.”
Steve Blatt, president of Searle Blatt Ltd., forecasts that “next year there will be much less of a desire to stock up early.”
“Stores will be holding back money to promote later on. It will be a difficult, late season, with stores looking at specific items and areas instead of broad categories,” Blatt said. “It’s up to the manufacturer to come up with some very strong items, with a focus on novelty and newness.”
Blatt sees continued strength in active looks, such as down-filled anoraks, fleece-lined jackets, rugged shearlings and casual cloth coats.
“It used to be wool coats dominated, but now it’s become one big outerwear market, and wool is just part of it,” he said. “There are so many different materials and fashion looks being offered today, and the dress-down casual trend is here to stay.”
The promotional nature of coat retailing has become so ingrained in the market that Blatt doubts it will change.
“They could cut down their expectations, but the overall numbers are so big, even if the margins aren’t,” Blatt said.
Josh Lipman, president of Cuddlecoat, which makes the licensed Christian Dior coat collection, said women’s apparel overall has not rebounded from the recession as strongly as the general economy has.
“On top of that, the coat business was severely hurt by the incredibly warm weather,” Lipman said. “On Presidents’ Day this year, I could have played golf, while last year it was 9 degrees. That’s hard to plan.
“All we can do is stick with what we’ve always done, which is to make a high-quality competitive product with an eye toward the trends, toward good prices and toward great fabrics and styling,” he added. “There is no magic bullet. We’re also facing skyrocketing cashmere prices, but that could work in our favor. It may be that the companies that started doing cashmere when it became so cheap will back off, leaving business to those who specialize in it.”
Morris Goldfarb, chairman and chief executive officer of G-III Apparel Group, said the key issues facing vendors and merchants are “how to build a profitable coat business and how to entice the consumer to buy again.”
He said discussions he’s had with retailers show an interest in cultivating partnerships with key vendors to develop new products that will pique consumer interest.
“Retailers recognize that you can’t replace fourth-quarter coat business with T-shirts, so we’re getting good early direction and participation from them as we plan for fall,” Goldfarb said.
Some areas that scored well this past season and are being counted on for fall ’95 are real and faux shearlings, textured leathers and colorful, down-filled active outerwear.
Nina Churchill, national sales manager for the women’s division of Sanyo Fashion House, said the strategy for fall is to focus less on basics and more on special items to get the consumer’s attention.
For example, said Churchill, a packable polyester and nylon microfiber raincoat sold with a carrying pouch, retailing for $175, did so well in catalogs this past season that it will be repeated next season.