RETAIL WOES HURT FABRIC SALES

Byline: David Grant Caplan

NEW YORK — While sluggish retail sales and the exodus of production offshore have taken a toll on the domestic textile industry, many mills and converters exhibiting at next week’s International Fashion Fabric Exhibition in Manhattan are trying to stay competitive by absorbing raw material and transportation price increases and expanding or launching full-package garment production programs.
Executives said retailers — hit hard in recent months by cautious shoppers — have placed fewer orders with apparel manufacturers, which in turn means less business for converters and mills. The downturn in business, said textile executives, began in December when retailers were hurt by a lackluster holiday season.
“Business is definitely flat at best right now,” said Jeffrey White, president of Shamash & Sons, a New York importer specializing in silk, rayon and linen. “I think Christmas really set things back because stores had so much inventory they stopped ordering as much for a short period of time.”
Pearl Ann Marco, principal at New York converter De Marco California Fabrics, said consumers began to cut back on apparel purchases because of economic uncertainty.
“When they go into a store, maybe they were thinking about buying a spring suit and they think twice about it,” she said. “The consumer is worried and you can’t blame them.”
John Irwin, vice president of New York converter Malibu Textiles, said “poor retail performance, period” is responsible for his firm’s “sluggish” sales.
“Retail has been so difficult overall, and it’s directly reflected on our customers and their needs,” he said.
Lawrence Gladstone, president and chief executive officer of Sequins International, said the Woodside, N.Y.-based company’s business has been slow since retailers “are buying more of a variety, but less quantity of each item.”
But with retailers clearing out inventory — fueled by heavy markdowns — executives said they expect business to pick up.
White at Shamash said “the pipeline is getting cleaner now,” so he expects his business to resume to pre-holiday levels by the summer.
“It is all based on the inventory in the stores, and I think the inventories have gotten more in line,” he said. “We are seeing an increase in orders now, and I think it will continue to pick up a little bit.”
Seymour Schneiderman, president of New York converter Symphony Fabrics, said his firm is beginning to rebound from a lackluster past couple of months, as manufacturers begin to receive orders from retailers.
“The months of January and February were definitely not great months from our perspective, relative to booking sales,” he said. “But for the month of March, there is tremendous pickup in activity, which tells me that now the old inventories have been cleared out at the retail level and they now have money to spend again.”
Schneiderman said his company is already beginning to accept fall and holiday orders — not surprising, he maintained, given the current state of retail.
“If the manufacturers had a great spring season, they would just milk it to the end before they would even think about going into holiday,” he said.
While most converters and mills are reporting a sluggish past few months, executives at firms dealing with higher-end customers and specialized niches — such as countertop — said it has been business as usual.
Raymond Hill, vice president of North Bergen, N.J.-based Sequins of Distinction, said the company has not experienced a slowdown because “our traditional customer base is medium-to-higher end, and they are the last ones affected by a slowdown in the economy.”
Hill added that the firm has many theater industry customers who “purchase our type of product [sequins] throughout the business cycle” for costumes, so the company’s sales have remained strong.
Ruth Gilbert, director at London mill Maison Henry Bertrand (England) Ltd., also said her higher-end customer base has so far insulated the company from economic woes.
“We’re probably a little bit cushioned because we are high market and we don’t sell to the mass production side, who are feeling it more,” she said.
New York’s Fabric Traditions, which does most of its business with tabletop distributors, is actually benefiting from the current economic uncertainty.
“The downturn in the economy seems to have the opposite affect on the over-the-counter end,” said sales representative Beth Towey. “There is sort of a pick-up in business because people tend to stay home more and do projects for themselves.”
Towey said the firm’s business has “remained in the same place because of this little niche we’ve created.”
At New York-based Harbin Linen Mill USA, vice president Richard Stein said “business has been quite good” since a linen mills’ peak period is “mostly spring and transition.”
Focusing on a particular segment or seeking out innovations in the textile industry are key to standing out in a crowded field, executives said.
“The companies that aren’t so up-to-the-minute and that aren’t aware of changes in fashion — they are the ones that are going to really feel it more than someone who is a lot more active in the market,” Marco said.
Irwin said the competition is fierce among companies seeking to outdo one another.
“Everybody is still looking for the next newest, hottest thing, which is always the case, but because business has been so quiet it’s magnified because people are just dying for something to sell,” he said.
White said, “You have to have innovative fabrics in order to expand your business.”
Fabric Traditions’ Towey said the company is “getting a little bit more aggressive about” expanding its product offerings.
“We’re trying some new ideas and trying some different fabrications,” said Towey, whose company deals mostly with tabletop retailers. “Basically, our thought process is to throw a lot of stuff out there and see what sticks.”
Ben Paniri, president of New York converter Ben-Tex Inc., said he is expanding his offerings of novelty knits to keep a step ahead of his competitors — and the bearish stock market.
“We are obtaining and creating new and interesting fabric lines to keep our business going and avoiding what is really going on outside,” he said. “Right now, we really have to do what is in our power and not have the stock market dictate our life.”
In addition to sluggish retail sales, increasing competition and offshore production, mills and converters have been hit in recent months by fuel- and transport-fee increases. Many executives said they have been forced to absorb most of the increases to stay competitive.
Sequins of Distinction has incurred hikes in raw material prices, but Hill said the company has absorbed most of the increases, which began about two months ago.
“Sequins are made of polyester, and of course oil prices are up, so because polyester is a derivative of oil, we have witnessed an increase in price,” he said. “We feel that we’ve taken on the larger portion of the increase.”
Barry Pollack, president of South Orange, N.J.-based Earthsea Trading Co., said the yarn-dyed woven designer and developer has incurred higher transport charges, but has been forced to absorb them in order stay competitive.
“We get cases sometimes where people order and then it’s getting late through no fault of our own, and in order to keep going, we have to absorb part of the air cost,” he said. “It’s just something we have to do to keep maintaining service and to have long-term relationships with our customers.”
Masion Henry Bertrand’s Gilbert said the company was forced to increase its prices after being hit by raw material price hikes.
“We’ve had to do as little as we can,” he said. “You have to a little because, otherwise, you don’t stay in business.”
Montreal linings distributor D. Zinman Textiles has also incurred raw material price hikes and passed some of it along to the firm’s customers.
“We’re incurring some charges from our mills because of petroleum that is used in the dyeing process of our raw fabrics that we sell,” said sales manager Barry McLaughlin. “We absorbed as long as we could, then we had to pass along a little bit to our clients — not as much as we would have liked to, obviously, but we did pass it on.”
McLaughlin said, in the past five months, the company has also incurred increases in transport and fuel fees.
“If our suppliers pass these incidentals on to us, then we have to do the same to our clients,” he said. “I did absorb it at the beginning for awhile, but there comes a time when you have to say ‘That’s enough.”‘
While many firms are grappling with increases, London lace manufacturer Alan Litman is not tolerating price hikes, said company director Adrian Litman.
“We’re not accepting any price increases from anybody,” he said. “If my dyers or my yarn suppliers try to put the price up, I shop around and try to go elsewhere.”
Fabric Traditions’ Towey said the company has been able to keep prices stable since “we planned pretty well and there is enough in our margins. But if it were to continue, I probably wouldn’t be able to say the same thing.”
Some firms are considering launching or expanding full-package garment production programs in order to remain competitive and offer customers one-stop shopping.
“We’re expanding it greatly,” said Shamash & Sons’ White. “We’re looking to double our apparel business this year and do more home furnishing packages like curtains, window panels and bed spreads.”
Pollack said he will increase Earthsea Trading Co./Jemi Trading Co.’s three-year-old, full-package garment production program “if that’s what it takes for us to keep moving forward.”
Pollack said he “would be happy with a “30 percent” increase in full-package garment production this year.
“It just makes it easier for the ultimate buyer that they have to deal with less people, less middlemen,” he said. “You’re accountable, and you have to stand up for the quality control, so I think it’s making things easier, more comfortable and more of a value for the customer.”
Ben-Tex’s Paniri said the converter does not currently offer full-package garment production, but it plans to offer the program to its customers by 2003.
Lee Forte, New York-based sales representative for Billion Freres, said the French mill also does not offer full-package garment production, but “it is something we are looking into for the future.”
He added, “You are actually producing the garment yourself, so there is a lot more flexibility in what you can do.”
While mills and converters may be struggling to compete with one another, the IFFE show — scheduled to run April 2-4 at the Jacob K. Javits Convention Center — will at least bring together members of the Textile Distributors Association in a designated area of the exhibition floor. For the first time, the show is being endorsed by the TDA.
IFFE show manager Amy Bonomi, who said about 300 exhibitors have so far signed up, described the endorsement as “a big vote of confidence for the show.”
Trend seminars at the show, which is managed by Woodland Hills, Calif.-based MAGIC International, include: “Spring 2002 Color & Lifestyle Direction: A California Approach,” “Junior Street Scene: Europe and L.A.,” and “New Concepts in Cotton for Spring 2002.”
Other seminars, scheduled on all three days of the show, will cover business-to-business ventures and forecasts for men’s wear and women’s wear.