LINGERIE FASHION THIRST STILL UNQUENCHED
Byline: Karyn Monget
NEW YORK — Lingerie continues to be a class act.
The seemingly insatiable appetite for fashion lingerie and the huge demand for specialty items, particularly allover seamless underwear, daywear and foundations, promises another solid year for innerwear at retail, said industry executives.
Following hefty booking increases for third- and fourth-quarter selling that generally range from the mid to high teens, and in some cases, 20 percent or higher, manufacturers said they are extremely bullish about prospects for the vital spring 2001 market week in New York starting Aug. 7.
The upbeat attitude isn’t a surprise. After ringing up $11.8 billion at retail in 1999 and generating sales of over $12 billion the first six months of 2000 at stores nationwide, intimate apparel continues to be a lucrative segment.
Based largely on the influence of fashion — whether it’s the proliferation of lingerie looks on ready-to-wear runways, the exposure of designer names in intimates such as Calvin Klein Underwear, Ralph Lauren Intimates and DKNY Underwear, or the growing number of licensees from the junior/contemporary sportswear field like Guess and Bisou-Bisou, and Nike in the active arena — lingerie is expected to chalk up another banner year.
Adding to the fanfare is Victoria’s Secret — the specialty lingerie retailer that raised innerwear’s profile in the U.S. and is currently honing its sexy image for a global platform. A majority of vendors, many of whom describe Victoria’s Secret as the leader of the pack, credit the lingerie specialist’s fashion-forward merchandise and Hollyood-style fashion shows for taking intimate apparel out of the boudoir.
Interestingly, lingerie — long regarded as a basic commodity business before its renaissance in the Nineties — is being characterized as a Teflon business, untarnished by sluggish sales that have hit other apparel categories and surmounting a crushing series of mergers and acquisitions over the past decade that have put independent firms on the endangered list.
Innerwear business remained virtually unblemished throughout several industry upheavals, such as the Chapter 11 issues of two industry titans — Maidenform Worldwide in 1998 and Fruit of the Loom this year — as well as the most recent Calvin Klein-Linda Wachner controversy. The most publicized cat fight to ever hit the innerwear industry, observers note that the outcome of the lawsuits in Federal Court, which are slated to commence Jan. 16, 2001, will most likely not have a negative impact on the overall industry.
Executives generally said the world-class feud will give other status brands an opportunity to take over space and snare additional open-to-buy dollars. Moreover, the crux of the lawsuit — which questions whether The Warnaco Group, Calvin Klein Inc.’s biggest licensee, has any rights to sell CK trademarked merchandise to off-price membership clubs — has fueled a number of troubling questions from major retailers who have depended on the celebrity power of designer-name intimates.
As reported, Dillard’s dropped Calvin Klein Underwear and May Department Stores cut back orders. A number of big department stores are said to be reevaluating and comparing the fashion benefits and productivity of licensed megabrands against a successful private brand or a smaller resource with creative flair.
Some executives privately voiced concern that an anti-brand trend could eventually surface in a range of product categories, which ultimately could elevate private label programs that typically were the backdrop for prestige brands.
“This whole Linda-Calvin thing has got a lot of retailers thinking about problems between licensors and licensees, and what damage that does to a brand and to a store,” said one manufacturing executive who did not want to be identified. “I wouldn’t be surprised if there’s some kind of backlash down the road.”
Ellen Rohde, president of the Vanity Fair Intimates unit of VF Corp., said, “I guess what it boils down to is who wins the lawsuit. I’m hearing that Linda Wachner’s personal time is less against business and more on the trial, and that may have some effect because she oversees Warnaco’s day-to-day business and a lot of her time has been sidetracked.”
Rohde said the category of megabrands is being evaluated and questioned by retailers right now in terms of growth and profitability.
“They are looking at the designer name category against the whole mix,” she said. “Only the very strongest megabrands will stay around. If CK survives at Warnaco and becomes the hottest brand again, retailers will want that brand and will forget there was this major legal issue.”
Regarding Vanity Fair products, Rohde noted, “The continuing success of our Illumination Bra will drive nice increases for us. Secondly, our Vanity Fair ‘My Favorite Pant’ launch in the third quarter has very high expectations. We also are launching The Body Sculpting Bra, Vanity Fair’s solution for support without an underwire.
“We currently see our second half coming in at strong single-digit sales increases, including strong shipping performance with every Vanity Fair top retailer. Pressure to develop big ideas and deliver on time will continue throughout the year.”
Key classifications expected to do well at Vanity Fair include seamless, molded bras, light-control panties, thongs and high-cut briefs, and slips and camis.
Charles Nesbit, president and chief executive officer of Sara Lee Intimate Apparel, observed, “Victoria’s Secret continues to improve its market position at the expense of traditional department stores. Status brands have not yet provided the competitive answer for department stores, and deep price promotion is not bringing back consumers.
“While powerful new product introductions are important, there is a need for both manufacturers and department stores to reinvent the category by creating a better shopping environment. New product performance continues to be good for us. The demand for the young, trend-right Lovable line has been much greater than expected. New push-up styles in Wonderbra are performing well. New Playtex, Bali and Barely There bras are also contributing to our increases.”
Nesbit further noted: “All Santoni seamless products continue to be strong growth vehicles. I am particularly pleased with the results on Barely There shapewear. My biggest disappointment, though, is our inability to keep up with the demand for seamless products. With our second plant coming on stream, I now anticipate we will be in a much improved supply position during the second half.”
Regarding lackluster apparel sales, Nesbit said, “I perceive the sluggish market conditions will continue into the second half. Consumers are experiencing higher gasoline prices and higher interest charges, which reduce their disposable income for categories such as apparel.
“I perceive consumers are making fewer visits to stores and buying only what they need. As a result, there is less impulse purchasing. I also see a number of retailers tightening inventory controls, which can only suppress sales through the supply chain.”
Michael Fitzgerald, ceo of Wundies, said, “The key challenge is the consumer wants newness all of the time. The life cycle is getting shorter and shorter on products. Something’s hot for two months and it’s not the third month. We have to constantly entertain consumers — like Disney World does.”
“We expect fourth-quarter sales to be up 2 to 3 percent over last year, and that was a great year,” said Fitzgerald, noting that shelf bras are “very important” items. Extra production has been added for microfiber seamless underwear, as well as printed cut-and-sew styles, he said.
Assessing the issue of status brands, Fitzgerald, said, “I think designer names have hit a glass ceiling. Product innovation will take them to the next level. There’s only so many ways you can do a logo. Consumers want new, innovative product. That’s the whole idea behind seamless.
“There’s going to be a shift. Designer names are going to max out, and no more space will be allocated to them. I don’t think retailers are going to fund them as deeply or grow them,” said Fitzgerald.
Victor Lee, chief financial officer of NAP, said, “I think this Warnaco-Calvin lawsuit really represents more of a culmination of the frustration felt by some of the status brands that haven’t been performing well. I think status brands have nowhere else [than chains and discounters] to grow. Once you’ve penetrated the first year or so of business at department stores, where else can you go? Expanding distribution overseas can be very costly. It costs no extra volume to grow domestically.
“I believe that’s what triggered the controversy between Warnaco and Calvin. Unless the licensing contract is crystal clear, other licensors and licensees could face similar consequences.”
Regarding NAP’s business, Lee said, “We think any fabric with a special hand will continue to drive business. Silk items have been received extremely well in our [licensed] Crabtree & Evelyn sleepwear collection. Robes, both long and short, have been strong in the Anne Lewin line and Crabtree & Evelyn.”
“Product is king. If you have the product, you’ll have the business,” said Kathy Nedorostek, president and chief operating officer of Natori Co. “Right now performance is number one. Unfortunately, performance and productivity on the selling floor for megabrands have not been strong. The retailers we work with are very smart. They are going to start looking at their mix and decide what to do, because they want to be unique and special.”
Nedorostek is projecting third- and fourth-quarter sales gain percentages in the high teens.
“We are coming off a very strong first half both in the Natori and Josie labels,” she said. “Weekly sell-throughs at retail have been 80 percent and 85 percent. We really positioned ourselves to be on top of the trends and key items such as pants — whether they are capris, long or cropped styles that are striped, printed and embroidered. We are taking a strong position on pajamas for the second half, as well as nightshirts and robes in cotton wovens and cotton knits.”
Richard Leeds, chairman of Richard Leeds International, said he and his wife, Marcia, who is president of the company, both credit a better understanding of the individual needs and overall fashion direction, “unique to each of our customers,” for driving their business this year.”
“This is a continuing commitment to fully differentiate our licensed brand collections with every tier of retail distribution,” said Richard Leeds. “We know that freshness creates excitement, and we are constantly trying to update our looks through fashion detail, great art and updated but understandable silhouettes. The consumer has proven it has no problem paying more for a brand as long as the products are worth it.”
Leeds said a top seller is a rib-knit boxer set in heather tones with fashion treatments such as minimal embellishments and updated graphics. Overall, he said, sales are 21 percent ahead of 1999.
Looking at licensing, Leeds noted, “In the intimate apparel licensed brand business, the importance of the brand and the retailer is often driven from other high profile areas, like children’s wear, and girls’ and women’s sportswear. If other licensees do not approach their product with greater long-term care and concern, the retailer looks elsewhere for brands or product that can drive more consumer traffic in their stores. This hurts the brand, themselves and us with them.”
Peter Keyloun, president of Ariel Designs, a division of John David Associates, said: “There has to be a thinning out of names like Tommy, Calvin and Ralph in the intimates departments. There’s too much duplication among the brands. It’s become a big turnoff to consumers. But I think this colossal battle between the two T-rex’s — Calvin and Linda — won’t affect the industry. It actually could make room for more people.”
Meanwhile, Keyloun said he projects sales gains between 18 and 20 percent over a year ago. He attributed the increases to more fashion merchandise and $400,000 worth of orders from an account that was in bankruptcy last year, the Brownstone and Lew Magram catalogs. Both catalogs were acquired this year by the Fingerhut unit of Federated.
Regarding marketing and ad campaigns, John Brody, vice president and national sales manager of Jockey International, said that part of the company’s strategy to “get consumers to try key product groups” has been a package of national print ads, in-store collateral and promotions that create awareness.
“We are using comfort as a bridge to encourage consumers to try our new products,” said Brody.
Tag lines for the campaign include “Jockey Bras — We Know What Makes You Feel Good,” and “The True Test of The Perfect Bra Is Not How It Feels, But How You Feel.”
In the sleepwear field, key items have generally been driving business. At Carole Hochman Designs, president and design director Carole Hochman said, “Three-piece capri sets with a tank and little cardigan have been incredible. Retailers have told me that after a customer buys one set, she comes back for another. A long cotton-knit tank gown has also been strong.”
Sheila Solomon, national sales manager of Priamo Designs, said, “Woven and knit cottons and linens have made a major contribution this year in sleepwear and loungewear. Quilted robes took off for spring, and we plan to intensify assortments, as well as pretty, dual-purpose items that can be worn as patio wear, loungewear and beachwear.”
Solomon said spring 2001 will focus on “fabrics that have a ready-to-wear influence like rayons and printed sheers,” which will be targeted to younger consumers.