It’s been a rocky winter for Rocawear — but the biggest brand in the urban space is adjusting to the new realities of retail, said company executives in an exclusive interview with WWD.
This story first appeared in the February 2, 2012 issue of WWD. Subscribe Today.
Last month, men’s licensee Roc Apparel Group LLC laid off 28 of its 56 employees at its Manhattan headquarters, according to a New York State Department of Labor filing, and published reports were quick to sound an impending death knell for the Iconix Brand Group Inc.-owned label. Rocawear founder Shawn “Jay-Z” Carter was said to be abandoning the brand.
However, reports of Rocawear’s potential demise are off the mark, said company officials, and the brand has a comeback strategy firmly in place.
Later this month, Rocawear’s first-ever television campaign, featuring Jay-Z, which was filmed in November, will make its debut, belying rumors that he’s distanced himself from the brand. While the label’s men’s business is facing severe challenges as the urban market continues its long slide, particularly in the specialty store sector, Rocawear is growing other license categories such as children’s wear and international markets.
Of the reports that Jay-Z is alienated from the brand, Iconix president and chief executive officer Neil Cole noted: “This is the first time we have a television commercial starring Jay, so that’s obviously not true. I think you’ll see the opposite.”
In fact, Jay-Z recently renewed his contract, which expired at the end of 2011, to endorse Rocawear for another three years, through 2014.
Jay-Z owns a 51 percent stake in Roc Apparel, the men’s licensee, and is a shareholder in Iconix Brand Group as a result of the latter’s acquisition of Rocawear in 2007 for $204 million in cash. Iconix holds a 16 percent stake in Roc Apparel.
“Of course, he’s a busy guy between his tour and his new baby and his music,” added Cole of Jay-Z. “Are there times when he’s not on tour and not in the studio where we get more time with him? Yes. And are there times when we have to work via e-mail and through other channels? Yes. But we are lucky enough to get a lot of his time and caring.”
The men’s business is about 15 to 20 percent of total Rocawear sales. Both the children’s business, licensed to Li & Fung, and the international business, licensed to various overseas partners, are equal to or larger than men’s at this point, said Cole.
Rocawear is currently in 11 international markets, with Asia and Europe being the main targets for growth. Last month, Rocawear took a large-scale booth at the Bread & Butter trade show in Berlin for the first time ever, accentuating its focus on overseas markets.
“We had a very prominent booth across from Tommy Hilfiger and next to G-Star,” said Jameel Spencer, chief marketing officer at Rocawear.
In the last two months, Iconix has signed three new licenses: swimwear with Longstreet, home products with Kidsline and watches with American Time Holdings. Rocawear now has 26 total license partners.
Still, Rocawear faces some steep challenges in maintaining its relevance in the volatile young men’s market, which were driven home by the layoffs at Roc Apparel. Total global sales for the Rocawear brand declined to about $500 million in 2011, down from $700 million three years ago, according to Iconix figures.
“Key organizational changes have eliminated unnecessary and underutilized roles as a part of an increased organizational efficiency exercise,” said Ronnie DeMichael, chief operating and financial officer at Roc Apparel, of the restructuring last month.
DeMichael said Roc Apparel’s sales decreased “slightly” in 2011 from 2010, due to continued declines in its specialty store business. The men’s product is currently in 2,000 U.S. doors, with Macy’s and Dillard’s the two largest accounts. No major retailers were lost in 2011, said DeMichael.
“It’s a very tough general environment with what’s happened in the urban business, and they’ve adjusted. There are layoffs up and down the street,” said Cole, referring generally to Seventh Avenue. “It’s been very tough in our industry, the apparel business. There are a lot of companies laying off quietly and adjusting their businesses.
“Roc Apparel downsized a bit based on business trends, but they have an exciting story going forward,” added Cole. “We were over there last week, and they are in a good position to start growing their business again.”
Directed by Anthony Mandler, the new television campaign is a key component of that plan. Rocawear plans to air the commercial on MTV, BET and TNT during NBA basketball games, among other outlets, including digitally on YouTube and rocawear.com. Titled “From Marcy to Madison Square,” the black-and-white spots track Jay-Z’s rise from selling CDs out of the trunk of a car in the Marcy Projects of Bedford-Stuyvesant, Brooklyn, to headlining concerts at Madison Square Garden. The spot uses footage from Jay-Z’s “Watch the Throne” concert at MSG in November.
“This is a really big deal, and fashion companies don’t usually use television. We are investing in the brand,” said Spencer. “We are looking to spend more money than we did in the past in marketing this brand.”
A print campaign will complement the broadcast spots, and will drive traffic to the online versions of the commercial. Pages will run in GQ, Details, Complex, Teen Vogue, Nylon, Vibe and XXL. A digital buy includes advertising on sites like complex.com, vibe.com, Highsnobiety.com, bet.com, Allhiphop.com and Freshnessmag.com.
On the fashion front, the brand plans to play up its classic flame logo in its fall collections, after eliminating it on most product in the past three years.