Men's Fashion Week: Is LA Ready? - California Apparel News

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For now, Los Angeles–based Speedo USA is staying in town after the swimwear brand’s parent company, Warnaco Group Inc., was acquired by PVH Corp. for $2.9 billion. Emanuel Chirico, PVH’s chairman and chief executive, said he was pleasantly surprised to see how Speedo had grown over the past few years under the leadership of Jim Gerson, named president of Speedo USA in 2010. In an Oct. 31 conference call announcing the acquisition, Chirico said PVH has no intention of selling Speedo right now. “When we started to do the due diligence, we were pleasantly surprised by the strength of the Speedo business,” he said. “It is a very marketable asset. But clearly at this moment in time, we’re looking for ways to help them grow that business, invest in that business and that brand, and take it forward.” Speedo USA, which licenses the name from Speedo International Ltd. in England, has experienced good revenue growth in the last few years. In fiscal 2011, Speedo USA saw its wholesale revenues hit $229.3 million, up 5.4 percent from 2010, when they were $217.5 million. The Speedo brand is a dominant label in competitive swimming, worn by U.S. swimmer Michael Phelps, who won eight gold medals in the 2008 Olympic Summer Games in Beijing and 10 gold medals during the 2012 Olympic Summer Games in London. In 2011, athletes wearing Speedo products won two world records at the World Championships in Shanghai. Some 58 percent of all medals won at the event were won by swimmers wearing Speedo suits. 2 CALIFORNIA APPAREL NEWS November 2–8, 2012 Warnaco also makes Calvin Klein swimwear, in a licensed deal, out of its Los Angeles office. Calvin Klein swimwear saw its wholesale revenues climb to $27.8 million in fiscal 2011, up 18.6 percent from the previous year, when they were $23.49 million. Warnaco’s other owned and licensed brands are Olga, Warner’s and Chaps. Many analysts and investment bankers weren’t surprised to see the acquisition. It had been in the rumor mills for three to four years. “I think when it happened, it wasn’t a huge surprise for anyone,” said Paul Zaffaroni, director of investment banking at Roth Capital Partners. Helen McCluskey, president and chief executive officer of Warnaco, is expected to join PVH’s board of directors. Calvin Klein on the move NEWS SPOt ChECk Speedo Safe After PVH Acquisition of Warnaco In his conference call, Chirico said all of Warnaco’s licensed Calvin Klein businesses, including the labels for Calvin Klein Jeans and Calvin Klein underwear, will be moved to PVH’s purview. PVH, formerly known as Phillips-Van Heusen, purchased the Calvin Klein brand in 2003. The brand is under the leadership of Tom Murry, president and chief executive of Calvin Klein. “This is a unique opportunity to reunite the ‘House of Calvin Klein’ and reinforce our strategy to drive the global growth of Calvin Klein,” Chirico said. PVH believes that in three years, the merger will help it save $100 million in operating costs. The deal is expected to close in early 2013. Holders of Warnaco common stock will receive $51.75 in cash and .1822 of a share of PVH common stock for each share of Warnaco common stock. Based on PVH’s last closing stock price, the per-share value of the consideration to be received by Warnaco stockholders is $68.43, a 34 percent premium over Warnaco’s last per-share closing price. When the acquisition is completed, Warnaco stockholders will own about 10 percent of PVH’s outstanding stock. PVH’s other brands include Van Heusen, Tommy Hilfiger, Izod, Arrow, Bass and G.H. Bass & Co. Its licensed brands include Geoffrey Beene, Kenneth Cole New York, Sean Jean and Donald J. Trump Signature Collection. —Deborah Belgum U.S. Joins Mexico on China Textile- Subsidy Case The United States is backing Mexico in its efforts to challenge alleged subsidies the Chinese government provides its apparel and textile factories. On Oct. 15, Mexico went to the World Trade Organization to challenge what it believes are various measures and economic incentives by China to financially support apparel and textile manufacturers. On Oct. 30, the United States decided to join Mexico in that challenge. Under WTO auspices, Mexico requested consultations with China over nearly 100 alleged illegal subsidies that include tax exemptions, reduction of import duties and value-added taxes for equipment purchases, low-cost loans from state-owned banks, preferential land-use rights, and cash payments from government agencies. Mexico believes these alleged subsidies, prohibited under WTO rules, have hurt its apparel exports to the United States. Mexico used to be the No. 2 provider of apparel and textiles to the United States. It is now No. 4, with $4.7 billion in apparel and textiles sent to the United States in 2011. China is No. 1, providing about 40 percent of all apparel and textiles sold in this country. Last year, that totaled $40.6 billion. Under WTO rules, the two sides have 60 days to discuss Mexico’s claims. If a settlement is not reached, Mexico can ask a WTO panel to make a ruling. Cass Johnson, the president of the National Council of Textile Organizations in Washington, D.C., praised the decision by the United States to join the consultations between Mexico and China. “For decades, large and comprehensive subsidies by the Chinese government have prevented free and fair markets from operating in world trade in textiles and apparel. These subsidies have directly contributed to the loss of hundreds of thousands of U.S. textile workers,” Johnson said in a statement, noting that 379,000 U.S. textile jobs have been lost over the last 11 years as manufacturing shifted outside the United States. “The landmark case by the government of Mexico exposes the Chinese government intervention for exactly what it is—a mercantilist state-guided effort to control one of the world’s largest manufacturing sectors.” —D.B. CHOOSE LUXURY: Darrel Adams, owner of Kin Los Angeles, recast his boutique as a luxury shop in 2009. Kin’s Journey to Luxury Labels For fashion boutique Kin Los Angeles, luxury is its key to success. When it opened in 2004, the boutique, located at 8555 Sunset Blvd. in West Hollywood, Calif., was intended to be ultimate clothier to the nightlife set. The shop would offer both high-end and low-end fashion. Club kids could find a $25 shirt alongside a $1,500 jacket. But the 3,500-square-foot store, which is a short walk from the Sunset Plaza retail district, could not make money on low-cost items, said Darrel Adams, Kin’s co-founder and, now, sole owner. The store was too small to churn out the large quantity of low-cost clothing required to make a profit, and Adams had no desire to compete against the masters of the low-cost fashion market, such as H&M, which happens to run a big store down the street from him. Adams made a gambit to sell only designer clothing after Kin co-founders Alex Mouracade and Jacqueline Kanawati left the company in 2009. The new direction seems to be paying off. Adams is close to signing a lease for a new boutique in Los Angeles’ exclusive Bel-Air neighborhood that will be smaller than his current boutique. Adams hopes that all of his stores—the physical store on Sunset Boulevard, the Bel- Air store and the online store at www.kinlosangeles.com—are defined by good service and a wide range of merchandise for both men and women. For women, Kin’s top-selling item is the reversible jeans by Los Angeles–based label Bleulab. The jeans retail for $245. The most popular style is a bronze colored, wax-coated jean that has the look of leather pants. When the pant is turned inside out, it becomes an indigo blue jean. “It’s the anti–walk of shame jean,” Adams joked, noting that the jean provides the opportunity for a new look after leaving a tryst. Kin opened its men’s section in February. The top-selling item is the “Drill” chino pant from Levi’s Made & Crafted label, which retails for $255. It’s popular because the fabric is soft and the chino offers a traditional, baggy fit. It’s an alternative to denim and the skinny look, which still dominates men’s pants. —Andrew Asch INSIDE OUTSIDE: Bleulab’s reversible jeans, one pair pictured above, are top sellers at Kin. Image courtesy of BleulaB
NEWS U.S. Labor Officials Subpoena Forever 21 for Garment-Factory Information Forever 21 Inc. is in the hot seat with the U.S. Department of Labor. After a raid of Los Angeles garment factories in August allegedly found a number of wage violations, labor officials requested a slew of documents from Forever 21, a Los Angeles–based retailer that allegedly used one of the raided factories. According to court documents filed in U.S. District Court in Los Angeles on Oct. 25, Forever 21 provided only a portion of what was requested and neglected to turn over information itemizing the apparel factories it employs. So the U.S. Department of Labor went to court to enforce an August subpoena asking for information. In a statement, Forever 21 said it follows federal wage guidelines. “Forever 21 shares the Department of Labor’s commitment to proper wage payment under the Fair Labor Standards Act. To that end, Forever 21 promptly responded to the department’s subpoena with information that resulted in a full resolution of the matter under investigation. “Forever 21 also offered to meet with the department and is surprised and disappointed that the department declined to meet before filing this action but looks forward to working with them to address any issues.” The subpoena is the latest turn in a Wage and Hour Division investigation that started on Aug. 6, when investigators made a sweep of 10 garment sewing factories at 830 S. Hill St. in downtown Los Angeles to inspect their records. According to investigators, the factories were paying their workers for every garment sewed, also Terramar Retail Centers is betting that people will want to shop at a retail and dining center that once housed criminals in the old jail cells inside the former San Diego Police Department headquarters. The developer is spending $40 million to configure the space into a shopping mecca near the waterfront. The historic Spanish Revival complex served as police headquarters between 1939 and 1987. It will be called The Headquarters, opening in October 2013. Terramar is leasing the 100,000-square-foot space from the publicly owned Unified Port of San Diego, said Steve Bowers, Terramar’s chief executive officer. Located adjacent to Terramar’s tourist-friendly center Seaport Village, The Headquarters, at the corner of West Harbor Drive and Pacific Coast Highway, will have space for up to 30 tenants. They will include specialty fashion retail and gift stores as well as chef-driven restaurants and prominent restaurant chains. No tenants have been announced, but Bowers is expecting they will enjoy a lot of retail traffic because more than 4 million people visit Seaport Village annually, according to Terramar. known as paying on a piece-meal basis. Investigators said garment employees, who worked on average 47.45 hours a week, made $6.85 an hour, which is below the federal minimum wage of $7.25 an hour. In California, the minimum wage is $8 an hour. The workers were not paid overtime, and none of the employers maintained accurate time and payroll records. “The results of this sweep were astonishing in both the breadth and the depth of violations discovered,” said Kimchi Bui, the district director of the Los Angeles district office of the Wage Hour Division. One of those factories raided was CUI Sewing Inc., which reportedly was a subcontractor for another Los Angeles apparel factory, Color Me Red Inc. Investigators said both factories were making clothes for Forever 21. Under federal law, retailers and manufacturers are responsible for the conduct of contractors, said Priscilla Garcia, a district director for the Wage and Hour Division’s office in West Covina, Calif. The division served Forever 21 a subpoena on Aug. 16 and demanded that the retailer turn over specified documents by Sept. 5. In the past five years, the Wage and Hour Division offices in Los Angeles, San Diego and West Covina have conducted more than 1,500 investigations into violations of minimum wage, overtime and recordkeeping provisions. According to the government, 93 percent of the investigations uncovered violations and the division found more than $11 million in back wages owed to 11,000 workers. —Andrew Asch Hot Topic Tests Lingerie Concept Hot Topic Inc. gained prominence for delivering Goth and rock ’n’ roll styles to malls, and on Oct. 31, the City of Industry, Calif.–based retailer announced that it will introduce a new division, called Blackheart, that will offer those styles in lingerie for women ages 18 to 30. Lisa Harper, chairman of Hot Topic’s board and chief executive officer, said it is only a test, though. “The Blackheart lingerie concept is a test that allows us to leverage the Hot Topic customer and offer her product categories that will not cannibalize the core Hot Topic brand,” Harper said. She is directing this test concept. It will sell clothing created by an in-house team assembled to design clothes for Blackheart. On Nov. 15, the company will open an e-commerce store for the new brand at www.blackheartlingerie.com. Hot Topic also will open five physical stores. Locations will include California malls Irvine Spectrum, Glendale Galleria and the Brea Mall and Texas retail centers Houston Galleria and Baybrook Mall. The stores will average 1,800 square feet and will offer bras, panties, corsets and sleepwear along with beauty products, jewelry and outerwear for nightclubbing.—A.A. U.S. chain-store sales increased a healthy 5 percent in October, according to the International Council of Shopping Centers. It was bigger boost than last year’s 4.1 percent increase, said Michael Niemira, the chief economist for ICSC. For the last few days of October, mall traffic was reportedly low in the Northeast and Mid- Atlantic states as people crowded supermarkets and hardware stores to prepare for Hurricane Sandy, which wreaked havoc along the eastern seaboard when it made landfall on Oct. 29. How the disaster affects re- COP SHOP: A rendering of The Headquarters, a retail center that will be built on the renovated site of the former San Diego Police Department headquarters. (Image courtesy of Terramar.) The Headquarters also will be frequented by people attending events at the nearby San Diego Convention Center and the popular Gaslamp District of downtown San Diego. It is a new development in an urban area with little free space, Bowers said. “Retail water projects are very few and REtAIL SALES October Sales Up 5 Percent Despite Hurricane Sandy October Retail Sales $Sales % Change Same-store (in millions) from yr. ago sales % change DISCOUNTERS Target $4,982.00 +3.0% +2.4% OFF-PRICERS Ross Stores $715.00 +8.0% +4.0% TJX $2,100.00 +11.0% +7.0% DEPARTMENT STORES Macy’s $1,908.00 +3.6% +4.1% Kohl’s $1,392.00 +4.6% +3.3% Nordstrom $835.00 +11.5% +9.8% SPECIALTY STORES The Buckle $84.20 +5.7% +3.8% Gap $1,220.00 +5.0% +4.0% Wet Seal $38.50 -5.1% -7.6% Zumiez $41.90 +20.2% +0.6% Information from company reports tail will become more apparent later, Niemira said. “Superstorm Sandy’s impacts were modest in terms of October sales, with strong pre-storm buying possibly even giving a slight lift in certain category sales,” he said. Niemira also forecast that holiday spending and spending for repairs will boost November retail sales by the end of that crucial holiday month. Adrienne Tennant, an analyst for Janney Capital Markets, noted that samestore sales for many retailers were better than expected, and many retailers distinguished their business with a “tight inventory and cleaner markdown levels.” Discounters and off-pricers reported a solid October. Target Corp. and Ross Stores Inc. announced same-store-sales increases of 2.4 and 7 percent, respectively. The department-store retailers also announced good sales. Nordstrom Inc. beat some forecasts when it reported a same-store-sales increase of 9.8 percent in October. On Nov. 1, Macy’s Inc. raised its guidance for its sales growth in the second half of 2012. It will increase to 4 percent, up from the previous guidance of 3.7 percent, said Terry J. Lundgren, chairman, president and chief executive of Macy’s. “We are feeling confident about our prospects for the upcoming holiday season and have increased our sales guidance for the fall season, despite the interruption caused by Hurricane Sandy in the first few days of the fourth quarter,” he said. Specialty stores were a mixed bag. Gap Inc.’s results were applauded after the biggest specialty retailer in the world reported a same-store increase of 4 percent in October. Zumiez Inc. disappointed Wall Street when it posted an anemic gain of 0.6 percent. The Wet Seal Inc. posted a same-store decline of 7.6 percent in October. Hot Topic Inc. and Bebe Stores Inc. reported quarterly financial results as many retailers announced their results for the past month. For the City of Industry, Calif.–based Hot Topic, its third-quarter results were an increase of 0.2 percent, while its net sales increased 2 percent to $179.3 million during this period. Bebe reported its first quarter for fiscal 2013 on Nov. 1. Net sales were $117.1 million, which represented a decrease of 7.3 percent from $126.3 million for the same quarter in the previous fiscal year. Same-store sales for Bebe’s first fiscal quarter of 2013 declined 8.7 percent.—A.A. New Retail Center Being Built in Former San Diego Police Headquarters Building far between,” he said. “People love being on the waterfront.” The three buildings at the former police headquarters will include an open-air plaza, wide walkways and fire pits to lounge around. Working with historic architect David Marshall of Heritage Architecture & Planning, Terramar is restoring architectural elements of the complex, which was built in 1939. Elements to be restored include 27,500 roof tiles, 15,000 square feet of ornate courtyard pavers and the cell-block doors from the complex’s defunct holding cells. San Diego fashion shopping is best known for Horton Plaza and the Fashion Valley mall, which is owned by Simon Property Group. It houses retailers such as Neiman Marcus, Macy’s, Louis Vuitton, Bebe, Gap and Forever 21. Fred Sweet, an observer of the San Diego fashion scene as well as producer of the La Jolla Fashion Film Festival and chief executive of San Diego Model Management, said The Headquarters is a good business idea. “It seems the world’s elite has discovered the area’s beautiful coastlines, beaches and perfect weather,” he said of San Diego. “So having more places for them to shop would be a good idea.”—A.A. November 2–8, 2012 CALIFORNIA APPAREL NEWS 3
Page 1: volker corell, John eckmier, Felix
Page 5 and 6: Join us for the official LAFW wrap
Page 7 and 8: Men’s Fashion Week Continued from
Page 9 and 10: Directory of Professional Services
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