173_CAN111210_letter.. - California Apparel News

4 CALIFORNIA APPAREL NEWS NOVEMBER 12–18, 2010
NEWS
Otis Releases 4th Annual American Apparel Reports
‘Creative Economy’ Report Loss in Third Quarter
American Apparel—the Los Angeles–
In Southern California, one in every six
persons is employed either directly or indirectly
in the creative economy.
That was among the findings in a recently
released report from the Otis College of Art
and Design.
The report, titled “2010 Otis Report on
the Creative Economy of the Los Angeles
Region,” was prepared for Otis by the Los
Angeles County Economic Development
Corp. and was presented at a Nov. 10 conference
at the Colburn School in downtown Los
Angeles.
According to the report, the
creative industries in the region
currently employ a total
of 835,000 people directly and
indirectly. (The report defines
the creative field as architecture/
interior design, art galleries,
communication arts, digital media,
entertainment, fashion, furniture
design, industrial design,
toys, and visual and performing
arts. A direct job is defined
as a job within one of those 10
industries, and an indirect job
includes everyone employed by
companies that supply creative
industries, as well as producers
of consumer products who sell
to both the direct and indirect
employees of the creative economy.)
“This is a big-time number; [it’s] a really
important sector,” said Nancy D. Sidhu, chief
economist for LAEDC’s Kyser Center for
Economic Research. Sidhu highlighted the
report’s key findings, including the economic
impact of the creative economy—$286 billion—and
the amount of state and local taxes
generated—$4.6 billion—by the creative industries.
The fashion industry is the second-largest
of the creative industries in Los Angeles
County, after the entertainment industry. In
Orange County, the fashion industry is the
largest creative industry.
The report also includes a five-year projection,
which forecasts continued growth for the
creative industries.
“By 2014, we expect the creative industries,
in total, to have grown,” Sidhu said.
www.otis.edu/econreport
However, she countered the rosy outlook
with some words of caution for the fashion
industry. Although the LAEDC anticipates
growth in fashion design, it forecasts apparel
manufacturing to remain flat over the next
five years.
Event sponsors included the James Irvine
Foundation, the Department of Cultural Affairs
of the City of Los Angeles, Mattel and Nike.
Otis President Samuel Hoi kicked off the
event, which drew a crowd representing all
aspects of the region’s creative industries.
“With all of you here, it’s easy to imagine a
better future for our community,” Hoi said.
The event also featured presentations by
James Canales, president and chief executive
officer of the James Irvine Foundation;
Rocco Landesman, chairman of the National
Endowment for the Arts; and Ann Markusen,
economist, professor and director of the project
on regional and industrial economics at
the Humphrey Institute on Public Affairs
at the University of Minnesota.
The “2010 Otis Report on the Creative
Economy of the Los Angeles Region” is
available online at www.otis.edu/econreport.
In addition to the report, the website
features a video overview of Southern California’s
creative industries and their contribution
to the economy. A video of the
Nov. 10 event, including the guest speakers’
presentations, is also being posted on the site
later this month.—Alison A. Nieder
RETAIL NOTES
Glendale Retail Panelists Say
Xmas Sales to Increase
Jack Kyser, a veteran Southern California
economic guru, forecast retailers’ sales
would grow by 3 percent during the upcoming
Christmas holiday season. He made the
forecast at Glendale Galleria’s 2010 Retail
Holiday Panel at the mall in Glendale, Calif.,
on Nov. 11.
Southern California has made an economic
recovery since the weak Christmas season of
2009, according to Kyser, the chief economic
adviser to the Southern California Association
of Governments. However, consumers
are still reeling from the impact from the
recession, and many are focused on saving
money. “Before the recession, consumers
were criticized for not saving enough. Now
they are criticized for saving too much,” he
said.
Kyser’s forecast ranks among the more
optimistic 2010 holiday forecasts. On Oct. 6,
the National Retail Federation predicted a
Christmas sales increase of 2.3 percent. On
Sept. 23, Britt Beemer, a pollster for prominent
marketing research company America’s
Research Group, noted that a record 43 percent
of American shoppers plan to spend less
in the last quarter of 2010, compared with the
last quarter of 2009.
Kyser backed up his forecast with news on
the recovering business sectors around Southern
California and the state. He noted that
business has been improving in the Southern
California businesses of film production,
tourism and home building. Also, some areas
such as Orange County had strong economic
news to report when California’s Economic
Development Department noted the county
added 4,600 jobs in September.
Leslie C. Reisner, a clinical psychologist,
also made remarks during the panel. She forecast
consumers will be using more cash than
credit to make purchases this season. “We’re
going to be more practical this year,” she
said.—Andrew Asch
based vertically integrated manufacturer,
wholesaler and retailer—is continuing to
reposition itself with a greater emphasis on
wholesale operations and a new leadership
team, even as it reports results of another
challenging quarter.
On Nov. 9, the company announced an
$8 million loss from operations in its third
quarter—a significant change from the same
quarter in 2009, when it reported an income
from operations of $11.2 million.
American Apparel’s third-quarter financial
results also included net sales of $134.5
million—a decrease of more than 10 percent
compared with the same quarter last
year, resulting in a loss per diluted share of
13 cents. Comparable same-store sales for
American Apparel stores open a minimum
of 12 months dropped 16 percent.
The company pinned a gross margin loss
of more than 52 percent in the third quarter
on increased production costs due to lower
labor efficiency, a production mix that leans
heavily toward more complicated styles and
a shift in sales away from retail and toward
wholesale, something that American Apparel
said generates a lower gross margin.
In a Securities and Exchange Commission
filing on the same day, the company
warned that noncompliance with “covenants
under the Lion credit agreement [with lender
Lion Capital LLC] would constitute an
event of default under the Bank of America
credit agreement, which, if not waived,
could block the company from making borrowings
under the BofA credit agreement.
Nov. 13
24th Annual Golden Hanger
Fashion Awards Gala, presented
by Fashion Careers College
Town and Country Resort and
Convention Center
Mission Valley, Calif.
“Business Plan: The Start of the
Business Journey”
California Market Center, C789
Los Angeles
Nov. 15
CALA
Courtyard by Marriott
Denver
Through Nov. 16
Nov. 16
“E-Commerce: Build an Online
Store”
California Market Center, C789
Los Angeles
Nov. 17
Kingpins
Osage Gallery
Hong Kong
Through Nov. 18
Nov. 18
WRAP 10th-anniversary
conference
Calendar
Embassy Suites
Fort Lauderdale, Fla.
Through Nov. 19
“Why GenY Buys: Capturing
the Millennial Dollar,” a panel
discussion presented by FGI-
LA and followed by a Spring/
Summer 2011 trend presentation
J Restaurant
Los Angeles
Nov. 20
“Behind the Seams,” a panel
discussion sponsored by MAGIC
on making the leap from sketch
to sales
Raleigh Theaters
Los Angeles
Nov. 21
Thread Fashion & Lifestyle Show
Metreon at Westfield
San Francisco
Nov. 22
“Supply-Chain Management”
California Market Center, C789
Los Angeles
Nov. 28
Thread Fashion & Lifestyle Show
Horton Event Space
San Diego
In addition, all indebtedness under the
BofA credit agreement and the Lion credit
agreement could be declared immediately
due and payable.” These factors and others,
the company said, “raise substantial doubt
that the company will be able to continue as
a going concern.”
Still, Dov Charney, the company’s
founder and chief executive, struck a positive
note, saying American Apparel is being
proactive in its attempts to turn the company
around. “We recently announced the
hiring of Tom Casey as acting president,
and we are in the process of hiring several
additional new executives. The American
Apparel brand remains strong, and many
of our customers appreciate that our highquality,
fashionable basics are made in
America,” he said in a statement. “I have
seen reinvigorated interest in our brand, and
our customers are recognizing us for our
new products. We plan to continue driving
sales of our basics as we align product design
and development with more efficient
manufacturing.”
Casey, who joined the company in October
after leaving his post of executive
vice president and chief financial officer of
Blockbuster, said American Apparel plans
to improve its financial results by “supporting
the brand with a customer-focused supply
chain, leveraging our speed-to-market
capability with lower distribution costs. We
are optimizing our retail store base through
investments in technology and improved allocation
while lowering our lease costs.”
—Erin Barajas
Dec. 1
Denim by Première Vision
La Halle Freyssinet
Paris
Through Dec. 2
“Protecting Your Brand:
Intellectual-Property Issues for
the Apparel Industry,” presented
by the CFA’s Orange County
Professionals Club
Kimera Restaurant/Lounge
Irvine, Calif.
Dec. 3
Thread Fashion & Lifestyle Show
The Bay Salone
Los Angeles
Through Dec. 5
Dec. 7
ADL celebration dinner honoring
Joyce Eisenberg-Keefer and Mel
Keefer and Peter Schwartz
Beverly Hilton
Beverly Hills
There’s more
on ApparelNews.net.
For calendar details and contact
information, visit ApparelNews.
net/calendar.
Submissions to the calendar should be faxed to the Calendar Editor at (213) 623-5707. Please include the event’s name, date, time,
location, admission price and contact information. The deadline for calendar submissions is the Tuesday prior to Friday publication.
Inclusion in the calendar is subject to available space and the judgment of the editorial staff.
POSTMASTER: Send address changes to: CALIFORNIA APPAREL NEWS, Customer Service, PO Box 4419, Orlando,
FL 32802. CALIFORNIA APPAREL NEWS ® : (ISSN 0008-0896) Published by MnM PUBLISHING CORP. APPAREL
NEWS GROUP Publishers of: California Apparel News ® , Market Week Magazine ® , New Resources ® , Water wear ® ,
New York Apparel News ® , Dallas Apparel News ® , Apparel News South ® , Chicago Apparel News ® , The Apparel
News (National), Bridal Apparel News ® , Southwest Images ® , Stylist ® and MAN (Men’s Apparel News ® ). Properties
of MnM PUBLISHING CORP., California Market Center, 110 E. Ninth St., Suite A777, Los Angeles, CA 90079,
(213) 627-3737. © Copyright 2010 MnM Publishing Corp. All rights reserved. Pub lished weekly except semi-weekly
first week of January, second week of July and first week of September. Periodicals Postage Paid at Los Angeles, CA,
and addition additional entry offices. The publishers of the paper do not assume responsibility for statements made by
their advertisers in business competition. Opinions expressed in signed editorial columns or articles do not necessarily
reflect the opinions of the publishers. Subscription rates: U.S.: 1 year, $89; 2 years, $140. Foreign: $180 U.S. funds
(1-year subscription only). Single-copy price $3.50. Send subscription requests to: California Apparel News, Customer
Service, PO Box 4419, Orlando, FL 32802 or visit www.apparelnews.net. For customer service, call (866) 207-1448.