Influential 20
News makers, hot topics and trends.
During the past year, the California apparel and textile industries grappled with new import procedures and the approaching deadline for a quota-free world. Business owners searched for relief from skyrocketing workers’ compensation costs. New retailers stormed into the state, while California-based niche-focused specialty stores watched their efforts pay off in ever-increasing sales.
Property owners joined forces to give the Los Angeles Fashion District a new look, a new marketing push and a new place to call home. Meanwhile, world-famous shopping boulevard Rodeo Drive got a makeover across town.
A handful of Los Angeles–based start-up trade shows held their own against a trade-show giant. And a New York trade-show producer returned to Los Angeles bigger and brighter than ever before.
Among manufacturers, surf brands entered the world of entertainment or got edgy, and a juniors maker opened stores in China while pulling much of its production back home.
For designers, there were new avenues for information, assistance and promotion. Two of Los Angeles’ own were tapped to head European design houses. And then there were shows, shows and more shows as Los Angeles became the home of two fashion-show venues and saw the number of Fashion Week runway shows and parties grow from 30 to nearly 100.
The California Apparel News takes a look at 20 people, organizations, ideas and issues that were influential in 2003.
Influential 20
2005 Effect
In 2003, the buzzword for many U.S. apparel and textile makers was 2005.
The apparel and textile manufacturing world as we know it will take on a whole new look in 2005, when quotas on clothing and most other goods will be lifted among World Trade Organization members.
U.S. apparel industry executives fear a flood of cheap apparel and fabric primarily from China and other Asian countries will put them out of business. In 2002, Chinese clothing and fabric exports to the United States more than doubled, and in August 2003, those exports had jumped 75 percent for the year to date.
The American Textile Manufacturers Institute, an industry lobbying group in Washington, D.C., has been a strong advocate for imposing safeguard measures that would keep quotas on some goods.
The White House decided to listen, particularly after 139 U.S. representatives and 26 senators signed letters urging the administration to invoke special safeguards for textile trade involving China. In November, President George W. Bush imposed safeguards to cap imports of knitwear fabric, bras, dressing gowns and robes.
The decision allows the United States to cap growth at 7.5 percent above current levels for one year unless the United States and China can negotiate an agreement in upcoming months.
While textile manufacturers are pleased, retailers are miffed about the restrictions. They feel it will create shortages and raise prices.
No matter what safeguards are put in place, almost all apparel and textile quota restrictions will eventually disappear on Chinese-made goods.
Los Angeles Fashion Week
Los Angeles Fashion Week has been growing steadily for several years, but when IMG’s Mercedes-Benz Shows L.A. and Smashbox Studios’ Smashbox Fashion Week both launched in April, the week really took off.
Los Angeles Fashion Week grew from about 30 events to nearly 70 in April and more than 90 in October and November. Much of the hype was about IMG, with its back-to-back shows in downtown Los Angeles, and Smashbox Studios, which held its shows in a laid-back, social setting across town in Culver City.
Many Los Angeles designers who had been staging their own shows in recent years opted to show their collections at the two high-visibility events, while some new venues and designers hosted solo events around town. Even several East Coast designers showed their collections alongside Los Angeles’ best-known designers and several up-and-coming labels.
The two major show producers helped draw national and international press and a few A-list retailers to the 14 days of fashion events. But the real stars of Los Angeles Fashion Week were, naturally, the designers. Industry insiders have long been aware of the considerable design talent in Los Angeles, but the addition of MBSLA and Smashbox Fashion Week helped focus attention on the city’s fashion industry and designers.
C-TPAT and the Department of Homeland Security
The world of apparel importing turned in a new direction when the U.S. government placed U.S. Customs and Border Protection (formerly U.S. Customs) under the U.S. Department of Homeland Security on March 1. The cabinet-level department, headed by former Pennsylvania Gov. Tom Ridge, governs U.S. customs inspectors and border patrol agents.
The new customs agency wasted no time in fine-tuning existing rules and regulations for the Container Security Initiative, first announced in early 2002 in response to the Sept. 11 terrorist attacks. The initiative requires shippers to send their cargo manifests electronically to U.S. customs officials 24 hours before loading containers onto ocean carriers so customs officials can determine whether they are high-risk items.
Customs believes that if terrorists were to smuggle weapons of mass destruction into the country, the weapons would probably come in cargo containers. With that in mind, customs officials are examining 4 percent of all ocean-cargo containers entering the country, twice the number inspected before the terrorist attacks.
This year, the agency amended the initiative to include advance manifests for air, truck and rail shipments.
As part of this increased scrutiny, customs officials are trying to crack down on illegal transshipments of apparel brought into the United States.
Customs officials have filed civil complaints against several Southern California companies that allegedly smuggled Chinese- made clothing into the United States by listing their cargo destination as Mexico.
Hand in hand with the increased security measures has come the Customs-Trade Partnership Against Terrorism (CTPAT). Launched in November 2001, the voluntary program helps importers get goods through customs quickly. To be part of the program, importers must be familiar with the entire supply chain of their goods, including the agents, shippers and overseas apparel factories that make the goods.
Kohl’s
This time last year, there was not one single Kohl’s department store open for shopping in the Golden State. Now, there are 28 stores scattered throughout five Southern California counties.
Menomonee Falls, Wis.–based Kohl’s Corp. opened a large distribution center in late 2002 in San Bernardino, Calif., to foster growth in the Southwest. Since then, it has been aggressively opening doors in Southern California, Phoenix and Las Vegas.
As of Nov. 1, 2003, Kohl’s operated 542 stores in 36 states, compared with 457 stores in 33 states during the same period last year.
The company, founded by the Kohl family in 1962 in Milwaukee, distinguishes itself in the retail world by offering stand-alone locations with adjacent parking lots instead of sharing large enclosed malls with other retailers. Kohl’s retail secrets of success include wider aisles for easier maneuvering, big shopping carts, plenty of checkout lanes and lots of brandname labels at competitive prices.
Kohl’s target customer is a middle-income consumer and busy individual who values convenience shopping.
Kohl’s entry into the Southern California market prompted other department store chains—including Federated Department Stores Inc., parent of Macy’s, and The May Department Stores Co., parent of Robinsons-May—to overhaul some of their stores and store concepts in Southern California, providing shopping carts, wider aisles and more checkout stations. Robinsons-May plans to open a dozen free-standing stores in Southern California during the next two years.
Rodeo Drive Committee
The name Rodeo Drive carries a lot of cachet, but in recent years, the tony shopping street, last revamped in 1991, was looking a little long in the tooth.
That’s why the Rodeo Drive Committee of Beverly Hills launched a major effort this year to give some oomph to the world-famous shopping street, which is studded with glitzy retailers including Harry Winston, Louis Vuitton and Gianni Versace.
The city of Beverly Hills and Rodeo Drive property owners, through a 25-year assessment period, are spending $18 million to upgrade five streets in the area known as the Golden Triangle District.
The first step was the creation of the “Walk of Style” on Rodeo Drive. The walkway is similar to Hollywood’s “Walk of Fame”—it honors the best and the brightest in the fashion design business. The first honoree was Giorgio Armani, who came to Beverly Hills in September to accept his award at a star-studded event that included Jodie Foster, Sophia Loren, Harrison Ford and Michelle Pfeiffer. The Italian designer was honored for his work in Hollywood, where he provided the fashions for movies including American Gigolo, The Untouchables and the remake of Shaft.
Since September, work has been done on two blocks of Rodeo Drive. The city widened the sidewalks, planted palm trees in the median, added lighting and installed a bronze statue designed by Los Angeles sculptor Robert Graham.
In the beginning of 2004, work will be completed on the rest of the Golden Triangle, which includes Beverly Drive, Canon Drive, Brighton Way and Dayton Way.
This is the first big renovation project in the area since 1991, when Two Rodeo Drive, a sloping cobblestone street that resembles a quaint European avenue, was added at the corner of Rodeo Drive and Wilshire Boulevard.
MAGIC’s Satellites
This was the year of the satellites. At the August run of MAGIC International in Las Vegas, there were nine other apparel trade shows running concurrently with the trade-show giant.
The formula is a simple one: Host an independent show to take advantage of the bigger show’s extensive retail draw.
In August, the buzz was at Pool, where young designer and contemporary streetwear lines showed their lines to nearly 2,000 buyers at the Alexis Park Resort & Convention Center. Pool has grown from 50 lines to 125 lines since its launch in 2001. The trade show now plans to move to the Las Vegas Hilton Convention Center, next door to the Las Vegas Convention Center, where MAGIC is held.
The Westcoast Exclusive also hit its stride this year, proving that bigger isn’t necessarily better. The 6-year-old menswear show launched a second show in Las Vegas last year, following the formula of the original Los Angeles show: Target boutique store retailers with a well-merchandised roster of upscale menswear lines. The concept—and the hands-on buyer attention from the show’s founders—scored with retailers, many of whom shopped the show in Los Angeles and then returned two weeks later to shop in Las Vegas.
There were other success stories in Las Vegas this year. The ASAP Global Sourcing Show turned its first profit after launching four seasons ago—and garnered a new competitor, the Sourcing Zone, at MAGIC. And the International Swimwear/Activewear Market moved its October show in Los Angeles to run concurrently with MAGIC at the newly expanded Mandalay Bay Resort & Casino. The show plans to move to Caesars Palace next August.
All the satellite shows are following in the wake of successful Womenswear In Nevada, which launched six years ago when two shows for better misses and plus-size apparel merged. When space at the Rio All-Suite Hotel & Casino sold out, WWIN expanded beyond the Rio’s walls to a tented space and launched Kidshow, a new childrenswear show.
MAGIC’s satellites might have garnered much-deserved buyer attention and attendee praise this year, but MAGIC is still the primary draw. The trade show remains the central event and strives to be a one-stop venue for all apparel industry needs. The Woodland Hills, Calif.–based trade-show producer’s four shows—MAGIC, WWDMAGIC, The Edge and MAGICKids—cover the men’s, juniors, alternative and children’s markets. The Sourcing Zone and newly launched Fabric@MAGIC were created to assist manufacturers and retailers with their fabric and production procurement needs.
Fashion Business, Inc.
Three years ago, Frances Harder—the founder, president and executive director of Fashion Business, Inc.—set out to empower the city’s burgeoning fashion scene by forming a nonprofit organization that educates and promotes up-andcoming designers and apparel companies. FBI offers training courses on issues such as securing financing, drafting a business plan and finding a sales representative.
A master at networking, Harder turns up at industry events to assist FBI members, reinforce the FBI message and seek out new support for the organization. As a result, FBI’s membership has increased from 100 members in 2000 to 350 members this year.
The group receives support from resource members of the apparel community, including Progressive Label, Apparel Information Management Systems, Moss Adams, Security Textile Corp., Apparel Link Inc. and Tukatech Inc.
Early in 2003, FBI received a $250,000 block grant from the Los Angeles Department of Water and Power. In April, FBI got a $25,000 grant from the Annenber g Foundation to help cover administration costs. FBI also receives ongoing support from the Ben and Joyce Eisenberg Foundation, which subsidizes FBI’s workspace in The New Mart.
Last June, the group moved into its new headquarters and training center in The New Mart. The 4,800-square-foot space houses a showroom, computer lab with 12 computers, photo studio and training room. Additionally, the Los Angeles Community Development Department renewed its annual contract to assist 15 FBI member companies in downtown Los Angeles under the CDD’s Los Angeles Business Assistance program.
This year, FBI increased its visibility on the trade-show circuit by hosting seminars at MAGIC International in Las Vegas in August and at the Action Sports Retailer Trade Expo in San Diego in September. The group also honored designer Richard Tyler in June at its annual fashion fund-raiser.
The organization also teamed up with new publicrelations company Pitch to provide basic public-relations and marketing services for a low members-only fee. More recently, FBI announced its alliance with action-sportswear industry organizations such as the Surf Industry Manufacturers Association and the International Association of Skateboard Companies, both in California’s Orange County.
Up next, FBI will take 10 apparel companies to the World Boutique trade show, which will be held in January in Hong Kong during Hong Kong Fashion Week.
Teen Specialists: Hot Topic and Pacific Sunwear
Most retailers have been struggling this year to churn out enough sales to stay even with last year. But two Southern California chains have concocted a potent retail formula for success.
Hot Topic Inc. and Pacific Sunwear of California Inc. have found their niche catering to the fickle teen shopper, whose attention span changes with the seasons. Both know the best way to entice customers is to keep on top of the ever-changing fashion tastes and interests of today’s youth.
Hot Topic—whose rounders are filled with rock ’n’ roll–inspired threads, including products from its own private label, Morbid—relies on its young employees to scout out trends at music concerts and parties. The City of Industry, Calif.–based company’s target customer is 15 to 29 years old and has a keen interest in edgy fashion. That consumer pushed Hot Topic’s sales to $443.3 million in fiscal 2003, a 32 percent increase over 2002. Same-store sales, following a nearly yearlong rise, grew 7.3 percent in November. The company has more than 400 mall-based stores, including its Torrid large-size apparel stores, in 48 states.
PacSun, as the Anaheim, Calif.–based company is nicknamed, knows its teen customers bore easily. That’s why the chain constantly mixes up its array of surf-and-skate apparel. PacSun carries brand names Billabong, Paul Frank, Globe and JNCO, among others. It also makes its own private-label merchandise under the Bullhead, Good Vibes, Breakdown and Tilt brands.
PacSun’s sales in fiscal 2003 totaled $846.4 million, a 23.6 percent increase over fiscal 2002. In November, same-store sales were up 11.7 percent. The company operates more than 800 stores, including its D.E.M.O. urban-apparel stores, in 49 states.
ENK Productions
Under the direction of producer Elyse Kroll, New York–based ENK International returned to Los Angeles in November with Brighte Companies, a big, bright show for contemporary labels.
This was not exactly new territory for ENK, which had produced the Pacific Champions show at the California Market Center in Los Angeles since 1999. The contemporary and young designer category is familiar terrain for the producer, which also puts on Fashion Coterie, Intermezzo and the menswear show The Collective in New York.
But this time, ENK came to Los Angeles with more. The new show expanded beyond the CMC’s fashion theater to the exhibition hall on the building’s lower level with 100 exhibitors and 35,000 square feet of show space.
The successful debut of Brighte Companies at the CMC complemented the Spring ’04 edition of Los Angeles Fashion Week and further validated Los Angeles as a fashion capital. With its clean white–and–lemon-yellow deacute;cor, record spinners, round-the-clock hors d’oeuvres, and blend of contemporary East Coast and West Coast lines, Brighte Companies served a shot in the arm to the Los Angeles show scene.
The Intersection
Four buildings, one goal. The owners of the California Market Center, The New Mart, the Cooper Building and the Gerry Building, as well as the founders of Designers & Agents, launched a marketing campaign called The Intersection this year to promote the intersection of Ninth and Los Angeles streets as the destination for the wholesale apparel business in Los Angeles.
Anchoring each corner of The Intersection are the CMC, The New Mart and the Gerry Building—which together are home to more than 1,500 wholesale showrooms representing more than 10,000 lines—and the Cooper Building, which houses manufacturers’ headquarters and wholesale showrooms.
New York–based Designers & Agents hosted its young designer and contemporary trade show at The New Mart and the Cooper Building during Los Angeles Market Week in April and November and a smaller version of the show, dubbed The Annex, at The New Mart during market in January, July and August.
The four buildings and D&A created The Intersection to promote their apparel showrooms and events, but they are also promoting Los Angeles as a whole. With their abundant resources and networking power, they are reaching many prospective trading partners. The Intersection founders have embarked on trade missions to Asia, hosted multinational groups and advertised to buyers—activities that prove the campaign cannot be discounted as marketing gimmickry.
With the Los Angeles fashion scene grappling with two different Los Angeles Fashion Week venues and showrooms expanding to a broader area, The Intersection’s creators will be doing their part to sell not just the buildings at Ninth and Los Angeles streets but also California’s economy, which ranks sixth in the world and accounts for $1.3 trillion of trade every year.
MJW Investments
Santa Monica, Calif.–based developer MJW Investments is shaping the look of the Los Angeles Fashion District as it prepares to introduce the first major residential element the district has seen since the turn of the 20th centur y. MJW’s Santee Court will open in January with 165 apartment lofts. MJW will soon follow up with condominiums, bringing Santee Court’s total number of units to 550.
But Mark J. Weinstein, MJW’s chief executive officer, isn’t just putting up four walls. The $130 million development is a community within a community, with retail-lined courtyards, rooftop amenities and open-floor lofts that look out over the Fashion District. MJW already made a mark on the district by turning the Gerry Building into showroom space for the apparel industry, bringing a new wave of urban and contemporary brands downtown.
The Gerry Building, which opened in the fall of 2002, is now about half full. Among the new tenants are Brett Morris, which carries Polo Jeans, LaurenWinterwear and Oxen Workwear; Nesi Apparel, which has the license for rapper Eminem’s Shady Ltd. clothing line; Tag Rag; BP Inc., which reps urban/athletic brands Meoshe, Pass Tha Roc, Burgundy, BP and NBA star Dominique Wilkins’ Give and Go line; Adia Kibur, which sells contemporary lines Reebok Diamond, Made U Look, Soul Rebel, Knot and Gorilla Union; and the Select Agency, which reps contemporary jewelry and accessories.
The Gerry Building is currently leasing showroom space on its seventh floor. The eighth floor is expected to be completed by the end of the year, and construction on the ninth floor is expected to be finished during the first quarter of 2004.
California Fashion Association
The California Fashion Association, led by Executive Director Ilse Metchek, continued to keep the apparel and textile industries as cohesive as possible in light of the drift toward offshore manufacturing.
The nonprofit organization was busy throughout the year promoting the industry offshore and at home, while staying on top of issues such as insurance reform and education. Metchek went on trade missions to China and Japan to promote California’s fashion resources. She also helped engineer the integration of important agencies—including the Coalition of Los Angeles Designers and the Association of Textile Dyers, Printers & Finishers—into the CFA.
The organization also hosted representatives of apparel associations from China, Turkey and Sri Lanka.
The CFA organized the successful launch of the Technology by Design show within the Los Angeles International Textile Show in October. The show, sponsored by Microsoft Corp., FedEx Corp. and Southern California Edison, among others, brought the latest information on software technology to apparel and textile resources.
Metchek also assisted the Smithsonian Institution in choosing apparel companies to be featured in the museum’s “America on the Move” exhibit. The Smithsonian selected Hot Kiss Inc. as the featured fashion company in the exhibit, which details the role of transportation in global production and international distribution.
On the workers’ compensation front, the CFA organized a speakers’ forum and a massive letter-writing campaign to legislators about the effects of insurance costs on the fashion industry. The CFA produced the “Fashion Action” newsletter to address the issue, as well.
Quiksilver
Huntington Beach, Calif.–based surfwear giant Quiksilver Inc. continues to ride a wave of success with its stable of brands—including Quiksilver, Silver Edition, Roxy and Tony Hawk— that tap into the boardsports lifestyle.
The publicly held company’s net sales hit $705 million in 2002, a 14 percent increase from the year prior. And in the first nine months of 2003, the company exceeded its 2002 sales.
Under the direction of Chairman and Chief Executive Officer Bob McKnight, who cofounded the label’s U.S. operations almost 30 years ago, the company acquired its Australian and Asian counterparts through a multimilliondollar acquisition this year, becoming a major force in the international market.
Quiksilver also entered a joint venture with Chinese retailer Glorious Sun Enterprises Ltd. for the opening of retail stores and the wholesale distribution of Quiksilver’s products in China.
Last year’s launch of the Quiksilver Entertainment division led to two Quiksilverproduced television shows: Fox Sports Net’s “54321” and “Surf Girls,” a reality show developed in partnership with MTV Networks that follows the lives of young female surfers.
Additionally, the company established a contract with HarperCollins Publishers for the Roxy Girl book series, “Luna Bay,” and corporate partnerships with the Sony Corp., the Snapple Beverage Group and Boost Mobile.
Los Angeles Fashion District BID
The Los Angeles Fashion District Business Improvement District (BID), led by Executive Director Kent Smith, provides security and publicworks services for the district’s property owners. With a major residential element coming to the district this year, the BID’s services will become more critical than ever before.
The BID’s management showed it has the support needed to conduct its services by enduring a rigorous challenge to renew its contract this year. Despite challenges from some property owners, the organization came away with a new five-year contract. At the same time, the BID opened up its policies to support small property owners.
Aside from keeping the district clean and safe, the BID helps market the district to the trade and consumers and keeps track of government issues with local officials. Its services will be increasingly relied upon in 2004 as it gains a new strip of showrooms and retail properties on the district’s east border.
This year, the California Downtown Association gave the Fashion District BID a Crystal Eagle award for the BID’s Web site marketing efforts.
Smith also facilitated the new look at Ninth and Los Angeles streets to kick off The Intersection, a joint marketing effort spearheaded by the California Market Center, The New Mart, the Cooper Building, the Gerry Building and Designers & Agents. With the help of Los Angeles Ninth District City Councilwoman Jan Perry and Cooper Building owner Steve Hirsh, Smith oversaw the rapid revamp of The Intersection’s crosswalks, which are now inlayed with a colored brick mosaic.
The BID also partnered with Hirsh to open The Intersection’s Oasis during Los Angeles Fashion Week. Located on the ground floor of the Cooper Building, the Oasis served as a lounge and information center for buyers and other visitors to Los Angeles Fashion Week.
Workers’ Comp
In 2003, the cost of workers’ compensation insurance in California shot through the roof and sent many California businesses searching for relief.
Under California state law, business owners are required to insure their workers in case of injury or death while on the job. Apparel business owners— from manufacturers and contractors to finishers and trim suppliers— have seen workers’ compensation costs rise by about 69 percent over the past three years.
Last year, Gov. Gray Davis signed a workers’ comp law that would increase the maximum weekly benefits for workers injured on the job from $490 in 2003 to $840 by 2005. The new law means an increase in costs of $3.5 billion for business owners, according to the California Chamber of Commerce.
Davis also sent a shock wave through the state, when, on the eve of the recall election, he signed a trio of bills that require businesses to provide health-care insurance to employees and their dependents, add minimum-wage guarantees to their business contracts, and abide by new anti-sweatshop guidelines and penalties.
Some insurers lowered their premiums to capture market share—a move that compromised some companies’ abilities to cover losses and led several to leave the state or shut down completely. In this environment, many private carriers have refused to write new policies, forcing businesses to turn to the rapidly diminishing California State Fund for the mandatory insurance.
The escalating costs led Los Angeles garment contractor Sam Kim, president of the Korean American Garment Industry Association, to form a private insurance policy for his 600-member association. Under a captive insurance plan insured by CNA Financial Corp., the second-largest insurance company in the United States, Kim says KAGIA’s members can expect to see a 10 percent to 25 percent cost cut, a savings of about $2.5 million each year.
Relief may not be in sight statewide, but it is up for discussion. Newly elected governor Arnold Schwarzenegger has promised to reduce the $29 billion workers’ comp system by 38 percent. California Insurance Commissioner John Garamendi has recommended less-sweeping reductions of 14.9 percent. It remains to be seen whether substantive reductions will be made, but so far, the California State Fund has projected a conservative reduction of 2.9 percent for next year.
David Cardona and Rick Owens
This was the year two European design houses looked west.
Italian label Cerutti hired Los Angeles designer David Cardona to design its central collection, and venerable French furrier Revillon hired Los Angeles–based Rick Owens to design a new apparel collection under the company’s name.
The self-taught Owens is best known for his artfully draped Gothic creations, which have been worn by celebrities including Courtney Love and Madonna. After nearly a decade of keeping a low profile, Owens joined the lineup at New York Fashion Week in 2002 and subsequently snagged the Council of Fashion Designers of America’s Perry Ellis award for emerging talent.
Cardona first studied engineering and worked as an aircraft designer for the McDonnell Douglas Corp. before turning to fashion. He is a graduate of the Fashion Institute of Design & Merchandising and an alumnus of Richard Tyler’s design studio. His tailored, sexy pieces are favorites of celebrities Janet Jackson, Sela Ward and Anjelica Houston.
Since he took the top design spot at Cerutti, Cardona has split his time between Milan and Los Angeles and did not have time to host a runway show during the last Los Angeles Fashion Week.
But Cardona was a highlight of Los Angeles Fashion Week in past seasons, showing at Audi Presents Designer Collections of Los Angeles Fashion Week in November 2001, his own solo show in November 2002 and IMG’s first run of Mercedes-Benz Shows L.A. in April 2003.
Ocean Pacific
Last year, the Ocean Pacific Apparel Corp. looked to its past. This year, it looked ahead. In 2002, the Irvine, Calif.–based beach lifestyle company launched Op Classic, a sportswear collection inspired by the company’s designs from the 1970s and 1980s. This year, the 31-year-old company launched Seven2, a line of edgier, trend-driven sportswear and swimwear that takes its fashion cues from streetwear.
The two brands, now folded into the Seven2 division, are expected to reach sales of $15 million in 2004. The brands have given the company a second chance with fickle juniors customers, thanks in part to placement on television shows including the Fox Network’s “The O.C.” and “Boston Public” and MTV Networks’ “MTV Beach House.”
It’s all part of the branding strategy set by Dick Baker, who has been Op’s chief executive officer since 1998. Baker led the thenailing surf label out of debt by spearheading the company’s marketing efforts, refreshing its offerings, and adding accessories, fragrance and home deacute;cor items. Baker maintains a multi-tier brand strategy that addresses segments of Op’s customer base at different levels of distribution with lifestyle-relevant products.
The strategy seems to be working. The privately held company is expecting its net sales to exceed more than $250 million in 2004.
Baker has served for two consecutive terms as the president of the Surf Industry Manufacturers Association, which raised more than $320,000 for ocean conservation programs this year at its annual Waterman’s Ball fund-raiser.
Coalition of Los Angeles Designers
Since its inception five years ago, the Coalition of Los Angeles Designers has served as a resource for young designers looking for a venue to swap ideas, information and a few apparel production horror stories. But most industry watchers know CLAD by its Los Angeles Fashion Week runway shows, which showcase its members’ designs.
CLAD’s list of past presidents reads like a who’s who of Los Angeles design. Monah Li, Cynthia Vincent and Alicia Lawhon have all presided over the organization. CLAD’s current president is Darren Gold, co-designer of the Los Angeles contemporary label Mhope.
Under Gold’s leadership, CLAD has stayed true to its core mission to be an informational resource for designers, boosted its ranks, and raised the visibility of the group and its members As a spokesperson for CLAD, Gold provides insight into the contemporary and young designer market in Los Angeles.
This year, CLAD joined the California Fashion Association, and the two organizations kicked off a series of business seminars for young designers with a panel discussion on publicity and public relations.
CLAD also staged a fashion show in April at the historic Orpheum Theatre in downtown Los Angeles and then shifted gears in October with a meetand- greet event for stylists, retailers and press that kicked off Los Angeles Fashion Week.
Hot Kiss
Hot Kiss Inc. has spent a busy year expanding overseas and diversifying into even more licensing deals.
Headed by industry veteran Moshe Tsabag, the 7-year-old Los Angeles juniors apparel maker has a five-year growth plan that includes a new denim line, expansion into the international market and in-store shops. Hot Kiss apparel is already sold in 4,000 retail outlets across the United States, including Gadzooks, Wet Seal and Nordstrom stores.
On the retail front, Hot Kiss will be opening 200 free-standing stores in China during the next five years through a multi-year licensing deal with Zhejiang Xuege Fashion Co. Ltd. The retail deal , which is expected to generate $80 million over the next five years, was brokered by Van Nuys, Calif.–based Cherokee Inc., which manages several apparel brand names.
The company this year shifted much of its production back to the United States. Last year, 70 percent of production was offshore, according to Tsabag, who said today 70 percent is domestic.
This has also been a busy year for Hot Kiss’ licensing department. The company entered a partnership with Montreal-based Fame Jeans to produce and distribute a juniors sportswear label called First Kiss in Canada. The moderately priced branded label launched for the 2003 Back-to-School season. During the past two years, Hot Kiss has signed licenses for items including swimwear, shoes, handbags and cell phones.
In January, Hot Kiss will begin shipping a better denim line called HK. Hot Kiss played a role in a national exhibit at the Smithsonian Institute called “On the Move,” which documents the history of transportation, including in the apparel industry.
With all this activity, Hot Kiss is on track to earn $50 million by the end of 2003. The company plans to explore the European market in the near future.
Gap Inc.
This has been a year of transition for Gap Inc., the San Francisco–based casual apparel company that is still the granddaddy of California retailers.
Company founder Donald Fisher, 75, recently announced he is stepping down as chairman of the company and passing the reins to his 49-year-old son, Robert Fisher.
Under the guidance of Paul Pressler, the former Walt Disney Co. veteran whom Gap named president and chief executive in September 2002, the company’s earnings have boomeranged this year after free falling in 2002. The clothier—which has 4,208 stores nationwide that stock casual, budget and chic apparel—saw a substantial turnaround at its Gap, Banana Republic and Old Navy outlets.
Seemingly, Gap is headed for a rebound. All three chains earned $14.5 billion in sales in fiscal 2003, a 4.4 percent increase over last year. The company’s net income for 2003 was $477.5 million, a vast improvement from 2002’s net loss of $7.8 million. And the company’s third-quarter earnings were $262.6 million, a 94 percent increase over the same period last year.
Gap not only focused on improving its merchandise mix and advertising but also pared down expenses and store openings. This year, the company instituted a 2 percent decline in square footage and has not planned growth for next year.
Marketing-wise, Gap illustrated how to develop brand recognition by turning celebrities Madonna and Missy Elliot into advertising icons.
The company has plans underway to revamp its offerings, with a focus on fashion. Last month, Gap announced the hiring of head designer Pina Ferlisi. Gap named Ferlisi, formerly of Marc Jacobs and Tommy Hilfiger, senior vice president of adult product development and design.
The company said next year it plans to leverage existing momentum as it builds on core groups, acts on consumer insights and positions the company for long-term growth opportunities.
