California Apparel News

Hurricane Katrina, which displaced thousands along the Gulf Coast, left a path of destruction that trickled into California.

Some large California retailers had to close their stores, and several of the state’s apparel manufacturers had orders canceled by companies devastated by the deadly storm.

Fortunately, most California-based manufacturers and retailers have a limited presence in the Gulf Coast.

San Francisco–based Gap Inc. closed more than 80 stores in hurricane-affected areas: 30 in the Gulf states and 50 in Florida. Gap representative Kris Marubio said the company will reopen the stores on a rolling basis.

Hot Topic Inc., the teen-oriented retailer based in City of Industry, Calif., was luckier. “We have a few stores that will be closed through the end of the year,” said Jim McGinty, Hot Topic’s chief financial officer.

The company, which has accounted for all of its employees, feels fortunate. “The impact for us will be fairly nominal. In terms of population centers [and] malls, it’s not one of those areas [where] we have a lot of stores.”

Larry Meyer, chief financial officer of Los Angeles–based Forever 21 Inc., said Hurricane Katrina initially forced the closure of 12 stores. The company owns more than 361 stores, including 149 Gadzooks stores. At press time, five Gadzooks stores and one Forever 21 store remained closed.

“In my memory, there hasn’t been this many stores out for such a long period of time. There’s still tremendous uncertainty [about] when these stores will reopen,” Meyer said. While he declined to reveal how much the company had lost, he did say that the losses were insurable.

The Wet Seal Inc., based in Foothill Ranch, Calif., had two store closures.

Pacific Sunwear of California Inc., based in Anaheim, Calif., is coping with 12 store closures.

To date, California manufacturers have reported little to no disruption of their businesses due to Katrina.Brij Lal, president of Los Angeles–based juniors manufacturer Just for Wraps Inc., said there was the cancellation of some orders from majors in the area, including Dillard’s Inc. “I think [Katrina] will have an impact; it just won’t be anything drastic,” Lal said, noting that the company moves only a minor amount of merchandise via the affected ports.

Just for Wraps does not have plans to alter its business strategy in the affected area, according to Lal. “We’ll wait for advice from the stores on how we can support them,” he said.

San Francisco–based Levi Strauss & Co. operates a regional distribution center out of Canton, Miss., but spokesperson Jeff Beckman said the facility and the company escaped Katrina’s wrath. The facility was down for a day and half after Katrina passed but was operational as soon as power was restored. “It was a blip,” Beckman said.

David M. Reza, senior vice president of Glendale, Calif.–based Milberg Factors Inc., said he is in the process of assessing what, if any, losses were suffered by his California-based clients and what Katrina’s impact may be on future shipments.

“Honestly, it’s hard to say what the effect will be,” Reza said, noting that much depends on each customer’s distribution. “If they’re shipping through majors, it shouldn’t be a problem because they can accept goods at another location. But if they’re shipping to boutiques, it’s a different story.”

Roger Williams, president of Warnaco Swimwear Inc., a $305 million venture based in City of Commerce, Calif., reported only one dealer affected by the hurricane. He predicted that the local California market will feel “very little direct fallout.” He said he expects reports of returned and canceled orders will increase as communication with affected stores is restored but thinks the immediate effect on his business will be negligible.

Williams warned, however, that the indirect effects of the Gulf Coast devastation may eventually be felt locally. “All wholesalers and retailers will face increasing oil prices, even those out here in California,” he said.