Tuesday, October 31, 2006

VF Jeanswear Closes Plant: 400 Jobs Lost

From AP:

RALEIGH, N.C. (AP) -- VF Jeanswear, the world's largest maker of jeans, will close a laundry and finishing plant in Winston-Salem that employs nearly 400 people and move the work out of the country, company officials said Monday.

The plant is the last major production facility in the U.S. operated by Greensboro-based VF Corp., the parent company of VF Jeanswear. The company began phasing out operations at the plant Monday and will close it in March.

"I would say we're the last major apparel maker to exit the U.S.," said Sam Tucker, vice president of human resources for VF Jeanswear. "From a manufacturing standpoint, you know, we held out here a long time."

VF Jeanswear makes the Wrangler, Lee, Rustler and Chic brands.

Layoffs will begin after the new year, and the plant will operate with about 60 percent of its current work force until it closes, Tucker said. Most of the work will be shifted to contractors in Central America, primarily in Costa Rica.

"From an operational standpoint, we thought we needed to move this facility closer to where the products are being made," Tucker said. "It was built to support plants hundreds of miles away," not those thousands of miles away.

The company still operates a small cutting plant in Alabama, he said.

Employees will be offered a package with some combination of severance pay, educational assistance for retraining, outplacement assistance and other benefits, officials said.

The company will also help look for a new tenant for the Winston-Salem plant, which opened in 1992.

"We'll try to market the building, ideally, to someone who will be able to come in and hopefully re-employ a lot of the work force," he said.

After the closing, VF will have 1,250 employees in Greensboro and 450 at its distribution center in Mocksville, Tucker said.

The closing announcement comes the same month VF Corp. reported that its third-quarter earnings rose 10 percent. Net income increased to $197.7 million, or $1.75 per share, from $179.6 million, or $1.57 per share, a year ago, the company said on Oct. 20.

VF shares rose $1.34, or 1.8 percent, to close at $75.97 on the New York Stock Exchange.

Market data is as of yesterday.

Article on Yahoo

Thursday, October 19, 2006

Rifle Aimed at Indian Market

The Italian Rifle brand will enter India through a licensing agreement with Indus Clothing. Indus Managing Director Harpartap Singh brokered the deal with the Super Rifle group. The former will manufacture and sell.

Fibre2Fashion reports:
This new joint venture targets youngsters in the age group of 16-33 who prefer edgy new brand messages. Rifle jeanswear is priced in the range of Rs1,300 - Rs2,500 because it is a regular brand in Italy plus the quality of finishes, fabric and treatment work out at a little premium here.

Law & Kenneth is taking care of the advertising campaign and has already made impressions with outdoor posters and the like.

Singh wants to complement the Rs3 crore brand which is building budget with well thought out precision targeting.

Indus Clothing is planning to have 20 stores by 2007 in bigger cities including Delhi, Mumbai, Bangalore, Hyderabad, Chandigarh, etc. and 40 stores by 2008 in smaller cities.

One Rs (Rupees, aka INR) is approximately .022 USD.
One crore unit is 10 million.

Via Fibre2Fashion

Wednesday, October 18, 2006

Straight from a Gay Man

hahaha this is hilarious. And surprisingly true, for the most part. Listen to William Sledd (mullings on life and fashion through his Ask A GAY MAN YouTube series) and friend rant about how skinny jeans are not for everyone.

Despite the silliness of the video they touch on a good point. The fact that the skinny jean doesn't flatter all figures makes our current fixation with it a predictably short-lived trend. Certainly a number of women will keep rocking it but its popularity will taper off. Soon.

Enjoy the video.

More info about William Sledd from his MySpace profile:

Average boy next door type, with a little bit of crazy BoyBitch in me, yeah thats right BOYBITCH, haha, anyways im 22 living in Paducah, KY. I work at the Gap, which in return has made me hate people. But i love my dog Verdell is the hottest dog in Paducah, also a BoyBitch. We have issues.

Link to Video "Ask A GAY MAN: Denim Edition"
Think Negative

I still have a stupid smirk on my face. Here's an informative, entertaining Newsweek article on vanity sizing. It talks about what may be the next big thing in apparel marketing: sub-zero sizes. Over the next few seasons lucky women will have the chance to think negative and feel positive.

First a crash course on vanity sizing.

Think of vanity-sizing as self-delusion on a mass scale. Anyone over the age of 40 knows that something isn't quite right if she can wear a smaller size now than she wore 20 years and 10 pounds ago. Yet many of us slip gratefully into a size 6 pair of Old Navy jeans even though we're pretty sure we wouldn't be able to squeeze into our size 10 Calvin Kleins from circa 1980. Call it faith-based sizing. We want to believe--hell, we really do believe--we're a size 6 or 8 because the label says so even when the scale disagrees.

Then check this:

While it's hard to imagine that anyone wants to be called "minus" or "sub" anything, there is some concern that the less-than-zero sizes will be a new status symbol for girls with eating disorders. Last month, rail-thin models were banned from a Madrid runway show for being underweight size zeros. But despite the banishing of bony models and the disparaging headlines over photos of shrinking celebs like Kate Bosworth, it's hard to shake the impression that razor thin is still very much in vogue. Or, as Stanley Tucci's character famously said in "The Devil Wears Prada," size 6 is the new 14.

Click on the link below and read the article complete with a gallery of celebs Newsweek believes can wear sub-zero sizes.

Newsweek Article
African Textiles Market

As more premium denim brands use those amazing Zimbabwe cotton denim for their jeans (Kato, Stronghold, 45RPM) I ask you this: How well do you understand the sub-Saharan African supply market.

I sure didn't know it well so I welcome this top story article from Business Day (South Africa).

It introduces us to Frame Textile MD and International Textile Manufacturers Federation president Walter Simeoni who laments South Africa's disadvantages.

...local manufacturers face additional costs compared with other countries. In China and India funding for capital equipment for textile makers can be obtained at 1,5%, while France, Korea and Israel's textile industries receive billions of dollars a year in financial assistance.

"What do we get in SA? Nothing! The limited advantages of the duty credit certification scheme comes to an end in March 2007," he said.

He also cites a volatile exchange rate, and expenses for security, HIV/AIDS pandemic management, and turnover as issues making South Africa less competitive globally.

Emigration of experienced staff, additional costs associated with black empowerment and employment equity, the costs of losing skilled black staff once they were trained, even though Frame paid the highest salaries in the industry, were expenses overseas competitors did not have.

"In certain skills categories we've reached the stage where white people work for 30%-50% less than blacks," Simeoni said.

The cost of employment for local textile operators averages about $600 an employee a month, while some local retailers are being supplied from manufacturers in the east, which pays workers $30-$40 a month.

Business Day (South Africa) Article
True Religion Update

Let's check in on True Religion (NASDAQ: TRLG). For a while we've been speculating what the company had in mind when it signed Goldman Sachs as financial adviser.

Yesterday Marilyn Much on Investor's Business Daily (Yahoo Finance) gives her take on it.

"It could be any number of things,from taking themselves private to a sale or just a strategic advisory on how to grow the business," said analyst Eric Tracy of BB&T Capital Markets, which seeks an investment banking relationship with True Religion.

Or the company may be exploring new financing options.

Another possibility: True Religion may set up a partnership with a major apparel maker like Liz Claiborne (NYSE:LIZ), which would hold a majority equity interest in True Religion, while Chief Executive Jeffrey Lubell would retain his 36% stake, says Sterne Agee analyst Ronald Bookbinder, who owns shares in True Religion.

This way Lubell can focus on overseeing the design aspect of the business, which he's skilled at, and at the same time leverage the partner's expertise in sourcing, international distribution and other aspects of the business, he says.

Oh and today Nollenberger Capital downgrades TRLG from buy to neutral. Ouch.

Two days ago LIZ announced it has hired a former pharmaceutical executive to run its business. Ouch (shot of new blood or bad medicine?).

Other TRLG happenings:

Just opened an outlet store in the Desert Hills Premium Outlets near Palm Springs, California.

Seven stores in 2007 planned with 40 to 50 stores over the next three to four years.

Expand into other product categories to be positioned as a lifestyle brand by utilizing existing vendors and through licensing agreements. Examples include fleece, non-denim bottoms, tops, loungewear, footwear, hats, accessories, bags, etc.

Marilyn Much's What's True Religion Up To?
Levi's Promotions

Yes, this is another Levi's announcement.

Robert Hanson is now president of Levi's North America and Alan Hed is now president of Levi's Asia Pacific.

Robert Hanson, 43, will continue to lead the U.S. Levi's brand as its president and general manager, a position he has held since 2001, and will now also be accountable for the North America region, which, in addition to the Levi's brand, includes the U.S. Dockers, U.S. Levi Strauss Signature, Canada and Mexico businesses.

Hanson joined LS&CO. in 1988 and has held increasingly responsible marketing and merchandising positions in the U.S. and European businesses, including president of the Levi's brand in Europe and vice president of Dockers brand marketing in the United States.

Alan Hed, 46, was the Asia Pacific region's managing director for Latin America, Africa, Turkey and Australia/New Zealand for the past three years, as well as Japan and South Korea for the past year. He joined LS&CO. in 2000 as the general manager of the company’s South Africa business and was promoted in 2002 to manage LS&CO.'s emerging markets in Eastern Europe, Turkey, Russia, the Middle East and Africa. His experience before LS&CO. included executive positions at Citibank in Thailand and Procter & Gamble in Europe, Asia and the United States.

These executive changes are part of a leadership transition at the company that began in July, when LS&CO. announced Philip Marineau's retirement as president and chief executive officer, effective November 26, 2006. The company's board of directors subsequently accepted Marineau’s recommendation to designate John Anderson, a 27-year veteran of the company, as LS&CO.'s next president and CEO. Anderson recently was president of the company’s Asia Pacific region and president of LS&CO.'s global sourcing organization before being named chief operating officer in July.

"John Anderson and I have been working closely to ensure a smooth transition when I retire and he becomes CEO," said Phil Marineau. "We've been collaborating on the company's strategic business plans and a number of senior leadership changes. With these appointments, John will begin his term as CEO with very strong leadership teams running our North America and Asia Pacific regions."

"Both Robert and Alan have tremendous leadership capability and capacity and excellent track records of driving change," said John Anderson. "They're keenly familiar with the company's operations, talent and strategic plans, and will contribute immediately as we continue to improve our business performance and optimize growth opportunities for the company."

LS&CO.'s business is organized into three geographic regions: North America, Europe and Asia Pacific. In fiscal year 2005, these regions represented approximately $2.5 billion, $980 million and $690 million of the company's approximately $4.1 billion total sales, respectively. In addition to comprising markets such as Japan, Korea, India and China, the company's Asia Pacific region also covers South America, the Middle East and Africa.

The point is Levi's is seeing a lot of change in leadership with Marineau's retirement.

Via Retail Merchandiser

UPDATED 10/18/06: As I was thinking about how I don't know Robert Hanson, I realize this may be a good opportunity to learn more about him.

A 2002 Fast Company magazine article starts with:
Three loose-limbed models slink into the cramped conference room next to Robert Hanson's office at Levi Strauss & Co. headquarters. On his command, they turn around and show off their backsides. Hanson, president of the Levi's U.S. brand, tugs at oversized belt loops and pokes at generous pockets as he takes a hard look at Type 1, the company's new line of jeans and jackets. He's betting that Type 1 will be this fall's must have in denim fashion.

He obviously understands how a company with heritage can still remain relevant to our fashion conscious society. Under his tenure Levi's has released products ranging from the Warhol Factory X Levi's collection to organic denim to iPod compatible jeans.

As Suzanne Kapner recently said in the NY Post:
Much of the credit for Levi's renewed focus on developing better products goes to Robert Hanson, the U.S. president of the Levi brand. Hanson made a splash in the 1990s when he came up with the "engineered jean," a style made of twisted fabric, while he was president of the Levi brand in Europe.

When Hanson first moved back to San Francisco in 2001, many of his ideas, such as upping the fashion quotient, were put on hold as Marineau focused on the Herculean task of shifting production offshore, paying down debt and stemming the slide in sales, sources said.

Now that the company's financial situation has stabilized - sales rose 1 percent in the most recent fiscal year - turning out better products is "probably our most important focus," Beckman, the spokesman, said.

According to his profile from Boston
College's Center for Corporate Citizenship:
Hanson began his career with Levi Strauss & Co. in 1988 as a advertising manager. Since then, he has held a variety of increasingly important positions in the U.S. and Europe including Director of Marketing, Levi's Kids; Vice President, Marketing and Brand Development, Dockers Khakis; Senior Vice President, Brand Development, Europe, Africa & Middle East; and President, Levi’s Brand, Europe, Africa & Middle East.

Prior to joining LS&CO, Hanson worked at the global advertising firm, Foote, Cone & Belding. Hanson received a bachelors of arts degree from Saint Mary's College in California and attended the Executive Program of Northwestern University's Kellogg School of Business Consumer Marketing.

Back to the Fast Company article:
Hanson can explain his strategy to you -- or he can draw it. He pulls out a pen and paper, draws a triangle with a dotted line down the center, and then divides the whole triangle into thirds. At the pinnacle are the brands Red on one side and LVC on the other. They're located at the top because Red and LVC are Levi's most expensive lines, and they are meant for trendsetters.

Underneath the Red and LVC brands, in the middle of the pyramid, sit Type 1 and Pure Blue. Red inspires Type 1, and LVC inspires Pure Blue. Both Type 1 and Pure Blue -- a gutsy bet on a look that simulates the blue created by optical whiteners -- are brands that are meant to appeal to trend adopters who want cutting-edge clothes on a limited budget.

At the bottom of the pyramid, Hanson still has work to do. But this is, of course, the place where such stalwarts as Levi's 501s and 550s live, so he has to be sure to tread carefully. "I want to create jeans for everyone that are equally distinctive," Hanson says. "But I always remember that we're about pants that were built for miners. I've got to keep that integrity and soul."

Good stuff.

Finally a few words on social responsibility. According to the National HIV/AIDS Partnership:
Robert Hanson and Levi Strauss have national and global recognition among those who fight the HIV/AIDS epidemic and have been leaders in promoting AIDS awareness and education. The company has a 20-year commitment to the fight against HIV/AIDS, and launched a fundraising and awareness campaign to benefit Population Services International's (PSI) YouthAIDS program a campaign Mr. Hanson helped promote. Mr. Hanson has co-chaired the Hetrick-Martin Institute's Annual Emery Award program, for which Levi's was the presenting sponsor. The Levi Strauss & Co. and the Levi Strauss Foundation have donated over $25 million dollars in the fight against HIV/AIDS in the past 20-years.

According to the Marketing Forum (Europe) Hanson was and may still be involved with "many professional and community activities, which include acting as Advisor in Marketing and HIV prevention to the Harvard Aids Institute, as Advisor to the Hettrick Martin Institute and the Larkin Street Youth Center and as Member of the Board of the San Francisco Center for Living."

I hope you learned a few things there.
Selvage Phones?

Maybe not but Europeans can expect mobile phones and accessories that draw "inspiration from the iconic roots of the Levi's brand," reads a Levi's press release announcing Modelabs Group's exclusive [European] license of the brand. "The collection will be a youthful and sexy take on the brand heritage: denim, rivets and the arcuate."

"Levi's(R), one of the world's largest brand-name apparel, creates new, innovative products which embody the pioneering spirit that founded Levi Strauss & Co.. Thanks to "Mobile On Demand" offer, ModeLabs Group will respond to urban fashion consumers needs, in connection with Levi's(R) style and aspiration. The products created by ModeLabs group will reflect the brand look and feel and be distributed throughout Europe by Mode Labs Group subsidiaries. This partnership confirms the in-depth changes underway in the telecom sector." says Stephane Bohbot, ModeLabs Group CEO.

No pictures accompany the announcement but I'll post if any come my way.

Press Release via SYS-CON Media
Press Release PDF

Thursday, October 12, 2006

Japanese Denim Culture

There's an interesting article in the International Herald Tribune earlier this month about the Japanese and their jeans.

For style-obsessed Japanese who have the cash, a favorite pair of jeans is ultimately the most important item in a closet, surpassing the Fendi suit or the cashmere sweater from Prada. Brands may come and go but jeans are forever, and they are very, very personal. They will adorn you but they won't disguise you, and they will surely reveal secrets of your innermost soul.

Such are some of the myths that have moved the quest for the perfect pair of jeans to religious heights. To call this search "shopping" would be a grave inaccuracy. The better phrase for these people is more like "mission from god."

Good, informative read.

International Herald Tribune Article
Levi Strauss and Co. Q3 '06 Results: Not Exactly Sexy

[Mena Suvari and Carmen Electra sport Levi's jeans; NY Post]

Buzz alone doesn't always bring home the bacon. This is the case with Levi Strauss & Co. who received some positive media coverage around town lately (see NY Post's Levi's Revival). While no one held his breath some did expected Q3 '06 to look better for them.

At this time I would like to evoke James Sullivan (Jeans: A Cultural History of an American Icon):

The venerable San Francisco clothier would remain fiercely committed to its core product, resisting innovations as fleeting fads. The behemoth of the industry gradually developed an unfortunate reputation as the garment world's Johnny-come-lately. Ideally suited for the momentary return to basics of the late 1980s, it was reluctant to acknowledge the baggy jeans phenomenon of the early 1900s. And it was slow to respond once again when low-rise would dominate the racks a few years later. Though still the world's largest purveyor of blue jeans, Levi's has tumbled from a record-high sales volume of $7 billion in 1996 to just over $4 billion in 2004.

I think things are starting to pick up. Q3 doesn't exactly look bad and the negative drivers seem to spring mostly from the decline of the Levi Strauss Signature brand. They already have plans to pull that out of Europe, where apparently crap jeans aren't tolerated.

Their LVC (Levi's Vintage Clothing) and Capital E are getting great feedback. And given their size nobody can say they were slow to react to the skinny jeans trend (which is tapering off, according to some).

But with CEO Philip A. Marineau retiring and R. John Anderson (current exec VP/ COO) taking over I hope to see some interesting changes. A company with such a rich history shouldn't become another fallen giant.

Oh and go buy James Sullivan's book if you haven't already (link below).

LS&C's financial results announcement:

Net revenues for the third quarter were $1,023 million compared to $1,037 million for the same quarter in 2005, an approximately 1 percent decrease on a reported basis and a 2 percent decrease on a constant-currency basis. The change in net revenue primarily reflects lower U.S. Levi Strauss Signature and Asia Pacific sales, partially offset by increased U.S. Dockers sales.

Net income for the third quarter increased 29 percent to $49 million compared to $38 million in the same quarter of 2005. The improvement reflects a 14 percent increase in operating income, primarily driven by a $29 million benefit-plan curtailment gain related to the planned closure of a U.S. distribution center, partially offset by higher income tax expense.

"We improved our profitability and cash flow - our primary objective this year," said Phil Marineau, chief executive officer. "We're addressing a number of challenges to our business, including fixture reductions at U.S. Wal-Mart stores and a sales decline in Japan. However, in the face of retailer consolidation in the United States and the challenging European market, I'm pleased with the U.S. Levi's and Dockers performance and the improving trends in Europe."

Third-Quarter 2006 Results

Gross profit decreased 1 percent to $467 million compared to $472 million in the third quarter of 2005. Gross margin was stable at 45.7 percent of revenues for the third quarter of 2006 compared to 45.5 percent of revenues in the same period last year.

Selling, general and administrative expenses decreased 6 percent or $21 million to $307 million in the third quarter of 2006 from $327 million in same period of 2005. Lower SG&A expenses in the 2006 period were primarily attributable to the curtailment gain and lower advertising and promotion costs, partially offset by the $8 million compensation and $5 million non-cash pension costs related to the retirement of the company's CEO and higher selling expense associated with opening new company-operated retail stores in Europe and the United States.

Operating income for the third quarter of 2006 increased $19 million to $158 million compared to $139 million in prior year period. The increase was primarily due to lower SG&A, partially offset by lower net revenue.

Interest expense for the quarter decreased 6 percent to $60 million compared to $64 million in the third quarter of 2005. The decrease was primarily attributable to lower average interest rates during the 2006 quarter.

Income tax expense for the third quarter of 2006 was $58 million compared to $40 million in the 2005 period. The increase is primarily driven by the increase in income before taxes in the current period compared to the prior year. The effective tax rate for the first nine months of 2006 was 39 percent compared to 47 percent for the same period in 2005.

Strong year-to-date cash flow in 2006 is attributable to improved working capital management and lower interest and restructuring payments.

"We delivered solid operating income, even as we invested in our business," said Hans Ploos van Amstel, chief financial officer. "Better working capital management and cost discipline helped contribute to our bottom line. We expect to see stable revenues in the fourth quarter."

Levi Strauss & Co. SEC Filings

Jeans: A Cultural History of an American Icon
Shop News: Denim Blitz

If you're into designer jeans check out Denim Blitz's periodic sales events. There's one in NYC starting today and running through Sunday, 10/15/06.

65 Greene St. - SOHO
Between Spring St. & Broome St.
New York, NY 10012

Time & Dates:
Thurs. 10/12/06 through Sun. 10/15/06
Thurs. - Sat. 11:00A.M. - 8:00P.M.
Sun. 11:00A.M. - 4:00P.M.

You're invited to our third DENIM BLITZ Sample Sale. YES, Ladies and Gentlemen, we have come back and we are stocked with even more goodies for both men and women at 30% to 90% below retail:


YES, Ladies we have great fall dresses, leggins, fitted jackets, tee's, and hoodies +++ much more!

**We have a top notch Costume Jewelry Designer selling her samples at prices you will die for. Her gorgeous pieces were sold in Bergdorf Goodman, Henri Bendel, Saks Fifth Avenue, Nordstrom +++ many more.

YES, Guys we have a great selection of denim from Earnest Sewn, Paper Denim and Cloth, True Religion, Diesel, as well as many stylish tee's (Ed Hardy) +++ much more!

MEN'S JEANS: 29 - 40 TOPS: S - XXL


Please sign up for our future sales by sending your e-mail to:

Here's the industry side of the reporting. Denim Blitz is run by two (three? four? several hundred?? they declined to specify) energetic, lovely ladies and plan to roll out in Boston, Chicago, Philly, LA, and London in the future. They source overstock, season(s)-old, and miscellaneous lots of denim and bring retail it to the public in what appears to be great looking pop-up stores.

Wednesday, October 11, 2006

Shop News: Earnest Sewn Sample Sale

It's that time again. Drop by if you're in New York City.

Location: 72 - 76 Greene Street, Ground Fl
Dates: Tuesday, November 7th - Saturday, November 11th
UPDATED: The sample sale date has changed to Wednesday, November 8th - Saturday, November 11th.
Hours: Tuesday - Friday 8 - 8 Saturday 10 - 5
Payment accepted: Cash, MasterCard, Visa, American Express
Prices: Below Wholesale from $60 to $85

Earnest Sewn has rapidly developed a cult-like following for their jeans due to their passionate devotion to quality and individual style, this unparalleled sample sale event is your opportunity to join the ranks! Both MEN and WOMEN will relish this limited shopping adventure. It's time to stock up. At $85 they're irresistible (regularly retailing for $195 to $225.)

Earnest Sewn's design concept is centered on the Japanese aesthetic system of traditional beauty, Wabi-Sabi. At its core, Wabi-Sabi is the beauty of all things imperfect, impermanent and incomplete. The idea that perfection can be found in the imperfect is not a new thought, but when combined with distinctly American products such as jeans, workwear, and sportswear, the result is fresh and unexpected.

Focusing on each individual jean and the numerous amounts of processing, hand application, and refinishing techniques used to create an Earnest Sewn jean, they take things even further by intentionally incorporating imperfection and inconsistency into key design and sewing details. This is exhibited in irregularities such as stitch detailing, needlework, sewing construction, trims, thread variation, and their ever changing back pocket decorative stitching.

Earnest Sewn is available in all of the finest department and specialty stores. All sizes available: for WOMEN sizes 24 to 32, for MEN sizes 30 to 38. You won't want to miss this sale event with prices that are up to 75% off retail. Retail prices usually range from $190 to $240, at the sale prices are $60 to $85.
Earnest Sewn takes denim to a whole new level with its appreciation to detail and distinctive hand craftsmanship not found elsewhere in the industry.

• Women's five pocket boot-cut jeans regularly retailing for $198, now $85;
• Women's Tapered Cigarette Leg Jeans regularly retailing for $198, now $85;
• Men's Five Pocket Straight Leg Jeans regularly retailing for $210, now $85;
• Women's denim skirt regularly retailing for $198, now $60.

Earnest Sewn Website

Tuesday, October 10, 2006

BLUE Not Getting Up Against the Wall After All

Less than 2 weeks after Blue Holdings (NASDAQ: BLUE) opens its second retail store in San Francisco it is now announcing it will not buy the operator of Up Against the Wall, Long Rap, Inc.

"While we are disappointed that we were unable to conclude our acquisition of the Up Against the Wall retail stores, we are now able to re-focus our efforts on our wholesale business, while continuing to develop our retail strategy," said Paul Guez, Chairman, Chief Executive Officer and President of Blue Holdings, Inc. "Blue Holdings is well positioned in the market place, and both management and the Board of Directors remain very committed to preserving and increasing shareholder value."

The deal's termination is said to be mutually agreed upon. Originally announced in June the plan was for Blue Holdings to pick up the chain of 24 and counting Up Against the Wall stores for $32 million (half cash, half common stock).

Press Release (Reuters)

Saturday, October 07, 2006

Selvage for Tots

Once again I cross paths with those ridiculous Levi's selvage jeans for kids. I couldn't resist inspecting them more closely this time and snapping a few pics. Found them at Lucky Wang, a children's fashion boutique on Broadway in NYC.

They are vintage washed and even have some authentic-looking scrapes to give them the impression that your hardy baby has been laboring in the fields or some coal mine.

These particular jeans appear to be designed for 3 year olds or oversized teddy bears. They're quite cute. If you think $98 selvage is too good for tots then you're probably a bad parent. Shame on you.

Innovo's Joe's Jeans' Q3 Results

On Thursday the Innovo Group (NASDAQ:INNO) reported their fiscal 2006 Third Quarter Results. These are the guys that make and market Joe's Jeans. Despite painful losses the numbers are in line with expectations.

For the quarter ended August 26, 2006, net sales from continuing operations were $12.4 million compared to net sales of $12.6 million in the prior year period, a 1% decrease. The company reported a narrower loss from continuing operations of $429,000, or ($0.01) per share, compared to a loss from continuing operations of $592,000, or ($0.02) per share in the corresponding period a year ago.

The Company's Joe's Jeans branded sales during the third quarter increased by 2% over the prior year comparative period to $12.4 million from $12.2 million during the third quarter of fiscal 2005. The slight decline in overall net sales was attributable to decreased sales in non-Joe's Jeans branded products of $77,000 during the third quarter versus $441,000 a year ago, which reflects the Company's plan to exit all other businesses to focus on its Joe's Jeans business.

Go to Yahoo Finance for more scoop and statements.

Here's some other info I gleamed from their conference call:

Overall gross margins for the third quarter increased to 40% from 38% in the corresponding period a year ago. This change is due to Innovo's decision to move the much of its production to Mexico, which will provide them with a GM of 58% before dilution. Currently 42% of Joe's Jeans production (cut, sew, wash) is in Puebla, Mexico (with the full package manufacturer AZP). The plan is to eventually ramp it up to 90% by the end of next year. Don't be so shocked. Paper Denim & Cloth and gangs of others migrated long ago.

They are currently holding 2-3 months of Joe's inventory. At one point they were keeping merely weeks worth of denim. Production issues or just watching inventory like a hawk?

They claim to be gaining ground with department store accounts like Bloomingdale's, Macy's West, and Nordstrom. They are also working the specialty stores circuit (Anthropologie, for women's line).

FYI, Joe's Jeans retail for $158-196 (basic jeans) and $216-275 (premium jeans).

Conference Call Audio Stream

UPDATED 10/09/06: Some of you have asked me who AZP is. AZP is of course Azteca Production International.

Through its IAA subsidiary (AKA Innovo Azteca Apparel, which it sold to Cygne Designs Inc. in May) INNO used to own a private label apparel division purchased from Azteca. It's a long story laced with non-compete agreements, indemnification provisions, and heartbreak.

Oh yeah and INNO is looking to change its name to Joe's Jeans in order to better reflect their primary business.