Thursday, November 30, 2006

The Gap Taking Heat

Stephen Foley writes for the The Independent (UK):

Todd Slater, retail sector analyst at Lazard Capital Markets, abandoned his buy recommendation on Gap shares yesterday, telling clients to "throw in the towel before losing your shirt".

He wrote: "Channel checks indicate that Gap is cancelling an enormous amount of product, especially denim, signalling a meaningful amount of internal disarray and lack of confidence in its spring merchandising plans."

The Independent Article

Tuesday, November 28, 2006

RRL Revving up for Wholesale

Looks like Ralph Lauren is preparing to wholesale its line of RRL ("Double RL") products, which began as a wholesale biz in 1993 but has since been exclusive to 3 RRL boutiques, Bergdorf Goodman Men, and some Ralph Lauren flagships. Check out Nov. 27 issue of DNR for their scoop.

The article notes that while Polo Ralph Lauren won't confirm their wholesale plans you can get the skinny by talking to prominent retailers like Villains Vault in San Francisco (Randy Brewer, general manager) and E Street Denim in Chicago (Thomas George, owner). The two are known for being denim destinations and were on a shortlist of potential accounts Polo Ralph Lauren selected to show the collection "in the beginning of December for spring deliveries."

RRL is named after Lauren's family ranch in Colorado and is the designer's take on the dude ranch cowboy look. I sincerely like the jeans can't find the right fit(vintage style denim). What wholesale distributions means to you the denim consumers is there will be more deals for these puppies floating around. And it may become mainstream.

Tuesday, November 21, 2006

Another Denim Design Lab Creation

The guys at Denim Design Lab have been busy writing a book. They're keeping to the formula of making pieces limited edition and unique. Check it.
Denim Design Lab LLC announces the launch of its new book "Denim Design Lab LE" in key cities globally.

The limited edition "Denim Design Lab LE" expands upon the current edition of the Denim Design Lab book in size, content and one of a kind presentation.

The Denim Design Lab LE book has been designed as a beautiful 9" x 12" coffee table book. The unique layout, product and historical photography makes the DDL LE book an eye-catching conversation piece. The thorough historical account of both denim jeans and denim fabric, in addition to the review of the denim fabric and denim jean manufacturing process and the comprehensive glossary of denim related terms, will provide a great educational foundation for those interested in the history of denim. The detailed "how to" section provides a road map to unleash the users inner designer, helping them add from subtle to extreme details to their denim to ensure they are truly wearing a one of a kind work of art.

Each hand numbered, hard bound copy of the book is covered in ultra-premium organic selvage denim from Cone Denim's White Oak Collection and hand finished by the denim artists at APS Laundry and Finishing in Los Angeles, CA. No two copies in this limited run of 5,000 books will look the same. Additional one of a kind design details include a selvage denim book marker and custom embroidered title on the front of each book.

The larger format Denim Design Lab LE book includes significantly expanded photographic content from Levi's, Lee and Cone Denim, as well as new sections covering denim trail blazers such as Evisu and Diesel.

The Denim Design Lab LE book has been designed for the most discerning denim collectors, aficionados and fanatics. From its content to its packaging, this book is destined to not only become a hard to find collectable, but a piece of denim history in the making.

The Denim Design Lab LE book is targeted for release in early January of 2007.
Did you read that? Selvage denim book markers.

Denim Design Lab

UPDATED 11/23/06: Amazon has this for pre-order for $63 with free ship.

Some pics follow.

Monday, November 20, 2006

Donadi at RRL

DNR reported today that Polo Ralph Lauren has tapped Maurizio Donadi to be the lead merchandising and product development for Double RL ("RRL") and Polo Denim. Donadi comes from Giorgio Armani where he was the head of product research. He has 25 years of experience in fashion merchandizing and retailing Diesel and Benetton on his resume.

Wednesday, November 15, 2006

Blue Holdings Slipping

Press release:
Blue Holdings, Inc. (NASDAQ: BLUE), a designer, manufacturer and distributor of high-end fashion jeans and denim apparel, today announced financial results for the three and nine months ended September 30, 2006.

Three Months Ended September 30, 2006

Net sales for the third quarter of 2006 were $14.6 million, a 4.8% increase over the $13.9 million reported in the prior year period. Net loss for the quarter was $(0.4) million versus net income of $2.4 million for the third quarter of 2005. Basic and diluted net loss per share were $(0.02) on 26.1 million weighted average shares outstanding versus net earnings of $0.09 on the same number of shares for the third quarter of 2005. Net sales and earnings for the quarter were negatively impacted by a combination of factors. The Company received late deliveries of a significant amount of both Taverniti and Antik product in the June and July period. This caused cancellations from some key accounts as well as a loss of re-orders. Additionally, the Company was impacted by inventory produced in anticipation of the distribution agreement in Europe with Global Fashion, as well as resources and expenses committed to the terminated transaction with Long Rap, Inc., the proprietor of the Up Against the Wall retail chain.

Blue Holdings' gross profit decreased to $4.4 million, or 30.5% of net sales in the third quarter of 2006 compared to $7.0 million, or 50.1% of net sales in the prior year period. The decrease in gross profit was due to discounts given to close out delayed inventory and inventory produced in anticipation of the distribution agreement in Europe.

Selling, distribution and administrative expenses were $4.3 million in the quarter, up from $3.3 million in the prior year period. Of these expenses, approximately $64,000 was related to one-time non-recurring expenses arising in connection with the opening of the San Francisco store in September 2006. Operating expenses, as a percentage of sales, increased to 29.4% as compared to 23.5% in the prior year period. In addition to these expenses, we had a one-time non-recurring charge under other expenses amounting to approximately $500,000 arising in connection with the terminated transaction with Long Rap, Inc.

"While we are disappointed with our quarterly results, we remain confident and excited about the many opportunities we see ahead for Blue Holdings," said Paul Guez, Chairman, Chief Executive Officer and President of Blue Holdings, Inc. "The termination of the Up Against the Wall deal, the production delays and the termination of our negotiations with Global Fashion to distribute our products in Europe, negatively impacted our third quarter. Although we experienced these difficulties, we remain committed, focused and optimistic about the growth of our business. Specifically, our brands continue to perform strongly and meet our expectations. The Life & Death brand, which we recently acquired a 50% interest, has been very well received by our top retailers and department stores and is off to a strong start. In addition, the Company's San Francisco store is performing above initial expectations, and is doing an exceptional job of showcasing the Company's brands. The store has experienced very strong sell-throughs of all the Blue Holdings brands and products."

Nine Months Ended September 30, 2006

For the nine months ended September 30, 2006, net sales were $41.6 million compared to $24.6 million in the same period last year. Net income was $2.0 million, or $0.08 per basic and diluted share compared to $3.9 million or $0.15 per basic and diluted share in the same period of last year. Gross profit for the nine months ended September 30, 2006 was $17.8 million or 42.8% of sales compared to $12.2 million or 49.7% in the same period of last year.

2006 Outlook

The Company has revised its outlook for the year. Previously, the Company expected net sales for 2006 to be in the range of $60 million to $70 million. The Company is now projecting sales for 2006 to be in the range of $50 million to $52 million. The Company now sees gross margins for 2006 to be in the 42%-45% range. The primary reason for the lowered guidance is the termination of negotiations with Global Fashion to distribute our products in Europe and the spillover effect of late delivery of product from our vendors in the third quarter.

Press Release

Monday, November 13, 2006

TRLG Q3 Tidbits

I'm no seasoned investor but the Average Joe Investor is. Nor do I own any TRLG stock but he does. Check his blog for a reaction to TRLG's Q3 results.
As a shareholder, and having been positive myself on the prospects of True Religion Apparel (Nasdaq: TRLG), I'm licking my wounds a bit after their last earnings call. What a mess. Rather than give a full rundown, which will just up my PTSD, I'll just hit some of the high(low)lights

Also read the recap by MarketWatch's Herb Greenberg. He points out that
One interesting question on the call was whether divorce rumors are true about Lubell and his wife Kymberly. Lubell sidestepped the question, saying, "Rumors are rumors; I'm here to discuss anything that involves the business."

Yes, that line in the article is underscored, italicized, and in bold. What's fashion without good gossip?

And almost certainly if Kimberly parts way with Jeffrey you can expect a new line from her. Perhaps a much darker version of True Religion.

UPDATED: Anonymous source notes the Lubell's divorce is not a rumor.

The Average Joe Investor

MarketWatch's Herb Greenberg

Tuesday, November 07, 2006

Arvind Mills Financials

The Business Standard is reporting about Arvind Mills from Mumbai.

A deterioration in business environment in its key segment-denim-resulted in a worsening of Arvind Mills?financials as its standalone sales declined 8.3 per cent y-o-y. Operating profit margin declined 308 basis points y-o-y to 21.83 per cent.

Denim volumes fell 18 per cent and prices declined 8.9 per cent on a y-o-y basis. Even in the June quarter, volumes and realisations had dropped 20 per cent and 12 per cent respectively.

Denim prices declined to Rs 90 a metre- the lowest price in five years. Demand for the shirtings fabric business improved from the garment division, but realisations, declined by 0.8 per cent sequentially.

Arvind has increased its focus on garments business in Q2 FY07, the contribution of garments increased to 19 per cent of sales, up from 17 per cent in Q1 FY07 and 11 per cent in Q2 FY06.

Its branded apparel subsidiary, Arvind Brands, hived off five international brands (including Lee and Wrangler) to a JV with VF Corporation, where the latter will own 60 per cent for which it received about Rs 148 crore.

The management believes it will take 12-15 months for the pressure on revenues and net profit to ease. Cotton prices are slightly higher this quarter and fuel costs will stay high due to inadequate gas supply.

The Arvind stock has halved over the past year, and even at the current price of Rs 59, it trades at an expensive 24 times FY07 earnings.

Business Standard Article
True Religion Q3 Results


-- Net income grows to $8.2 million, after giving effect to the
balance of a one-time settlement expense and to a banking
expense, which together amounted to approximately $799,000

-- Earnings per diluted share increases to $0.35, after giving
effect to a one-time settlement expense and banking expense
equal to $0.02 per diluted share

-- Company signs first global licensing deals for footwear and
headwear to help drive brand to broader lifestyle collection;
Enters into leases for six new True Religion stores in
California, New York, New Jersey and Florida; Opens outlet
store in Desert Hills, California

Although their adjusted net income grew 13% to $0.37 per diluted share, analysts were expecting 44 cents. And get this- MarketWatch's Carolyn Pritchard cites a denim-heavy product as the reason for that shortcoming. Let's just hope these creative accountant types don't set up contingencies for global warming. Well it doesn't matter now that TRLG will be selling other apparel items with GMI (oh wait that's headwear, scarves and gloves).

Full press release follows.

True Religion Apparel, Inc. (Nasdaq:TRLG) today announced financial results for the third quarter ended September 30, 2006.

Net sales for the 2006 third quarter increased 22.6% to $42.9 million from $35.0 million in the 2005 third quarter, although were below the company's internal projections. During the quarter, the company's product mix at retail outside the U.S., which was heavily denim-based, negatively impacted sales due to exceptionally warm weather and, as much as the recovery has been solid, sales in Japan did not perform up to the company's original forecast.

Excluding unusual expenses in the quarter related to the balance of the Indigo Group arbitration settlement and legal and professional fees related to the company's ongoing engagement of Goldman Sachs, which together amounted to approximately $799,000 before income taxes, or $0.02 per diluted share, adjusted net income grew 13% to $8.7 million, or $0.37 per diluted share. This compares with net income of $7.7 million, or $0.33 per diluted share for the third quarter of 2005. Giving effect to these expenses, reported net income for the 2006 third quarter grew 6% to $8.2 million, or $0.35 per diluted share. Management believes that including non-GAAP net income per diluted share for the current period provides a useful and relevant measure for comparative year-over-year operating performance. Refer to the attached table for details regarding the basis for the adjusted net income per diluted share calculation.

"On both financial and operating metrics, this was a great quarter with progress on many fronts that supported our goal of becoming a global lifestyle brand with a strong denim foundation," said Jeff Lubell, Chief Executive Officer of True Religion Apparel, Inc. "We advanced initiatives that will enhance our ability to develop a richer product offering and broaden distribution channels. Subsequent to the end of the third quarter, we signed our first licensing agreements for footwear, headwear, scarves and gloves; added key new members to our design and marketing teams; signed leases for new stores in Los Angeles, New York and New Jersey, and opened our first outlet store in Desert Hills, CA. As the holiday season approaches, we are hard at work to offer an increasingly diverse product mix to our growing customer base, drawing on our hallmarks of fit, style and high attention to detail."

Gross profit in the third quarter increased to $22.4 million from $18.4 million in the third quarter of 2005. Third quarter 2006 gross margins stood steady at 52.2% compared with 52.7%, in the same period last year.

Selling, general and administrative expenses in the quarter increased to $8.8 million from $5.8 million in the 2005 third quarter, primarily reflecting ongoing infrastructure enhancements including personnel, facilities, warehousing, replenishment systems, marketing initiatives and retail build-out.

Net income from operations was $13.6 million, or 31.6% of sales, in the 2006 third quarter, versus $12.7 million, or 36.2% of sales, in the same period in 2005.

For the nine-month period ended September 30, 2006, net sales increased 41.8% to $109.3 million from $77.1 million in the same period last year. Net income, excluding a one-time arbitration settlement of $2.1 million primarily recorded in the second quarter and unusual banking expenses previously discussed for the most recent quarter, increased 41% to $21.3 million, or $0.91 per diluted share. On a reported basis, net income rose 24.0% to $19.6 million, or $0.83 per diluted share, versus $15.8 million, or $0.68 per diluted share in the first nine months of 2005.

Gross profit in the 2006 nine-month period was $57.5 million, compared with $39.6 million last year. Gross margins for the nine month period increased to 52.6% from 51.3% in 2005.

Selling, general and administrative expenses for the first nine months of the year were $23.6 million, compared with $13.8 million in the first nine months of 2005. Included in the increase for 2006 is $2.5 million non-cash compensation and SFAS 123R compensation expense.

Net income from operations for the first nine months of 2006 was $33.9 million, equal to 31.1% of sales, versus $25.8 million, or 33.5% of sales, in the same period last year.

2006 Financial Guidance

Reflecting current visibility for the remainder of 2006, the company adjusted its expectation of total sales for the full year to $138 million to $140 million, representing a growth rate of 35% to 36% over last year. Earnings per diluted share, before giving effect to the one-time expenses related to the arbitration settlement and unusual banking expenses, equal to $0.08, is expected to be in the range of $1.11 to $1.12 for 2006.

True Religion Press Release

Monday, November 06, 2006

TRLG Licensed

This morning True Religion announces their licensing agreement with GMI that will diversify their product mix. Lifestyle is the keyword. This is only after six months since Michael Buckley took the post of President. If you remember when his appointment was announced he was cited as having "played a critical role in taking Diesel from a wholesale denim-based brand to a complete lifestyle brand."

True Religion Apparel, Inc. (NASDAQ: TRLG) today announced it has signed its first-ever licensing agreements for True Religion Brand Jeans branded lifestyle products including footwear, headwear, scarves, and gloves further diversifying its product mix and extending the reach of its brand into a broader lifestyle collection.

Under an exclusive agreement, GMI Corporation has licensed the worldwide rights to manufacture and sell True Religion branded men's and women's shoes, sneakers and boots, as well as sandals in both adult and children's sizes. GMI, based in Italy, is the current licensee for Levi's-branded footwear, and has earned a stellar reputation, spanning more than 40 years with top-selling apparel industry veterans, for quality, tailor-made shoes. Distributing throughout Europe, Asia-Pacific and the United States, GMI plans to launch the True Religion Brand Jeans footwear line at the WSA footwear and MAGIC apparel shows in Las Vegas in February 2007 and is expected to begin shipping to retailers in the fall of 2007.

True Religion also selected Paramount Apparel International, Inc., to design, develop and market worldwide the company's original branded headwear, scarves and gloves under an exclusive agreement. With more than 75 years of experience designing, manufacturing, embellishing and sourcing headwear for leading fashion and athletic apparel companies, including Nike and Timberland, Paramount plans to launch the new True Religion Brand Jeans program at MAGIC in February 2007 and begin delivering to retailers in the second quarter of 2007.

"We are extremely excited about these new ventures and are confident that both companies will serve as ideal partners to debut footwear, headwear, scarves and gloves next year and to continue to build a following for the True Religion brand," said Michael Buckley, president of True Religion Apparel, Inc. "We chose GMI for their ability to both make high-quality, trendsetting footwear and to promote them in the hottest showrooms around the world in Milan, New York and Hong Kong. Additionally, Paramount is sought-after for their high quality product and shares our core values with respect to innovative design and superior quality control." Buckley noted that the combined minimum guarantees on the two licenses will contribute more than $9 million to True Religion's operating income over the life of the agreements.

"GMI and Paramount are both standouts every year at the WSA and MAGIC shows, and we are truly excited to expand our product offerings with these new licensing agreements," said Jeff Lubell, chairman and chief executive officer. "This brings us one step closer towards our goal of becoming a vertically integrated, premium, global lifestyle brand, and we are thrilled to partner with GMI and Paramount on an exclusive basis. We are confident our customers will embrace the look that will be offered next year in our enhanced product offerings."

Press Release via Yahoo