Rugby Shorts Make The Grade

Men's shorts sure didn't change much in the 90's. Cargo shorts in khaki, cinnamon, brown, green and camo became the golden standard, and summer after summer, nobody seemed to come forward with a successor. Over the past few summers, J Crew and Brooks Brothers brought us preppy innovations: more traditional Bermuda shorts with repeating preppy symbols such as ship anchors, sailboats, and swordfish:

Once the cut was popularized, seersucker and love-it-or-hate-it Madras patchwork took the stage:

A great piece of innovation, though, is coming out of Rugby: the same preppy repeat-patterns done in waterproof fabric for swimwear (as evidenced by the blue pair on top):


What's the next men's shorts innovation?

Retail Holding Up

Bloomberg just chimed in on retail earnings, noting that J.C. Penney, Kohl's, and Nordstrom beat analyst profit estimates.

The retailers accomplished the feat by "clamp[ing] down on inventory, operating costs and store growth". Same store sales declined at all three retailers.

Macy's is the only retailer so far to report a net loss, due to consolidation costs.

Just something to chew on for those mulling retail right now...

J.C. Penny, Kohl's, Nordstrom Profit Beat Estimates - Bloomberg

J.C. Penny Cuts Economic Outlook

Some unsurprising news today, apparently J.C. Penny (NYSE:JCP) CEO Mike Ullman is predicting a slowdown in the retail sector due to the recent economic downturn.

"J.C. Penney Co. Inc.'s slashing of its first-quarter profit projections by a third after a disappointing Easter could be a warning for the overall retail sector that the proverbial wall is just ahead. While retailers have been dancing around the impact of the economic slowdown for the last few months, evidence is mounting that the second half might not be pretty." -WWD

It must be an easy job running a crappy department store chain (see futile attempt American Living) and blaming the store's inadequate measures to join us in the 21st century solely on macroeconomic events... I think your product buyers and brand strategists belong in the proverbial 'fail' dumpster directly up against that proverbial economic wall.

"Consumer confidence is at a multiyear low... J.C. Penney counts half of American families as its customers and they are feeling macroeconomic pressures from many areas, including higher energy costs, deteriorating employment trends and significant issues in the housing and credit markets." JC Penny's CEO Mike Ullman

Keep on trucking J.C. Penny, we are always amazed by your utter incompetence and and inability to run a successful, modern retail firm.

Inditex Announces New Brand, Global Expansion

Grupo Inditex (Euronext MC: ITX), the maker of Zara, has just announced a slew of things at an analyst conference today, including plans to launch an accessories brand to be called Uterqüe. The brand is to sell bags, shoes, sunglasses and scarves, and the company is planning on having 20 to 30 of the shops open by year-end.

Also of note was the news that Zara stores will be opening up at a faster clip throughout Asia (Inditex already has some stores in Japan and China). Seoul's first Zara location will open in April, with at least four more openings planned in the city before year-end. These openings come as the company is busy rolling out heaps of new stores in Italy, France, Russia, and eastern Europe.

So, when is Inditex going to start seeing problems from over-saturation? Or is Inditex immune because they have so many brands?

It would serve Inditex's management to take a good look at what happened to Ford and General Motors. In the 80's and 90's, both sported portfolios of profitable brands whose products became more and more alike. Those brands began poaching sales from one-another, and in the end, GM axed their underperforming Oldsmobile marque. Both companies soldiered on with portfolios of less-than-original nameplates and continue to lose market share to their more concentrated Japanese/German rivals to this day.

Inditex has got to continue to ensure that their brands are distinct from one-another in order to safeguard their relevance in the marketplace.

Inditex abrirá entre 20 y 30 tiendas de complementos en el segundo semestre de 2008

American Apparel Trading At 52-Week Low

American Apparel (AMEX: APP) has been getting hammered in the market over the last 4 weeks. After debuting around $15/share in December, American Apparel promptly fell to $11 not more than forty days later (24th of January). It rebounded north of $13.20 by February 5th, and has sold off since, closing at $10.95/share today.

Some of the selloff is due to general macroeonomic concerns including a retail spending slowdown, but there's something else driving the negativity on APP: CEO Dov Charney is in the middle of a potentially damaging lawsuit. Charney has recently won an appeal, and the case is back in arbitration, which could delay settlement for up to a year.

American Apparel has fallen more than double that of the S&P Retail ETF since its listing in December.

What do you guys think of American Apparel right now?

Retail Customer Service All-Stars

BusinessWeek has published a list of the American firms with the best customer service, gathered by J.D. Power. A few retailers made the grade, including L.L. Bean, Land's End, Nordstrom, Amazon.com, and Neiman Marcus.

Some interesting tidbits in the survey:

Land's End doubled its presence in Sears stores in 2007 and added in-store monogramming. They let customers bring back merchandise that's 20 years old.

Amazon.com made shipping free for all orders above $25, which seemed like a dangerous margin-killing move, but ended up increasing sales by 42% and doubling profit in the 4th quarter of 2007.

At Neiman Marcus, new hires receive 160 hours of training so they know how to develop customer relationships and understand the designer goods the chain sells (retail success story Lululemon requires similarly-lengthy training). Also, Neiman has been recruiting at top universities to increase the caliber of its associates.

Another study published in the Journal of Marketing shows that firms in the top quintile of customer service rank beat the return of the broader stock market in good times and bad. Indeed, there's something to be said for providing good customer service.

Businessweek - The Customer Service Elite
Consumerist - How To Beat The Stock Market: Buy Companies With High Customer Satisfaction Scores

J Crew's Women's S/S 08 Lineup

As we head back into the first months of spring, a few retail outlets come to mind for the usual spring shopping. This week we look at J.Crew's (NYSE:JCG) Women's lineup.

It seems as though this spring, the clothing is a bit more conservative than normal with a few odd quirks. In comparison with Anthropologie (NASDAQ:URBN), it seems as though much of their collection really is hit or miss. Half-jokingly, I compare some of J.Crew's collection with the older-woman style of Talbots (NYSE:TLB), moving away from a more youthful look. One very stand-out part of the S/S line is their obsession with the above pictured Paisley print (pictured above). This is certainly a different style direction than much of their pieces and might be a clash rather than a complement.

I think the brand may be getting a little too conservative for some of its core buyers in their early 20's. Perhaps perfect targets for Rugby (NYSE:RL)?

Sentiment: Neutral-Bearish.

Hedge Funds Corral American Apparel

American Apparel (AMEX: APP) shares are being widely fielded by hedge funds. SEC 13G filings (which indicate that an investor or fund has amassed >5% ownership stake in a publicly traded entity) have been filed by Morgan Stanley Investment Management, Fir Tree, and most notably, SAC Capital Advisors.

SAC Capital Advisors is run by the über-successful fund manager Steven Cohen, who routinely pays himself upwards of half a billion dollars a year (and more than a billion in 2005) for managing the fund, and is the 47th richest American, according to the latest figures. More importantly, Mr. Cohen has had a stellar track record investing in retail. Google Finance Board user mlrtist wrote:

"...it might interest you guys to take a quick look back at Cohen's involvement in [youth retailer] Wet Seal's dramatic turnaround exactly 2 years ago."

TheStreet.com - Retail - Wet Seat Turns It Around

Quoting the article from TheStreet.com:

"For S.A.C., Wet Seal has proved to be a huge success. The shares have nearly tripled since the firm bought its stake over a year ago..."

"The results imply that S.A.C., which held a 9.9% stake in Wet Seal as of Dec. 31, found a cheap way to break in on the teen fashion specialty-retail business, where Wall Street darlings like Abercrombie & Fitch, American Eagle Outfitters and Pacific Sunwear have been delivering some of the highest returns in the stock market in recent years. Wet Seal operates about 300 stores across the U.S."

If Steven Cohen tripled his investment in Wet Seal, then we might take a good long look at American Apparel just by association.

(Full disclosure: author owns shares of American Apparel both directly and indirectly at the time of this writing; does not own shares of any other firm mentioned in the article.)

13G Filing - Morgan Stanley
13G Filing - Fir Tree
13G Filing - SAC Capital Advisors

Friday Linkfest!

Turning most of our focus over to fashion week coverage we have a few great articles for your viewing pleasure this week.

Fashion Week Coverage

Business of Fashion contends that "celebrity haute couture" will be the new standard after this fashion week. In addition, they have some great coverage of Gucci's new flagship store in NYC.

My Fashion life has coverage of the following collections, Arthur Mendonica, Naeem Kahn, American Express w/ Peter Som, Malan Breton, Karen Walker, Iodice, Rag and Bone, and our favorite, Gap's new look.

Styledash had coverage of Lacoste, Rock and Republic, Nautica, and Project Runway's Viktorya Hong.

Is Rock & Republic In Hot Water?

The buzz about Sundance this past week has been about the state of some popular contemporary denim brands. I'm not even remotely a fan of True Religion, one of the sponsors of a swag suite at the festival, but the brand has generally been successfully in selling their core product - upscale denim with new, on-trend variations every six months or so. The gossip around Sundance has been focused on how Rock & Republic has been faring. While their core product is also upscale, on-trend denim, they have been trying to expand into areas with limited success that has allegedly cut dramatically into their cash flow. With handbag prices reaching $950 and shoes reaching $395, and sunglasses like those pictured above for $350, Rock & Republic is pricing the brand much higher than others in the same contemporary market, including L.A.M.B. and Botkier, among others. The problem is that the brand expanded into apparel and accessories far too quickly. Instead of capitalizing on a growing brand cachet, Rock & Republic instead found themselves with numerous overpriced products with very little consumer awareness. Just as they were experimenting with several new back pocket logos, they also launched their handbag and footwear line. The new logos varied from a popular, lightning-like, angular variation of their classic double-Rs, to a more confusing tri-colored, triple-stitched version of the logo they introduced on their accessories. Too many variations of the brand's logo can prove confusing for the customer, working against the rather unsubtle, nearly garish effect of their bestselling, original double-Rs. While this gossip may just have been propagated especially strongly because of True Religion's dominance at Sundance, Rock & Republic's clearly uncontrolled brand expansion is certainly something to watch out for.

Cobain's Daughter New Face of Chanel

The 15 year old daughter of the late Kurt Cobain, Frances Bean Cobain, has been reported by Styledash to be the next Chanel poster child. We guess having over 130 pairs of shoes and 200 pairs of jeans as well as being "relatively" famous gets you into a contract with a high end fashion house these days.

The rock world's most famous offspring is widely rumored to be the front runner for the face of Chanel's 2008 campaign -- and she's only 15!

I had no idea she was even a model, but apparently Frances Bean is "overwhelmed" by the opportunity and ready for "what the Chanel experience may offer."
-Via Styledash (full article)

Loeffler Randall for Target - Cheap and Moderately Chic

Loeffler Randall, the New York shoe and accessories line designed by Jessie Randall since 2004, has picked up a lot of editorial coverage lately, and buyers across the country have taken note. Ms. Randall's shoe collection can now be found everywhere from tiny shoe boutiques, like Lamb's Ear in Fremont, to extreme luxury landmarks, like Bergdorf Goodman in New York. The company recently expanded to include a clothing collection, now carried at Nordstrom, Les Amis, and Tulip in Seattle. With all the buzz, it was only natural that a collaboration with target was next.

Already in stores, the collection consists of two styles of flats, two styles of handbags, and three styles of clutches, all offered in a variety of fabrics or faux leathers. The shoes are all $29.99, while the clutches are all under $25 and the handbags under $50. For those prices, are they any good? A recent trip to my local Target revealed that the shoes were surprisingly chic for the money. The metallic rose cinched flats looked and felt on par with several shoes that cost twice as much. The rosette ballet flats avoided kitsch by using less conventional colors. All in all, these are all perfectly serviceable pieces of footwear for a very agreeable $30.

The bags, on the other, feel exactly as they should for their price. While their woven design is attractive enough, clearly a riff on Bottega Veneta's increasingly popular Intrecciato weaving, the material used is what one would expect at these under $50 price points. The satchel and large tote have handsome proportions, but the brown patent looks, feels, and, worst of all sounds cheap. The vinyl squeal elicited by the patent is painful to hear. The faux leather versions of these bags are much less offensive, but they still lack the feel of genuine leather. For the money, fabrics almost always looks better than faux leathers at the bottom end of the price spectrum. Instead, these bags come off as trying too hard to be something they're not, too hampered down by price constraints that result in excessively cheap materials. something that previous Target designer collections have also suffered from, most notably those from Rafe Totengco and Devi Kroell.

Christian Louboutins

The blog 'I am Fashion' on Christian Louboutins shoes:

Out of all the super designer footwear brands out there like Manolos and Jimmy Choos, my favourite is Christian Louboutins. I really want to be able to say that I love them all, but I've been to the stores and tried them on and to be honest, I've never really seen anything at the Jimmy Choo store that I really wanted to try on. As for Manolos, physically the designs don't look too special either. I heard it was the angle of the arch that is crazy comfortable, but I don't quite need that at this point in my life yet when there are so many decently comfortable black pumps out there still i.e. Fiona by Cole Haan. So yes, Manolos and Jimmy Choos are like wine- an acquired taste developed over time.

For me, the charm for Louboutins are just more obvious. Their designs are just more elegant and me....

-Via I am Fashion, The thing about Louboutins (Full Text)

True Religion: Foil Jeans

Styledash commented on a pair of True Religion Jeans (NASDAQ:TRLG), proclaiming them to be the best 'going out' jean they have seen in a while. Contrary to the Fashion Investor Poll... we also think these are potentially worth looking at - although the bright gold could be an eyesore to some without the right top and accessories...

Filed under: Casual wear, Jeans and DenimI am a denim girl at heart. In fact, I have more pairs of jeans than I do pairs of socks (that's the truth). Today, jeans are appropriate for almost any occasion but the secret is wearing the right kind of denim at the right time. During the day almost anything goes. However when the sun goes down you must choose your denim carefully.

The True Religion Joey Foiled Painted Pocket Jean is perfect for night time occasions. The dark wash, the extravagant pocket detail and the sexy cut will be turning heads all night long. These jeans would look amazing with a gold sequin shell and pointy-toed stiletto heels -- great for a night on the town with the girls or a date with that special someone.

-Via Styledash (Full Article)

Trendspotting: Shopping bags - A new fashion?

This winter shopping season, you may have noticed the impressive quantity of strongly-branded shopping bags around the city. It is not suprising that with a potential retail squeeze coming after the new year, that retailers are jockeying for high sales figures during the holidays.

The New York Times had a very interesting article about these shopping bags and the idea behind this trend.

A team of designers at Saks Fifth Avenue envisioned “a piece of modern art” and hired a renowned graphic artist to create it. Their counterparts at Lord & Taylor demanded five prototypes, even traveling to a Korean factory to oversee manufacturing.

Bags designed by David Lipman. Lord & Taylor pays 80 cents for each.

Over at Bergdorf Goodman, staff members held secretive deliberations that stretched late into the night for nine months.

The focus of all this scurrying was not this fall’s couture line or next spring’s resort collection.

It was shopping bags.

Once a flimsy afterthought in American retailing — used to lug a purchase home from the store, then tossed into the trash — the lowly, free store bag is undergoing a luxurious makeover.

From upscale emporiums to midprice chains, retailers are engaged in a heated competition to make the most durable, fashionable shopping bags. They are investing millions of dollars in new flourishes like plastic-coated paper (Macy’s and Juicy Couture) and heavy fabric cord handles (Abercrombie & Fitch and Scoop).

-NYT, Never Mind What’s in Them, Bags Are the Fashion (Full Article)

We thought that the shopping bags were a great momentum indicator into the holidays by simply walking down the street. We also noted that some retailers such as Nordstrom have been providing their customers with quality shopping bags for years!

Capital Allocation: Business of Fasion

The Business of Fashion blog features a great series this week on basic spending guidelines for the fashion industry to ensure success. This is a must read for anyone interested in doing any business in the sector.

The Business of Fashion Basics 4 - How do I decide where to allocate my capital?

So you've done it. You've cobbled together some financing from family and friends or squeezed a loan out of your bank manager. If you're a little farther along, perhaps you have managed to raise an injection of capital that will help take your business to the next level. The question is, now what to do with your funding? And, how do you make it last? - Business of Fashion

I will be in New York this week for interviews, however please stay posted for more updates over the next week!


Speaking of which, the Sartorialist had a small article on the styles of Grey's and Blues in New York worth checking out. Those of you looking to play outside in this colder weather might also want to refer to I Like Her Style's article on Winter Parkas.

In case anyone was wondering what the newest Men's winter jacket trends are, Stil in Berlin has a look into what people are wearing on the streets of northern Germany.

In The Spotlight: Aritzia

Hailing from Vancouver, Aritzia boasts an impressively trendy boutique concept with stores all over Canada and 2 in the US. From staple brands like Citizens of Humanity and Juicy Couture to in-house designers like Talula Babaton, Aritzia seems to have the perfect combinations to put together some hot, stylish outfits. Not only are the clothes fashion-forward, but the boutiques also resemble trendy European styles such as artistic lighting and decor.

Currently the two stores in the U.S. are in Bellevue, Washington and San Jose, CA- with plans to expand further into the American market. I think their distinguished style and great taste makes them a perfect candidate for the growing interest in upscale brands state-side.

Stay tuned for more to come on this up-and-coming brand's entry into the US market.

More information can be found here:

Aritzia Boutique Launches in Bellevue Square Nov 17th - East Side Business Journal
Aritzia hopes designer jeans will fly in U.S. -Financial Post

Black Friday: Consumer Spending Update

Consumer spending was healthy in many of Seattle's retail stores
today. Most notably, and surprising was the line out the door at
Bellevue Square's Express. Other busy retailers included MNG Mango,
Canadian retailers Aritzia and Lululemon Athletica (NASDAQ:LULU), as well as department stores Nordstrom (NYSE:JWN) and Macy's (NYSE:M). Gap(NYSE:GPS) was (not surprisingly) practically empty, with only a few scattered customers waffling around
in the men's section with the cash register completely empty. Retailer
Best Buy (NYSE:BBY) had a respectable crowd, however we were largely disappointed with the 'deals' offered. Overall, we thought that higher end clothing retailers fared better with the upscale consumer crowd than electronics or lower end products.

--Update

Another notable retailer this weekend was GameStop (NYSE:GME), with its store packed full of shoppers. Recently, they have been on a pretty heavy run with so many popular video games being released and pre-sold by the store. I wouldn't be surprised if this momentum continues through the holidays.

A Hipper, Younger, Less Intimidating Chanel

Chanel plans to open a store catered to younger, more easily intimidated demographic of shoppers in their teens. Fashion Week Daily reported that the store would be located at 125 North Robertson Boulevard.

"Merchandising for the approximately 4,500-square-foot store has yet to be conceptualized, but when it opens late next spring alongside neighboring stores like Intermix, Tory Burch, Kitson, and Lisa Kline, it's expected to carry a selection of trendier, more fashion-forward ready-to-wear and accessories as opposed to its 14,700-square-foot Rodeo Dr. counterpart. That mantra evidently will carry through as far as the store's design, as word has it the front door entrance will come in the form of a retractable garage door, likely emblazoned with the Chanel logo."
-Fashion Week Daily, Chanel Readies for Robertson

As younger consumers become increasingly exposed to high-end advertising and luxury products, accessibility to these products must become second nature to retailers. Although, one might worry that a younger consumer crowd potentially threatens a brand's image and might drive away older staple customers willing to spend more per capita.

Oprah's Favorite Things + Nordstrom

Notice anything particular about the three items featured on the Nordstrom.com home page? Those Ugg boots, the Clarisonic system, and the Rachel Pally set were all featured on Oprah's Favorite Things episode, which airs today. It's funny how subtle it is, there's no mention of Oprah anywhere. Buy! Buy! Buy!