Amidst Dark Economic Times, Some Designers Still $hin€

The poisonous combination of tight credit and limited spending is setting the stage for a dramatic and frightening start to the new year.

Financial and credit sources expect 2009 to be difficult from beginning to end, but the first few months will be critical as stores weigh the damage wrought by soft holiday demand, heavy markdowns to drive traffic and expected weak fourth-quarter profits.

William R. Wagner, partner in the banking and finance practice at the Baker & McKenzie law firm, said, “I think we will continue to see many financing issues throughout 2009. We have certainly hit some difficult times. Some people think we are at or near the bottom. So far, I haven’t seen liquidity hit the market yet. I expect we’ll see an increasing combination of bankruptcy activity and distressed investing during the next six months.”

Wagner said retailers are significantly exposed to the liquidity crunch since they operate on a “seasonal buy-sell curve, and this downturn, in particular, is hitting their biggest season, essentially handcuffing them.”

In the current environment, he explained, many retailers face increasing pressure to meet their financing obligations under loan agreements. That pressure, coupled with a real uncertainty over how much consumers may be willing to spend during the holiday season, has led to major spikes in discounting as retailers do their best to end the holidays with a pile of cash to finance the next selling season.

“This is so pronounced because every retailer out there is competing against the other,” Wagner said. “Even Nordstrom is competing with TJ Maxx, trying to get that last dollar from the consumer. Those that aren’t successful may have real liquidity issues in the first quarter of 2009. From a lawyer’s perspective, lenders have now returned to very tight credit policies. The credit markets are anything but robust, and companies that were able to borrow on liberal terms in the past do not have the same access to cash, creating significant refinancing risks ahead. I believe 2009 will continue to be pressured.”

James Schaye, president and chief executive officer of liquidation firm Hudson Capital Partners LLC, also is pessimistic about 2009.

“I see absolutely nothing at this point in the near future to turn things around,” he said. “People may buy to feel good or feel a little better, but there are no triggers to turn the economy around. The banks are going to exert pressure on companies come January. Most will come out of December with sales that are highly disappointing to everyone. That means the banks are going to look extremely hard at the portfolios. I know of one asset-based lender that said 10 percent of his portfolio is in trouble, and that the percentage could increase.”

To survive the threat, “the smart retailers will get their inventories way down and start turning faster,” he said. “Some are canceling or holding back on orders. But it’ll also back up into the wholesaler as retailers return goods or come back with their hands out for markdown money.”

Steve Victor, a vice president at Development Specialists Inc., a restructuring and workout firm, said consumers are either not spending or trading down.

“Most don’t have any availability on their credit cards and are scaling back. All retailers are affected, from consumer electronics to apparel. It will be an interesting time starting in the middle of January and into February when management and the lenders begin evaluating where they are,” he said.

Calling the times “unprecedented,” he foresees continued pressure throughout next year and is expecting more bankruptcies and corporate downsizing after the holidays.

Consumers, like the businesses trying to snare their purchases, are emphasizing cash conservation. A recent study by global strategy firm L.E.K. Consulting indicated that individuals, deprived of the comfort of wealth creation in real estate or the stock market, will decrease personal consumption and instead emphasize savings in the new year.

“This trend represents a startling reversal, with huge implications for the economy,” said Andrew Rees, vice president and co-author of the study. “If consumers do indeed move the savings rate back to the average over the past 20 years, around 7 percent, that will take between $115 billion to $120 billion out of the consumer economy on a quarterly basis.”

As with all economic downturns, the changes will spell opportunity for some. Gary Wassner, president of Hilldun Factors, believes there are new opportunities out there for American designers.

“When I talk to the stores, they say they can’t sell European product,” he said. “Consumers don’t want to buy. The appeal of the superluxury European brand has gone away among the affluent in this depressive financial mood. It is almost more politically correct to feel better by buying American, which usually has a lower price point even in the luxury market.”

Wassner said American brands offering merchandise typically slightly less expensive than the ultrahigh-end — Alexander Wang, Nanette Lepore, Theory — are the sweet spots among consumers. “Consumers can still buy designer, but at better value prices,” Wassner said.

He is concerned about retailers who cater to the affluent, or those who have mimicked their wardrobe habits. “These companies could be getting strapped because their customer base, the aspirational shoppers, are unwilling to pay high price points for something when the discretionary money is now needed for their kids and their education.”

Wassner is hoping that by the end of 2009 the market will be on the road to recovery. “Everyone is grasping at straws right now. No one knows what will stop the panic. The fundamentals are still good for most companies, but the panic is due to lack of confidence in the financial system. It is really crazy because the panic is feeding on itself.”

Jeffrey Edelman, retail consultant and former analyst, believes the climate will help retail-wholesale partnerships built around exclusive brands, rather than focused on stores’ private labels or vendors’ brands. At a recent presentation sponsored by accounting firm McGladrey & Pullen LLP, he noted, “Private labels can tie up stores’ cash and force them to make buying decisions far in advance of actual selling. Vendors’ brands provide stores with more flexibility but have limitations of their own. Brands are losing their relevance because there’s too much sameness. There’s nothing new, nothing exciting.”

The reluctance of brands to take fashion chances might be understandable given the economic uncertainty, but that has made it easier for many retailers to cut their orders or play it safe. Brands’ caution when it comes to fashion also has made it easier for consumers to sit on their wallets.

Emphasizing private brands can help retailers cut costs in some instances, but private labels also necessitate making commitments far in advance of delivery. The strategy can work, Edelman noted, but is by no means a panacea. Before its Chapter 11 bankruptcy filing in January 1992, R.H. Macy & Co. had “up to one-third [of its goods in] private label, but it couldn’t control costs and it cut many of its other brands, creating an inventory imbalance,” he noted. On the other hand, today more than 35 percent of Macy’s sales come from brands that are either exclusive to its stores, such as Tommy Hilfiger’s sportswear, or limited in distribution, according to the firm.

J.C. Penney Co. Inc. has a number of private label brands that offer good value to consumers, a practice that earns the retailer its “value image,” Edelman said. He noted the midtier retailer also has its share of national brands and maintains a promotional cadence that adds to its value orientation. However, the exclusive brand American Living, developed by Polo Ralph Lauren Corp.’s Global Brand Concepts division, sits at the top of its price structure and could be “a billion-dollar brand as it develops,” Myron “Mike” Ullman 3rd, J.C. Penney’s chairman and chief executive officer, said in August.

Earlier this month, Charlotte Russe Holding Corp. was designated as the exclusive retailer for the People’s Liberation brand. “Partnering becomes extremely important,” Edelman remarked. “If done right, both [retailers and wholesalers] can win.”

Even with growth at discounters and off-pricers, Edelman doesn’t expect trading down to be a long-term trend. “After so many years of trading up, I think consumers will not be trading down in terms of quality,” he said. “They’ll buy less [instead].”

That means retailers will need to generate higher sales per square foot. The answer won’t lie in higher prices, but in better sell-throughs, Edelman advised. “It means better product, better value and lower markup.”

Courtesy: WWD , Sage Works Inc

Every fashionista wants to be a star and every star a fashionista – Sean Avery, Lydia Hearst, Kanye West

It seems every week another celeb, socialite or athlete is interning at a magazine, fashion house or other fashionista-related industry, raising eyebrows in the media as to why people of their caliber (*cough* money*) would take on such marginal roles. Is it the glitz and glamour that attracts them? Do they just want to be guaranteed a seat at runway shows? Are they trying to see how much more free stuff they can get both as a celeb and as an employee?

Sean Avery kicking it back in the Vogue closet

It seems that no sooner were we digesting the news of yummy NHL hockey player Sean Avery interning at Vogue, styling models for photoshoots in L.A. and attending ‘senior level meetings’ in New York, do we now learn that Kanye West is planning on interning in London this coming spring. For anyone not familiar with Kanye, his level of ambition and dedication to anything he does is simply immeasurable. While he may come off as cocky as Chuck Bass at a Hamptons White Party, he has good reason to: multi-platinum albums, Grammy wins, sold out concerts, world-reknown celeb status, the list goes on and on.

Kanye o-Fendi's his love of all things LV

Not content with dominating one industry, Kanye has set his sights on conquering a world he’s only seen from the front-row of fashion shows. His goal: intern at large fashion houses like Louis Vuitton whilst launching his own line Pastelle (yes, as in Estelle, with whom he’s made a duet for the hit single American Boy. *Rolls eyes*) . Oh, and let’s not forget he’ll still be doing that singing thing on the side, every weekend or so.

Lydia Hearst on the runway

While other famous phenoms, such as Lydia Hearst, are actually doing gruntly intern work at places like BlackBook, preparing to take the reins of the family company one day, Kanye may simply be completing his own prophecy. Yes, that wasn’t a typo – I wrote prophecy.

Kanye, the anointed fashionista

Let’s not forget, Kanye believes that if the Bible were written today, he would be in it. Perhaps this internship is a stepping stone to that end. Thousands of years from now, when humanity searches for the next saviour, I’m certain that they will read of the Gospel of Kanye, a story of a powerful music king whom left his day job to follow the steps of the prophet Wintour, finding salvation at the end of the catwalk lights.

No other Stylista has a chance

Perhaps if things don’t work out for Slowey’s future junior editory and ass-sistant, Kanye could try out for next seaon’s Stylista.

Sample Sale Bonanza Day 3 – Marc Jacobs

So after downloading our new favourite iPhone App “5800+ Cocktail Recipes”, and a night of experimenting exotic takes on Vodka, we woke up kinda late for Marc Jacobs the next day. In fact, rumor had it folks were standing outside the 146 Mercer store from as early as 7am, with the queue bending around the Mercer hotel by 8:30am. With the doors opening at 10am, famished fashionistas feasted on grogeous MJ bags. And with prices hovering only from $50-$300 for high end leather bags, even the street counterfeit sellers had to go into the store and snag what they could.

As our Twitter feed shows, we got there by 5pm and queued up as far as back of the Mercer hotel. We made good conversation with the ladies on line, who were all but nervous that there wouldn’t be anything left by the time they got in. From a peek through the store window, we spotted piles of bags along the middle aisle when we walked by and knew there would be more than enough to go around. After a 1 hour wait, our toes were colder than Stylistas TV ratings, but that happily changed upon walking through the boutique’s brick lined doors.

But what greeted us inside was everything save magical – in fact, it was like a retake on the Le SportSac madness, except the girls were a lot taller and they came prepared for a fight. With cluttered boxes of mismatched shoes everywhere, bags piled on top of bags spilling out onto the floor, the MJ boutique looked like another poorly planned FEMA project. The staff valiantly tried to meet the enormous queue of buyers, swiping credit cards in a flurry, just to get as many buyers out as more came in.

We took a deep breathe, turned our rings around, took off our earrings, hiked up our skirts and dove into the pandemonium elbow first. Immediately, we knew we were leaving MJ with at least two things: bags and shoes. To that, we immediately snagged a couple lovely Silver ruby-eyed frog pochette purses in every colour under the Fall rainbow: navy blue, black, and ivory.

Mountain of discounted MJ bags

Mismatched MJ shoe boxes

Next we snatched up the same pochette but in clutch format, sans strap and in black. Whilst looking for shoes, we were torn between a black laced ballerina and a smooth lavender satin bow flat. The latter won, since it seemed to go best with our Alexander Wang cashmere knit.

With these savings, we even felt compelled to get something for the special guys in our life. A last pair of 90% discounted brown suede sneakers in 9.5′s meant we couldn’t pass them up.

The damage: $100 pochette (x3 @$300), $50 clutch, $60 flats, $26 men’s sneakers.

Grand total: $476, tax included!

After quickly checking our receipts to make sure there wasn’t some catch to this sale, we still buzzed from the shockingly awesome deals we were able to come away with. Every other store we visited afterwards was just the after-shopping orgasm to our MJ climax. We especially took pleasure in having sales reps in other stores ask us if we went to the MJ sample sale. To that, I simply swiveled around to show my huge white Marc Jacobs shopping bag and smiled.

Sample Sales Bonanza Day 2 – Alexander Wang, Rag and Bone

With our biweekly Thursday check cashed, Friday seemed like a perfect day to do even more damage. Hopping on R train to Canal and Broadway, we scurried to one of our most sought after sample sales yet: Alexander Wang. With over 40-70% off, the CFDA Vogue Designer of the year’s sample sale was like sweet Chocolate Pirouline in our coffee.

Alexander Wang Sales Floor

We took the elevator to the 6th floor, stopping by the 3rd floor to checkout Wang’s uber chic main headquarters, decked out in large orchid florals, mahogany floors and black Niemeyer chairs. On the 6th fl, post coatcheck, we were immediately mesmorized by a rack full of pastel toned cashmere knits, in baby yellows, peach, beige, and black. But what really took us aback was the awesome pricetag: $40! You can’t even get the same knit for that price at the Banana Repulic. We didn’t think twice, grabbed our size and quickly moved on to the next rack, hopping the pricetag wasn’t some staff error.

Cashmere Knits

Segueing to the front, we pulled a cute dark violet silk sleeveles top with a gold chained collar that was only $160 from a previous $600. Another great find was the adorable beige short ruffle sleeve jacket that went great with the top. Decisions, decisions…

Violet sleeveless top with gold chain collar

Beige Short Jacket

Since it was cash only under $200, we decided to go minimalist on the spending, opting for the cashmere knit. A quick roundtrip to Bank of America on Canal St. for some cash and we were out of Wangs by 7pm.

With only 1 hour to spare, we hopped back on the R uptown, got off at Union Square and headed toward 10th Ave & 13th on foot, to Rag and Bone’s own sample sale. After ariving at the door, we had a hard time with the intercom until another R&B shopper figured out that the #17 button was for the 6th floor sales dept (I still don’t know how he figured that out). Upon opening the door, we were severely disspointed Rag and Bone couldn’t choose a locale that had, oh I don’t know, a ground floor space or perhaps an elevator…. After schleping up a Mayan temple flight of stairs, we finally got up to the sales floor.

Rag and Bone Sales Racks

With only 20 mins left to go before closing, and with assembly line consistency, we touched and tugged at pants, ponchos, tops and coats, looking for anything that complimented our Wang & Erin Wasson street chic look. While there were a few cute pieces, namely a cashmere poncho and few ragged tops, the men’s collection seemed the better deal with coats selling for as low as $75. We held off on the $240 poncho and decided to save our pennies until Saturdays mother of all sales – Marc Jacobs.

Alexander Wang Pre-Fall 2009 Collection

The continuation of the Spring Summer 2009 busy party girl is felt in this Pre-Fall 2009 collection. The coral washed crepe one-sleeve draped cocktail dress with hook-and-eye closures and the Pink Powder Corset dress are our ultimate favorites. We find some touches that reminds us to the athletic spirit of the Spring Summer 2009 Collection with the cycle pants and the sweaters. As for the pieces we are dreaming about: this leather & velvet jacket with puffy shoulders.

The collection should be available at the beginning of June 2009 at:

NET-A-PORTER.COM

LUISAVIAROMA.COM

See the pictures below:

Sample Sale Bonanza Day 1 – Furla, Le SportSac, and Catherine Malandrino

This week’s sample sale had thrifty buyers running out and pushing elbows on the clothing racks. While it may have seemed that this economy tempered the charge card consumerism of yore, buyers were seduced by some notable luxury brands slashing their prices up to 90% off retail.

Indeed, buyers not content with $0.99 Xmas shopping at Crazy Jacks were treated to deals at Furla, Le SportSac, Alexander Wang, Rag and Bone, and even Marc Jacobs to name a few. (And I’m talking about MJ’s high-end boutique, not the more ‘cheapo’ Marc by Marc Jacobs line).

Table full of Furla bags

As you might have spied on our Twitter feed, we started off the sample sales bonanza shopping Wednesday 9am sharp at the Furla sale on 552 Broadway. We spotted a few bags that were worth prying open our creaky coin purse, namely a gorgeous Black Pony Hair Purse for $375 from $700. Pricey, but we justified it because you can reverse the bag and have a purely gorgeous leather bag too. Two bags for the price of one, how is that not a deal?

Black Pony Hair & Leather Pochette

We then took off to the Tracey Reese sample sale around the corner on 40th street. Not much was going on instore but maybe because it was only 10am and most folks were still getting their morning coffee. By the way, when you see a line at the mobile coffee stand and no one at Starbucks during morning rush hour, you know there’s a recession.

Le Sport Sac Sample Sale Sign

We then hopped into a cab on Broadway and headed to the Le Sport Sac sample sale on 18th street between 7-8th Aves. With no line outside at 11am, we headed upstairs and found nothing short of a knife fight for a ridiculous number of Tokodoki bags. Mayhem could not begin to describe the tenacity of these women as they clawed and snatched up as many Tokidoki bags as the crux of their arms could hold. Many queued up to checkout with 10 bags to an arm, this despite the fact that there were thousands of Le Sport Sac nylon bags to go around. We left shortly after arriving, unable to comprehend how the Stella McCartney for Le SportSac luggage bags were totally ignored but grabbing any Tokidoki Fannypack meant a back-alley fight with a short tempered Asian lady.

Tokidoki Mayhem

Belthaus was located next door in the ground floor glass panelled Altman Building space. Wide, spacious, wood parquet floors with racks of clothing, bags and shoes from Givenchy, Bottega Veneta, Alexander McQueen made for an awesome sample sale shopping experience. Oddly it was kinda empty inside which I think scared the staff into ratcheting up the sales from 40% to a whopping 70% off in the ten minutes since we got there. Another sign that this is a buyers market.

Couture for a couple of coins

Givenchy Pumps

After perusing through the well displayed shoe and bag collection, we fell in love with a pair of wine colored ballerinas with golden skull tassles by Alexander McQueen, priced at a reasonable $175 from a former $575 pricetag. Once we put them on, we felt whisked away to the fashion land of Oz – full of flying anoerixoc models, Mario “Tinman” Testino, Lagerfeld “the Lion”, and Wicked Wintouress herself.