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

CFDA 2008 Finalists Named

 

 

NEW YORK — This year’s 10 finalists for the CFDA/Vogue Fashion Fund are a varied group, from their home base to their designs and their dedication to the environment.

The finalists, who were revealed on Tuesday, are Richard Chai, Jason Wu, Alexander Wang, Irene Neuwirth, Albertus Q. Swanepoel of Albertus Quartus, Alejandro Ingelmo, Juan Carlos Obando, Swaim and Christina Hutson of Obedient Sons & Daughters, John Patrick of Organic and Sophie Buhai and Lisa Mayock of Vena Cava.

Founded by the Council of Fashion Designers of America and Vogue magazine five years ago, the fund offers emerging talents a cash prize and mentorship programs by industry leaders. The winner receives an award of as much as $200,000, and the two runners-up pocket up to $50,000 each. Previous winners were Rogan Gregory of Rogan, Doo-Ri Chung, Trovata and Proenza Schouler’s Lazaro Hernandez and Jack McCollough.

The finalists were selected from among 100 candidates, after a two-hour meeting on Tuesday.

CFDA executive director Steven Kolb said the group is diverse, including designer collections, jewelry designers, a milliner and a label that focuses on sustainable fashions. Two of the finalists are Los Angeles-based.

“The mix of it was very varied,” Kolb said.

The CFDA/Vogue Fashion Fund Selection Committee is to meet with each finalist this month to go through their collections and interview the designers. The committee consists of CFDA president Diane von Furstenberg, Kolb and associate director Lisa Smilor, Vogue’s Anna Wintour and Sally Singer, Barneys New York’s Julie Gilhart, Coach’s Reed Krakoff, Jeffrey Kalinsky of Jeffrey New York and Nordstrom, Gap’s Patrick Robinson and Theory’s Andrew Rosen.

The fund offers all finalists guidance through its growing Business Advisory Committee. The panel consists of Calvin Klein Inc.’s Tom Murry, Diane von Furstenberg’s Paula Sutter, Rockwood Management Group’s Josh Sparks, Cole Haan’s James Seuss, Liz Claiborne Inc.’s David McTague, Creative Design Studio’s Susan Davidson, Kellwood Co.’s George Sokolowski and Phillips Nizer’s Monte Engler.

The fund is sponsored by partner Gap, and underwriters Vogue, Barneys New York, Coach, Kellwood Co., Juicy Couture, Liz Claiborne Inc., Lord & Taylor, Nordstrom, Theory and L’Oréal Paris. American Express and Evgeny Lebedev join as underwriters this year.

The fund’s winner and runners-up will be announced at a gala dinner here on Nov. 17.

Courtesy: WWD

Lovely Leggings Leads To Strong Fall Showing

After a strong showing on the fall runways in New York and Europe, designers and retailers continue to be passionate about legwear — and their optimism extends all the way into the holiday season.

Color is a primary trend on which retailers are betting big.

“Our biggest legwear story is all about color and texture,” said Ann Watson, vice president and fashion director at Henri Bendel. “Two designers who expressed it best were Proenza Schouler in New York and Bottega Veneta in Milan. I loved the playing with tonalities of color at Bottega [Veneta] — there’s nothing more lean-looking than head-to-toe one color. Proenza [Schouler] took a more whimsical approach. It was very fresh — a burgundy leg against navy — playing within those color families was new. At the end of the day, what the consumer needs to know is that it’s more of a tonal story, whether playing within tones of the same family or playing ‘matchy-matchy.’”

Watson said the specialty store increased its legwear buys for the fall season and is “double exposing it in lingerie and amongst ready-to-wear” so customers can see their head-to-toe wardrobes in one place.

Heavy knits are also another style to watch this fall. Brands as different as Tibi and Rodarte both showed chunky textured legwear. At Tibi, designer Amy Smilovic sent down layered pieces, namely wool thigh-highs slouched over herringbone tights, while Rodarte presented open-weaved ripped-styled tights.

“Texture for us looks great,” said Watson. “Even lace came down the ready-to-wear runway and lace hosiery makes legwear feminine. It’s an easy way to incorporate the lace trend into a wardrobe. The other thing about texture we’re seeing is the continuation of ribbed — it’s texture without bulk.”

While metallic handbags have long been a trend in accessories, sparkly, shiny hose is consistently a popular holiday season look.

Tony Taylor, whose Look from London legwear firm partnered with Anna Sui on her collection, said, “We always do metallic for fall because it runs into holiday and works so well. Anna [Sui] puts glam back center stage all over again.”

Perhaps one of the biggest trends for fall is reminiscent of the days of the Eighties power suit. The sheer leg is back, and such shows as Hervé Léger, 3.1 Phillip Lim and Alexander Wang embraced the sexy, sheer leg in shades of purple, navy and black.

CFDA Names 2008′s Nominees

 

 

 

NEW YORK — Marc Jacobs, Francisco Costa of Calvin Klein, and Lazaro Hernandez and Jack McCollough of Proenza Schouler have been nominated for the 2008 Womenswear Designer of the Year award by the Council of Fashion Designers of America.

In the men’s wear category, Tom Ford, Thom Browne and Michael Bastian are nominated for Menswear Designer of the Year. Jacobs, Michael Kors and Tory Burch will compete for the Accessory Designer of the Year award.

Nominees for the Swarovski Award for Womenswear are Kate and Laura Mulleavy of Rodarte, Alexander Wang and Thakoon Panichgul. For men’s wear, they are Scott Sternberg of Band of Outsiders, Tim Hamilton and Patrick Ervell. The Swarovski Award for Accessory Design will be decided among Philip Crangi, Joy Gryson and Justin Giunta for Subversive Jewelry.

Dries van Noten will receive the International Award: Carolina Herrera will be given the Geoffrey Beene Lifetime Achievement Award, and Mayor Michael R. Bloomberg will take home this year’s Board of Director’s Special Tribute. Style.com’s Candy Pratts Price will receive the Eugenia Sheppard Award.

The nominees, as well as recipients of the honorary awards, were confirmed Monday at a meeting of the CFDA board, and unveiled Monday night at an event hosted by the CFDA board of directors and Swarovski at the Rooftop Gardens on top of Rockefeller Center. 

The 2008 CFDA Fashion Awards will take place at the New York Public Library on June 2, and will be staged as a theater-style show followed by a dinner at the adjacent Bryant Park Grill. Swarovski is underwriting the event for the seventh year. Fran Lebowitz will emcee this year’s event.

Courtesy: WWD

Fashionistas Super Bowled Over

 

 

 

Anyone in fashion who cares at all about football knows there’s only one after party where you can both hobnob and watch the Super Bowl: Diane von Furstenberg’s. This February, the designer brought a massive television screen to her downtown studio so her 200 or so guests could get a piece of the action. Of course, not everyone was a die-hard football fan.

“I only care about the Super Bowl because New York is in it,” said Ellen Barkin, who huddled in the corner with Susan Sarandon for a chitchat and a couple of smokes. Plus, Barkin added, football guys are not really her type. “I prefer a swimmer’s body.” 

“Yeah,” laughed Sarandon. “I think if they look better wearing a helmet than not, then they’re made to play football.”

As David Tyree made the acrobatic catch that led to the Giants’ last minute touchdown, the crowd at salon DvF — including Amy Smart, Anh Duong and Peggy Siegal — roared. 

“We’re gonna win,” shouted the hostess. Then when the Patriots missed the final pass with just one second remaining in the game, Frank Sinatra’s “New York, New York” came booming from the speakers. 

Meanwhile, Miss Sixty hosted a comparatively mellow post-show dinner at Socialista. There, two members of the brand’s front-row lineup — Anne Hathaway (with boyfriend Rafaello Follieri) and Milla Jovovich — stopped by to congratulate designer Wichy Hassan. (Fellow front rowers Chloë Sevigny and Ashley Olsen presumably partied elsewhere.) “I want to be one of the models in the show,” Hathaway told Hassan, before adding, “I’d have to do some exercises first.”

The night before, models Noot Sear, Julia Stegner and Shannan Click, Genevieve Jones, Alexandra Richards and Jennifer Missoni danced up a storm at the designer Alexander Wang’s after party at The Annex. “I come here all of the time. I wanted to do it somewhere where everyone could just have a good time,” explained Wang of his LES party location.

Host Erin Wasson (who styled Wang’s looks for the second season in a row) certainly took the notion to heart, pairing baggy sweatpants with a vintage corset, all the better to get down in. Why wasn’t she sporting Wang? “We proved our point already,” she remarked.

DVF RTW Fall 2008: From Berlin, to Shanghai, to New York, with Love

Diane von Furstenberg may be famous for her effortless dresses, but there’s more to her repertoire than fab frocks. And she proved it with the stylish fall collection she showed on Sunday, which centered on a vagabond heroine in polished, Marlene Dietrich-influenced looks. Here, a combination of the sporty and the feminine: a twinset belted over soft layers of chiffon.

Feminine with a hint of retro — that’s what triumphed on the fall runways, with smart blazers, full skirts and some drop-dead dresses.

Diane von Furstenberg: “She always knew she would find her way through the raindrops.” So Diane von Furstenberg mused in her program notes of this season’s heroine, a mysterious sort whose travels take her from Berlin to New York by way of Shanghai with a Forties attitude and plenty of style.

Of course, the real heroine of any von Furstenberg saga is DVF herself, whose innate survival instinct has always informed her when it’s time to adjust course. Having carved out a well-known place for herself as the go-to goddess of modern, sexy dresses, von Furstenberg typically celebrates that angle on her runway, as was the case with last season’s oh-so-tropical romp. Yet life, as they say, is not always a beach, and so, for fall, she made it very clear that she’s got those more serious moments covered, too.

Courtesy: WWD

Alexander Wang Ready-to-Wear Fall 2008

Alexander Wang’s got the hype, the retail presence and even his own celebrity stylist, model Erin Wasson. But the young designer has to show he’s more than just a flash in the pan. Enter a high-energy fall collection that was certainly a step in the right direction. Wang has a consistent vision and a strong sense of his customer, who’s a little bit gritty and molto street chic. She can pull off his trompe l’oeil silk cargo pants — made to look like trousers worn low over boxers à la K-Fed — and wear his roomy blazers, ripped denim and off-kilter tanks with a just-got-out-of-bed confidence. And she’ll toss the pretty “It” tote aside for his leather clutch, inspired by a men’s toiletry bag. But Wang has to fine-tune that message, because his dressed-down vibe hewed too closely to those of others, like Marc Jacobs’ neo-grunge affair of ’06.

 

 

Courtesy: ELLE,  WWD

Diane von Furstenberg RTW Fall 2008

“She always knew she would find her way through the raindrops.” So Diane von Furstenberg mused in her program notes of this season’s heroine, a mysterious sort whose travels take her from Berlin to New York by way of Shanghai with a Forties attitude and plenty of style. 

Of course, the real heroine of any von Furstenberg saga is DVF herself, whose innate survival instinct has always informed her when it’s time to adjust course. Having carved out a well-known place for herself as the go-to goddess of modern, sexy dresses, von Furstenberg typically celebrates that angle on her runway, as was the case with last season’s oh-so-tropical romp. Yet life, as they say, is not always a beach, and so, for fall, she made it very clear that she’s got those more serious moments covered, too. 

As for her vagabond femme fatale, this woman revels in a Dietrich fixation with a strong, polished aura that starts with a coat or jacket, or both, belted over layers beneath. This allowed von Furstenberg the chance to flaunt her way with sportswear, and to show off those delightful girly dresses in a different context. The former was strong on terrific sweaters and Marlene-worthy languid trousers; the latter bore a bit of “Atonement” romance, although a frothed-up dress under a graphic jacquard jacket looked more indulgently Sally Bowles. 

Evening went two ways. There were moments of Asian-inspired grandeur in curvaceous gowns, such as one with an exotic vine print. But elegance gave way to sauce in flapper-esque dresses worked with sequins and beads, just right for the girl who wants to shimmy till dawn.

Courtesy: WWD, DVF.com