Shop Talk

Retailers, consumers and prices

If only All Mankind would buy Premium Denim

-

Premium jeans are a chic — and profitable — addition to department stores when consumers flush with cash are willing to shell out over $200 per pair. But when the economy goes south, stores and shoppers start to balk.
    
On Tuesday, VF Corp, maker of 7 For All Mankind jeans, said that brand’s total business was down about 10 percent in the quarter, thanks to the weak U.S. wholesale environment.
    
“It is absolutely a piece of the market that has been most challenged in this economy and that is the more premium luxury sector,” Chief Executive Eric Wiseman told analysts in a call following the release of first-quarter results, which were lower than the year-ago quarter.
    
7 For All Mankind competes with a small group of premium brands including True Religion, which announces quarterly results in early May.
    
The brand is sold in specialty shops, some of which are shuttering their doors in the recession, and upper-tier department stores, including Nordstrom, Bloomingdale’s and Saks Fifth Avenue.
 
“You see their comps so you see how they’re struggling right now to get traffic into the store,” Wiseman said.
    
VF’s international jeans business, too, is struggling for a good fit with the global economy. 
    
The company, which makes Wrangler and Lee jeans sold around the world, said it was lowering its full-year earnings guidance in large part due to “a severe contraction” in the economies of Scandinavia and Eastern European countries, where jeans are apparently not at the top of the shopping list.

Pay rent, buy food, fill up tank … buy jeans?

Photo
-

PERU/We know, dear fashionable readers, that, much as you like to look good in your jeans, the idea of shelling out $300 for said casual apparel item just doesn’t sit too well in a recession.
    
Apparently others think so, too, and premium denim maker True Religion might just be starting to notice.
    
Wedbush Morgan’s Jeff Mintz wrote on Thursday that consumer weakness was finally catching up to True Religion, which has been riding a long streak of popularity even as other apparel makers and retailers have been down in the dumps.
    
“Recent channel checks suggest slower business in the company’s retail stores,” Mintz wrote, adding that the change from October and November was “significant.”
    
“The post-Black Friday lull has left the stores much quieter and, we believe, could be a sign of slowing demand for the brand due to the difficult consumer economy,” he wrote.
 
Mintz cut his price target on shares to $17 from $23. Shares are down 35 percent since January.
    
True Religion raised its 2008 outlook last month, posting a 65 percent rise in third-quarter sales and a 76 percent rise in net income. But Mintz wrote that the company’s outlook was still achievable, despite what he called a lagging sportswear business due to relatively higher prices and “less compelling non-denim product.”

Ok, so maybe jeans are still recession-proof, but paying $172 for a hoodie? Maybe not so much.

  •