California Apparel News

When Jeff Lubell searched for names for his premium denim brand in 2002, he decided on True Religion because virtually everyone wears jeans, no matter their background, and can find a common bond in denim. On Dec. 2, his company tested the strength of that faith. True Religion Brand Jeans opened its first store, in Manhattan Beach, Calif.

The debut of the store in the wealthy beachfront town represents a crossroads for the company. After three years of wholesaling to 600 retailers such as Ron Herman and Nordstrom company President Lubell and his wife and partner, Kymberly Gold-Lubell, vice president, have taken their Los Angeles– based company from $3 million in sales in 2003 to $100 million in 2005. Sales of $138 million are forecast for 2006.

Like many other manufacturers, Lubell opened a store to showcase the full collection of his brand for retailers and the general public. His company also is testing the retail concept as a candidate for expansion. If it’s successful, True Religion will build up to five more stores in 2006.

One of the attractions of becoming a vertical retailer, or a manufacturer who sells at his or her own stores, is that it can greatly increase revenue. The manufacturer could start earning greater sales from its wares by selling at retail prices instead of wholesale. Also, some of the headaches of the business should be eliminated, according to Lubell. “There’s no middleman. I won’t have to worry about collecting bills,” he said. “The potential is enormous. That’s if you’re successful.”

Lubell said he believes a possible retail division would not cut into the business of the specialty shops and department stores that have been selling True Religion denim for the past few years.

The transition from manufacturer to vertical retailer can pose some pitfalls, according to Richard Giss, a partner in Deloitte & Touche’s retail services section. “You lose the independent checks and balances when you don’t sell to the retailer,” Giss said. “Retail is a different business from manufacturing and designing, even if they work hand in hand. He’s smart to start slowly.”

The Manhattan Beach store, based in the newly opened Metlox shopping center, is forecast to earn revenue of $1 million in the first year and grow at least 10 percent annually, according to Chana Taft, True Religion’s director of operations.

Lubell had vowed to wait and see whether this gamble pays off, but his company already is looking for real estate in Las Vegas and possibly San Francisco and New York.

The Manhattan Beach store will pack some surprises for many shoppers. In order to shop for the store’s men’s, women’s and children’s apparel, they’ll have to sit at a stool at the 900-square-foot store’s jeans bar and be waited on by the sales staff.

True Religion employs a similar strategy at trade shows. Lubell found buyers were more apt to make purchases if they had to wait at a jeans bar and watch other retailers go through the collection and make purchases.

Lubell and his wife co-designed the store, which features hickory wood floors and walls. Stools that bear the company’s Buddha logo on the seats surround the jeans bar. A sample of each style in the True Religion collection hangs on a rack at the bar. Lubell intended the rack to act as a menu. The walls are covered in cabinets, which hold the store’s inventory.

Other True Religion stores might share the same look, but they’ll have more square footage, ranging from 1,200 to 1,600 square feet.

The company also is considering building stores in Japan, where it earns $30 million to $35 million in wholesale sales. The company earns 50 percent of its revenue in the United States, 50 percent overseas. Eventually, Lubell expects the company to earn 70 percent of its revenue internationally and 30 percent in the United States.