California Apparel News

Paul Guez is looking to build a premium-denim empire.

Of course, denim is familiar territory to Guez, who introduced the world to Sasson Jeans three decades ago and helped to build the private-label denim business of such companies as Tommy Hilfiger and American Eagle Outfitters Inc. through his denim manufacturing company Azteca Production International. Not to mention that Guez is also the major shareholder in the publicly traded, Commerce, Calif.–based Innovo Group Inc., which designs and markets Joe’s Jeans.

In 2004, Guez delved further into the branded-denim business when he launched Blue Concept LLC as a way for one company to offer multiple independent lines of denim—rather than a single expansive brand. The Commerce-based company sells its multiple lines out of a 5,000-square-foot showroom on the 12th floor of The New Mart in Los Angeles.

The concept is not the only unconventional aspect of Blue Concept. Deciphering who owns what or what is licensed to whom can be a monumental task. Under the Blue Concept umbrella, the company designs and markets Antik Denim, Yanuk and Taverniti So Jeans labels, but the brands are owned by its publicly traded sister company, Blue Holdings Inc. Guez is Blue Holdings’ majority shareholder and whole owner of Yanuk. Another recent licensing agreement gave Antik Denim the licensing rights to Yanuk’s U trademark.

Retailers don’t pay much attention to Blue Concept’s corporate structure but appreciate the company’s unique offerings and ability to deliver goods on time.

“All that stuff doesn’t matter,” said Fraser Ross, owner of the Kitson boutiques in Los Angeles.

He carries several of Blue Concept’s lines, including Antik Denim and Taverniti So Jeans. Whether a company has multiple brands or licenses “has no relationship to buyers,” he said. “What matters is that they have good product that retails well and can ship on time.”

However confusing the corporate side of Guez’s companies may be, Blue Concept has been able to build a stable of licensed designer denim brands that includes Imitation of Christ and Henry Duarte Jeans.

And now, Guez is looking to expand into kids’, men’s, women’s tops and the retail masses.

Rick Spielberg, Blue Concept’s president of sales, recalled the industry’s initial reaction to the idea. “I remember when I started with Paul a year and a half ago, everybody in my peer group was saying, ’You’re crazy. How can you guys put all these lines in one showroom? How are you going to be able to market them all to the stores?’ ” Spielberg said.

But the company’s concept works, he said, because the brands are all strong and individual: “There’s no overlap in any of the lines, and we have a tremendous infrastructure to be able to deliver this product. It’s almost like a one-stop shop for California casual denim for a [buyer].”

To keep the lines separate, each is headed by different designers, and the design rooms are segmented to keep the designers from being influenced by one another’s work, Spielberg said.

Kitson’s Ross, who shops the Blue Concept showroom, acknowledges that the deluge of denim in the showroom is a mixed blessing. “I can see how it can be very overwhelming to some buyers,” he said, but he insists that both buyers and salespeople have to be smart about how they approach the lines. “You can’t buy everything, even if it’s all good. There’s only so much a denim consumer will take.”

The one-stop-shopping approach seems to be working. Blue Concept is on track for sales of nearly $60 million this year, according to Spielberg. These figures fall slightly short of initial reports projecting $70 million in net wholesale sales for 2005. The company anticipated hitting $180 million in sales by 2008.

“The Los Angeles showroom generates between $3 [million] and $5 million in sales at every Los Angeles market,” Spielberg said, adding that Blue Concept’s lines pulled in $7.8 million at September’s Fashion Coterie show in New York and $4.8 million at the MAGIC International show in Las Vegas in August.

Stretching denim

Blue Concept opened its doors with Yanuk, a line owned by Guez that’s known for its starlet appeal and bum-lifting pockets. The average wholesale price for the line is $80. Over the next year, the company added Antik Denim and Taverniti So Jeans to its roster and acquired the license for Henry Duarte Jeans.

Antik Denim, the company’s strongest line, wholesales for $75–$135 and is known for its back pockets heavily embellished with embroidery and appliqueacute;s. The company’s Spring 2006 runway show last month at Mercedes-Benz Fashion Week at Smashbox Studios in Culver City, Calif., proved to be one of the most popular and controversial shows of the week.

An overcapacity crowd attended the show, which turned up the heat and the hype with plenty of skin and a finale that featured a model in denim hot pants riding a mechanical bull.

The runway show included a preview of Antik’s next frontier: childrenswear.

Antik Denim Kids will bow for Spring 2006 with a line of jeans for boys ages 2–12 and girls 2–14 that have all of the embellishment of the adult versions.

The little jeans are a big deal, according to Spielberg, and they’re just the beginning. “We are really looking to be multi-tiered in premium denim,” he said. “We want to dress everyone, from just born all the way up.”

Designer denim

Blue Concept’s strong lines have helped it land sought-after collaborators. In August, Blue Concept inked a denim licensing deal with Imitation of Christ designer Tara Subkoff. The line, designed in partnership with Subkoff, bowed in September at the provocative designer’s Spring 2006 readyto- wear fashion show in New York, and the fashion world and press took notice. Subkoff, known for her outlandish fashion shows, sent handcuffed models down the runway in denim that bounced between dark washes with high waists and slouchy, sun-bleached California-girl shapes. The collection, which included overalls, frocks and cropped pants, wholesales for $88–$96.

Los Angeles’ bad-boy designer Henry Duarte licensed Henry Duarte Jeans to Blue Concept in 2004. The designer, whose signature is $1,800 couture leather pants for the rock-minded, inked a deal that Guez said is for “10 years to life.” Henry Duarte Jeans denim wholesales for $95 and features a more contemporary aesthetic than the designer’s other lines, said Spielberg, with men’s denim cut with the traditional 18-inch bootleg and women’s denim featuring flattering wide-leg silhouettes. The line also includes leather jackets for men and women ($250 wholesale) and knit tops ($35–$40).

And the young company’s designer stable keeps growing. Blue Concept is in talks to purchase Puka and Archindigo, two new lines from denim princess Joie Rucker, the former designer of Joie Jeans and better contemporary sportswear line Joie. Both based out of Los Angeles, Puka, a casual line, and Archindigo, a denim line, bowed at the February Coterie show and hit stores in May. The lines are carried by department stores and specialty stores, including Belle Gray in Sherman Oaks, Calif. According to Spielberg, should the deal go through, Rucker would remain as chief designer and design director of the two brands. “A talent like that you don’t let go,” he said.

Men’s, Elvis and everything else

One of Blue Concept’s biggest targets for growth is contemporary menswear.

“Our contemporary men’s business is explosive,” said Spielberg. “Where our men’s business was maybe 5 percent of our total business in 2004, it’ll be 15 percent in 2005, and I expect it to be as much as 25 percent of our business in 2006—without taking anything away from our women’s business.”

Spielberg attributes the growth to men’s increasing perception of premium denim as a status symbol. “There’s a guy out there that’s status-minded, that drives the nice car,” he said, “and he needs to wear the status jeans to go with it.”

With the exception of Archindigo and Imitation of Christ, every Blue Concept denim brand includes a men’s line.

Blue Concept launched the Elvis denim line six weeks ago under a license that gives them worldwide rights to Elvis apparel. Designed by Antik’s Philippe Naouri and Alexandre Caugant, the line has booked $1 million, Spielberg said, and features styles named after such Elvis hits as “Jailhouse Rock” and “Love Me Tender.” The line, which wholesales for $80–$95, was the subject of scrutiny in April when New York–based Icon Licensing Group filed a lawsuit in Los Angeles Superior Court accusing Guez and Blue Concept of failing to honor a handshake deal in which Blue Concept allegedly agreed to pay Icon a $100,000 brokerage fee in connection with the Elvis license. Guez, through his attorney, has denied any wrongdoing.

Although Blue Concept’s focus is undoubtedly denim, tops are commanding increased space on the showroom floor. Grail, a line of knit tops designed by Peter Ross, and Butterfly Dropout, a line of printed tops designed by Tova Celine, share space in Blue Concept’s New Mart showroom. Both lines wholesale for about $45. “We are trying to balance tops and denim as best we can,” Spielberg said. If the showroom expands later this year, as planned, there will be more flexibility, at least when it comes to rack space.

Growing public

Taverniti So Jeans, which wholesales for an average of $85, is the newest label to join Blue Holdings, the publicly traded side of Guez’s business, which launched in May.

Taverniti So Jeans is owned by Guez, who is Blue Holdings’ chairman, president and chief executive officer; his wife, Elizabeth Guez, Blue Holdings’ chief operating officer and Blue Concept’s president; and two unnamed members of the Guez family. Under the terms of the acquisition, Blue Holdings paid $750,000 in cash and 500,000 new shares of common stock for the Taverniti brand, and the newly formed Taverniti Holdings LLC will be owned by Paul Guez and the brand’s designer, Jimmy Taverniti. Blue Holdings is anticipating Taverniti So will contribute more than $10 million in revenue to the company in 2006.

“What we do is incubate the brands in Blue Concept, which is a private corporation, and when they’re in the black, we move them to Blue Holdings, the public corporation,” explained Spielberg.

At press time, Blue Holdings’ stock was trading at $7.70 per share on the Over the Counter securities market. The company’s third-quarter financial results indicated that for the three months ending Sept. 30 Blue Holdings had a net income of $1.8 million.

Retail and e-tail

Blue Concept opened an Antik Denim store on Melrose Avenue in Los Angeles in August and plans to open more stores in 2006. Guez “has plans for San Francisco, New York and Florida,” said Spielberg, but he hinted that the stores might be Blue Concept stores and may be filled not with a single brand but a selection of the various Blue Concept lines. “We’re starting to have enough brands to fill a store,” he said.

The company, which already sells to some e-commerce retailers, is planning to launch its own e-commerce site in Spring 2006. The site will be handled by a third party.

With their California casual denim getting increasing media attention and penetrating new markets, Blue Concept isn’t worried about overexposure.

“We make a point of not over-saturating because it doesn’t make sense,” Spielberg said. “So we sell to one store on one street in every city. That’s all.”

In Kansas City, Kan., that store is the Standard Style Boutique. Owner Emily Baldwin has had success retailing several of Blue Concept’s lines, including Antik, Grail and Taverniti. “They do a good job of bringing in good lines,” Baldwin said. And she’s always open to adding lines she finds in the Blue Concept showroom, she said: “They always use great fabrics and have good quality control.” On her radar now is the Imitation of Christ line and Antik Denim Kids.

“I have a waiting list for Antik Denim of women who look at the pockets almost like collector’s items,” she said. “They want to know when new styles come in just to see what they did now.”

Spielberg is confident in denim’s success because it has universal appeal, he said.

“Denim is generic,” Spielberg said. “You have a broader audience in denim than you can possibly have in tops. As long as denim has a great fit and a great feeling about it, and people like the wash and the little tricks that are done to it, you can sell it to anyone.”