California Apparel News

For Joe’s Jeans Inc.’s Marc Crossman, the recent 2013 Recon Las Vegas convention was about making deals for an anticipated rollout of 70 full-price boutiques for the Los Angeles–headquartered premium-denim label.

Crossman, Joe’s chief executive officer, met with representatives of America’s biggest mall operators, including Simon Property Group and General Growth Properties,at the real estate convention, produced by the International Council of Shopping Centers, to talk over arapid expansionof mall-based, full-priced Joe’s Jeans boutiques. Until recently, the premium-denim label mostly opened its shops on exclusive, urban retail streets.

Joe’s Jeans’ retail push is coming during a time of mixed forecasts for retail real estate. Major retailers such as Urban Outfitters Inc. are expanding, and others, such as Pacific Sunwear of California Inc., are scaling back their fleets. Retailers, however, are still wary of expanding during a time when much of the economy is still in recovery.

“It’s not for play,” Crossman said of a bricks-and-mortar rollout. “It is to generate a profit. You’re not going to generate profits just out of e-commerce. There is a big, existing bricks-and-mortar business.”

Joe’s Jeans currently runs 12 full-price boutiques and 19 outlet shops. From 2008 to the present, Joe’s averaged opening six stores annually. Crossman said Joe’s is speeding up the rollout by opening 12 stores annually. By the time the domestic rollout is scheduled to finish in 2017, Joe’s will run a fleet of 100 U.S. stores. Crossman and other Joe’s executives feel the upcoming retail gamble will pay off because the market in premium denim is increasing.

At a recent presentation at the B. Riley & Co. Investor Conference, held May 20–22 in Santa Monica, Calif., Hamish Sandhu, Joe’s chief financial officer, said the customer base for Joe’s is growing.

The core Joe’s consumer is a woman in her 30s who earns a six-figure salary and typically buys a new pair of jeans every month. This stylish, well-to-do woman is not just a denizen of wealthy neighborhoods of America’s leading metropolises. Such women live all over the country, Sandhu said.

It’s a demographic gain also witnessed by Angelika Corrente, creative manager of Denimhead/WGSN, a Los Angeles–headquartered market-research office devoted to the denim market. “It’s not just coastal anymore,” Corrente said of demand for premium denim. “It went global.”

Market-research company The NPD Group also confirmed that demand for premium denim increased this year. Sales increased 11 percent for the category of jeans priced above $75 during the period from April 2012 to March 2013 compared with the same time last year.

While Joe’s will focus on domestic boutique retail, growth for its other channels will remain crucial. The company recently added True Fit, a sizing program, to its e-commerce store (www.joesjeans.com). True Fit will assist Joe’s e-commerce customers to find the jeans that will best fit them. Joe’s also will develop a mobile commerce store and an iPhone app to help build e-commerce sales.

The company will open outlet stores and full-price boutiques overseas opportunistically. However, the company will focus on overseas retail expansion after 2017.

During the B. Riley presentation, Sandhu said upcoming Joe’s bricks-and-mortar stores will feature a smaller footprint of 1,500 square feet or less, compared with Joe’s full-price stores of the past, which were bigger than 2,000 square feet. “Expect a smaller footprint and reduced capital investment without a loss of productivity,” Sandhu said.

The new stores will be inspired by the look of the Joe’s Jeans flagship, located at 8432 Melrose Place in West Hollywood, Calif. The store features crystal chandeliers, one-of-a-kind furniture and neutral colors.

Joe’s also hopes to solidify its gains for its line of Else jeans. The bridge line is sold exclusively at Macy’s Inc. and was intended for a juniors customer looking for an introduction to premium denim. Wholesale price points for Else range from $19 to $30.

Joe’s Jeans announced results for the first quarter of its 2013 financial year, which ended Feb. 28. Net sales increased 13 percent to $29.4 million, compared with $26 million in the same time last year. It had a net loss of $6.4 million for the recent first quarter, compared with a profit of $794,008 during the same period last year.

Its same-store sales for its retail stores declined 1 percent in the first quarter. In a statement, Crossman blamed the decrease on a tough comparison with the label’s successful “55 Colors” campaign, which ran in its stores during the same time last year.