‘American Original’ Seeks to Reinvent as Brand Fades

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What’s it like being on the downward slope of a fashion trend? Von Dutch Originals is finding out.

After its trucker caps and logo T-shirts were sported by the likes of trendsetters Justin Timberlake, Fred Durst, Ashton Kutcher and Britney Spears, only to be deemed pass & #233;, the Los Angeles-based company is now in the process of broadening its offerings.


That includes a surf-wear line and a slew of licensing deals involving toys, motorcycles, boots, sandals, sunglasses and watches. There’s also an effort to expand its retail outlets, especially overseas.


“It was very logo driven and I’m trying to get it more fashion-driven,” said Chief Executive Tonny Sorensen, who has assumed creative director duties at the company and hired a team of designers, each dedicated to a particular product line, such as surf, denim, hats and knits.

“At a certain point when you merchandise, you would like to have people wearing your stuff, where you know it’s Von Dutch by the way it looks but not necessarily by the logo,” he said.


That could be a challenge. Founded in 1999 by Robert Vaughn and Michael Cassel, Von Dutch Originals skyrocketed to fame in 2003 with the trucker cap craze. The company got its name from the original Von Dutch, whose real name was Kenneth Howard and who was known for customizing bikes and hot rods in the 1940s and 1950s.


But fashion brands can quickly go out of style if they become too familiar.


“If I see another trucker hat or Von Dutch T-shirt I would probably have a heart attack,” said Fred Segal Fun Assistant Manager T.J. Lacsamana, who latched onto the brand in the early days by purchasing two trucker hats and a tank top with a pin-up girl screened on it.


While it was once difficult to find Von Dutch merchandise outside a Von Dutch retail store, Lacsamana said, “Now it’s in any mall store. The theory was good they picked up on a name known for customizing motorcycles and then they really killed it. The market is saturated.”



Challenge to re-invent


Revenues for Von Dutch in 2004 are expected to be $55 million, up from last year’s $33 million, but well below original projections of around $100 million. More than two-thirds of the business remains wholesale and the largest contributors are hats and T-shirts.


“With any particular line that gets their explosion in business based on celebrities, just as there is a meteoric rise, there has the potential to be a meteoric fall,” said Sandy Potter, principal of retail consulting firm Directives West in Los Angeles. “The strength of whether the label will continue is a matter of whether they can continue to re-invent themselves.”


It’s not just slowing sales. In August, head designer Christian Audigier resigned with a year remaining on his contract amid complaints from Sorensen that the product line was too narrowly focused. Allegations that the original Von Dutch was a racist also cropped up, leading distributors such as British online retailer Capitate.co.uk to withdraw the caps from its site.


And in June 2003, Vaughn, who left the company three years earlier, filed suit against Sorensen for more than $1 million over alleged fraud and unfair business practices. The suit was settled last month, with neither side admitting any wrongdoing.


At this point, the strategy is to move beyond T-shirts and hats and tone down but not entirely abandon the use of its logo. At the same time, the company is trying to remain true to its “kustom kulture,” modeled on Howard’s style. (“Kustom kulture” has come to encompass “freedom, style, sex, power and motion,” reads a mantra painted on the wall of Sorensen’s office.)


With Von Dutch now a household name, Sorensen said the company can rely on new products to keep the business stable and come up with one or two trendy items each season to keep the buzz going.


“Our job right now is to translate that whole trend thing and basically make people understand that that’s a culture,” he said.


Some of that will involve a series of licensing deals one with motorcycle maker Chrome and Horsepower, which has changed its name to Von Dutch Kustom Cycles and is making bikes ranging from $60,000 to $80,000. Another deal is with France-based Footwear Europe Export and Trading, which is launching a spring Von Dutch footwear line.


Licensing currently comprises 10 percent of Von Dutch’s business, although the company wants to expand on that. “As long as I keep putting out a product that is cool and fashionable, then they will wear it because it’s the idea behind it,” Sorensen said.



Focus on brand


That strategy could work, said Jackie Fernandez, partner in the consumer business group at Deloitte & Touch, citing Nike as an example of a company that has capitalized on the strength of its brand to continue reinventing itself. “As long as the brand name is strong and they don’t do anything to cause the brand to drop, that transition is a lot easier,” she said.


As Von Dutch widens its distribution, it’s also trying to offer different merchandise to boutiques than it does to chains. “The boutique customer always wants the new trendy stuff and so it’s kind of segmented,” Sorensen said.


Von Dutch is also moving ahead with expansion plans, adding roughly 30 to 35 stores overseas by the end of 2005. It has five U.S. stores, including its flagship Melrose Avenue location, a unit on the Third Street Promenade in Santa Monica, and stores in Las Vegas, Miami and Chicago.


“I would be lying if I say I had nothing else but great expectations,” Sorensen said. “I believe for the first time we’re going to see a very broad, very interesting line of clothing and accessories and products and I finally can tie the whole thing together. It’s going to be a great opportunity to show the world what we can do.”

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