For the first time, Forever 21 is selling clothes that don’t feature the store label – a sign the retailer is looking to expand its offerings.
John Williams, brand manager for Divine Rights of Denim, said his company’s collection of jeans, dresses and tops has been a strong seller since it launched in stores owned by the downtown L.A.-based fast-fashion retail chain. He said Forever 21 has placed orders through March.
Divine Rights, a Gardena company, teamed up with Forever 21 Inc. to launch a clothing collection exclusive to the retailer last month.
The collaboration posed some challenges. At first, executives at Divine Rights weren’t quite sure if the partnership would be a good fit. That’s because Divine Rights had to find a way to slash the retail price of its jeans from $75 to $25 for Forever 21.
“We took a couple of months to evaluate the situation because it would be a dramatic shift in price point for us,” Williams said.
So Divine Rights, owned by apparel manufacturer Phoenix Textiles, created a less expensive product by simplifying the construction of its jeans. The company also managed to lower the price of its merchandise because Phoenix Textiles handles the majority of manufacturing. As a result, it has greater control over its costs.
Divine Rights already had a relationship with Forever 21, making private-label clothing for the company for the past few years. As a result, Forever 21 approached Divine Rights with the idea of working together on clothing that would appeal to the trendy young women who shop at its stores.
Dollars for Dov
Struggling clothing manufacturer and retailer American Apparel Inc. has been able to avoid delisting, amend its debt agreement with a major lender and recruit a former Blockbuster Video executive since September.
But now, the downtown L.A. company may be facing heat over the compensation that its chief executive, Dov Charney, received last year. According to an Oct. 15 proxy filing with the Securities and Exchange Commission, Charney’s compensation was $1.9 million, including a $1.1 million bonus, for last year.
Howard Davidowitz, chairman of New York retail consulting and investment firm Davidowitz & Associates Inc., said Charney’s bonus is likely to anger shareholders given the company’s poor stock performance. American Apparel’s stock has declined 55 percent year to date.
“To get a bonus in this kind of situation is just terrible. And it’s counterproductive for him,” Davidowitz said, “because it will inflame certain institutional shareholders against him, and he may need the support of the institutional shareholders.”
Charney declined to comment on his compensation.
American Apparel’s board and stockholders approved an incentive compensation plan designed to attract and retain employees last year. Under the plan, Charney’s bonus was tied to performance goals set for the period from May 1 to Dec. 31 of last year, and linked to Ebitda, or earnings before interest, taxes, depreciation and amortization, and comparable store sales and inventory levels.
Charney received $650,000 based on the company’s Ebitda of $48 million and $474,000 based on its inventory levels of $157 million. He didn’t receive any compensation tied to comparable store sales, which were down 11 percent during the period.
Tying executive bonus pay to performance is a trend that’s building throughout the corporate world as a result of stockholder pressure.
But Davidowitz said the performance goals linked to Charney’s compensation aren’t in line with goals that have been set for other chief executives. For example, boards have been linking chief executives’ compensation to metrics such as a company’s overall profitability, earnings per share or a company’s relative stock performance compared with its peers.
Going Solo
Chip Foster and his identical twin brother, Pepper, found success with premium denim maker Chip & Pepper. But Chip Foster is going solo for his latest venture.
He launched a new clothing line called Pray for Mother Nature last month. Its fall collection of women’s apparel, which sells for $160 to $240, includes denim leggings, T-shirts and dresses.
Chip Foster said he had wanted to create his own clothing line for a while, but was too busy running Chip & Pepper.
The Canadian-born Foster brothers have worked in the apparel industry for more than 25 years. The two are best known for their namesake line of high-end denim, launched in 2002 and sold at boutiques and major department stores such as Bloomingdale’s.
At Chip Foster’s new Pray for Mother Nature, he is working with the same employees who’ve been involved with Chip & Pepper. The Venice-based company’s garments are made in Los Angeles with organic fabrics and vegetables dyes.
Boutiques carrying the Pray for Mother Nature line include Planet Blue and Madison.
Staff reporter Alexa Hyland can be reached at [email protected] or at (323) 549-5225, ext. 235.
