Jessica Simpson's marriage to Nick Lachey isn't the only thing of hers that's shaky.
The bubbly pop star's denim line, JS by Jessica Simpson, suffered a setback recently when Bensalem, Pa.-based Charming Shoppes Inc., the retailer behind Lane Bryant and Fashion Bug stores, decided not to pick it up. That was a hit to Los Angeles-based Tarrant Apparel Group, which manufactures and distributes JS and another Simpson line.
"Denim in and of itself fell into a weakened mode after back-to-school," said Barry Aved, Tarrant's president, during the company's third-quarter conference call.
JS wasn't the only Tarrant line victimized by a denim downturn. Troy, Mich.-based Kmart Corp., a subsidiary of Sears Holdings Corp., discontinued Tarrant's Gear 7 jeans brand. Gear 7 had been in all 1,500 Kmart stores.
Vera Van Ert, an analyst with Wedbush Morgan Securities Inc., described Gear 7 and JS as "two question marks" hanging over Tarrant. "Over the longer term, it is important for the company to reposition Gear 7 in some other channel," she said.
Aved said Tarrant is pursuing new outlets for the Gear 7 and JS lines. However, the company acknowledged in a Securities and Exchange Commission filing that it anticipates sales for the brands to "decline significantly in the fourth quarter of 2005."
That will hurt Tarrant in its fast growing private brands segment, which includes American Rag Cie and Alain Weiz. Private brand sales hit $22.6 million in the third quarter, nearly eight times higher than the $2.8 million for the like period a year earlier. Overall, sales totaled $69.6 million in the third quarter, up from $38.1 million last year.
Now, though, Tarrant expects private brand sales for the year to be in the $50 million to $53 million range, with total sales of $210 million to $215 million. The full-year net income forecast is down to $2 million to $2.5 million, from previous guidance of $9 million to $12 million.
Investors have punished Tarrant accordingly, with its shares settling at $1.54 last Tuesday. The stock had traded as high as above $4 a share in August after nose-diving in September, October and early November.
Meanwhile, the company is starting to ship a new line called House of Dereon by Tina Knowles, the mother of Destiny's Child singer Beyonce Knowles. The line just gained wide exposure by being featured on "The Oprah Winfrey Show."
There are only 10 Metropark USA Inc. locations now, but Orv Madden, founder of Hot Topic Inc., is using his retail muscle to grow the boutique-inside-the-mall concept to 400 units.
There are plans to expand La Puente-based Metropark by 15 stores next year, with new locations set for California, Texas, Georgia and Oregon. In 2007, the company could add 20 to 25 stores. Local Metroparks are in the Glendale Galleria, Oaks Mall and Irvine Spectrum.
Eventually, Madden, who co-founded Metropark a little over two years ago, said he expects to take the company public. But first, the chain has to show it can rack up substantial sales volumes and perform in diverse geographical areas.
Metropark stores are geared to 20-something shoppers who became accustomed to shopping at malls in their teens. Madden said these shoppers have tired of the mall and instead are frequenting boutiques and high-end department stores.
"Our goal is to give them a reason to come back to the mall," he said. Metropark's merchandise is drawn from the boutique scene, with fashion-forward brands such as Salvage, True Religion, and 575 Denim fetching as much as $225 for an item.
Like Hot Topic, Metropark mixes music and fashion to give the shops the feeling of a club. Disc jockeys are in the stores spinning hip soundtracks, and there are also flat-screen televisions with music videos running.
Janet LaFevre, the Glendale Galleria's senior marketing director, said Metropark has brought in customers who often don't go to the mall. "They have a clientele that is very comfortable shopping on Melrose or Sunset Boulevard," she said. "For us, it has really been a great untapped market."
Mossimo Giannulli, founder of Mossimo Inc., who owns a 65 percent stake in the Santa Monica-based clothes maker, has dropped his bid to take the company private for $5 a share, or a total of $28 million for shares he does not already own.
The move comes after a board committee rejected Giannulli's offer. Mossimo had received a takeover bid estimated to be $2 a share higher than the spurned offer.
Although Mossimo has declined to name the interested party, the New York Post said it was New York-based Iconix Brand Group Inc., which recently purchased Rampage Clothing Co. and owns the Joe Boxer and Candie's labels.
The Iconix bid would be valued at $101 million, enough for investors to turn against Giannulli's offer.
Chicago-based institutional investor Segall Bryant & Hamill criticized Giannulli's bid, which started $4 per share and was later raised, as being "wholly inadequate."
*Staff reporter Rachel Brown can be reached by phone at (323) 549-5225, ext. 224, or by e-mail at firstname.lastname@example.org .
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