You might think you’ve gone back to 2007 if you look at the price tag on True Religion Apparel Inc.’s newest pair of jeans called Phantom. The cost: $396.
The Vernon maker of premium denim now plans to carry a larger selection of similarly expensive styles at its own retail stores – despite the shaky economy.
But recession-battered department stores are resisting. Jeff Lubell, chairman and chief executive at True Religion, said it has been a challenge convincing the stores to carry higher-price jeans. Some still want to sell premium denim closer to the $150 price point that became the benchmark during the recession years.
“That’s their game plan and mine is much different than theirs,” said Lubell, whose jeans sell at such major department stores as Nordstrom and Bloomingdale’s. “I really want to bring compelling product regardless of the price. I call myself the Louis Vuitton of jeans wear. I want to be at the high end of jeans wear.”
Despite department stores’ resistance, True Religion and other L.A. premium denim makers – which dominate the designer jean industry – are pushing prices up from $150. The cost for a pair of basic premium jeans hovers at about $200, while more fashionable designs retail closer to $300 or more, according to industry analysts.
At True Religion’s retail stores, the average retail price for a pair of women’s jeans increased 4 percent to $232 in the second quarter compared with the same period last year. The average price for a pair of men’s jeans jumped 8 percent to $274 in that period.
True Religion’s prices haven’t hit a ceiling yet, either – increases are coming in the third quarter, although the company hasn’t determined the amounts yet.
Why are higher prices in style again?
Even though cotton prices tumbled last month, premium denim makers are now passing on the higher costs they faced in the spring. That’s because the majority of current styles were made with denim fabric that was purchased months ago when cotton prices were soaring.
Then there’s the issue of changing styles, which also carry higher prices. Skin-tight jeans, often referred to as skinny jeans or jeggings, pushed down prices in the last few years because such basic styles are less expensive to manufacture. Jeans with wider legs and higher waistbands are back in vogue, and premium denim makers are boosting prices because they believe shoppers are willing to shell out more for a different look.
“With costs going up, prices have gone up,” Lubell said. “And we are doing more novelty product, more compelling product and with that product you have higher costs in sewing, raw materials and also finishing.”
Price stretch
Still, sales trends suggest shoppers are not dropping big bucks on jeans like they used to. Sales for women’s jeans priced at $50 or more dropped 2 percent in June compared with the same month last year, while sales for men’s jeans selling for $50 or more declined 18 percent, according to Port Washington, N.Y., market research firm NPD Group Inc.
Meanwhile, department stores are sticking to their recession mentality of carrying lower-price designer jeans and fewer of them.
Dorothy Lakner, managing director at Del Mar investment banking firm Caris & Co. Inc. who follows True Religion, said department stores have been slow to adopt new styles and higher price points. But she added that their resistance may break down.
“Department stores have taken longer to make decisions and eventually they will,” Lakner said. “If you look at same-store sales from True Religion’s stores, that would suggest more variety and newness is what brings the sales.”
Spokespeople for Nordstrom, Bloomingdale’s and Saks Fifth Avenue declined to comment for this article.
L.A.’s designer denim brands are pushing ahead with more expensive styles. At Commerce premium denim maker Hudson Jeans, new looks such as the company’s wide-leg styles, reminiscent of 1970s bell bottoms, are hitting store shelves for fall and going for around $220, a rise of 5 percent to 10 percent from last year.
Peter Kim, founder and chief executive of Hudson, who has doubled his work force to 120 in the last year at the company’s Commerce headquarters and its Vernon warehouse, released his most expensive pair of jeans six months ago, the $1,000 Resurrection jeans.
Kim said the jeans, which were manufactured from salvaged denim and available for a limited time, sold out.
Kim acknowledged that the most people aren’t dropping $1,000 on a pair of jeans, but he believes there are enough shoppers to support the higher prices.
“I don’t think consumers are ever too happy about having to pay more,” he said. “But it’s almost acceptable if the product is right and it’s not something that is offensively too high.”
Huntington Park premium denim maker Citizens of Humanity, which owns designer jean brand Goldsign, is also charging more. Prices for both brands have increased by 3 percent in the last year. Goldsign’s basic styles now sell for about $200, while its more fashionable pairs retail closer to $280.
Federico Pagnetti, vice president of operations at Citizens and Goldsign, said both companies have been designing new looks such as flared jeans that require the use of more fabric, in some cases double the amount of more traditional styles.
Premium denim makers have to have their fingers on the pulse of fashion if they want shoppers to shell out a hefty chunk of change for a pair of jeans, said Eric Beder, managing director at New York investment banking firm Brean Murray Carret & Co. who follows True Religion.
“There is nothing that’s the bane of raising prices in premium denim except for sameness,” Beder said. “The key to that area is to have all of the fashions change. The product lasts a long time and if it’s the same year after year, you don’t need to buy any more.”
