Archives For Apparel

I am always on the look out for new and emerging brands that have unique stories. I also keep my eyes open for brands that also have the potential to be good investments. A couple of nights ago I was watching Jim Cramer on CNBC’s “Mad Money” and he did a comparison of the investment potential of two recent Initial Public Offerings, The Container Store (tcs) http://wp.me/p2zj1x-D9 and Zulily (zu). I was intrigued by his comments on Zulily and thought that I would do some of my own research to better understand their story and value proposition.

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Zulily was founded in 2009 by Darrell Cavens and Mark Vadon. It is headquartered in Seattle and has offices in London, Columbus, Ohio and Reno, Nevada. Zulily is an online shopping destination for moms. Zulily offers daily deals for moms, babies and kids. Each morning Zulily offers a fresh selection of hand-picked quality children’s apparel, women’s apparel, toys, infant gear and home décor—all at an average savings of 50%. The flash sales include over 4,500 items and typically last 72 hours. It creates an impulse-driven shopping experience while helping move excess inventory sourced from a variety of vendors.

Moms are a highly lucrative market. According to the U.S. Census Bureau, 39 million U.S. households have children under the age of 18.  Women manage most household spending and account for almost two-thirds of all online shopping. Zulily has over 2.6 million active customers who have purchased at least once in the last 12 months. There is tremendous potential for future growth. 83% of orders were placed by repeat customers

Zulily has created a proprietary system that delivers 10 million daily emails to consumers who have opted in to receive notices of 72-hour sales.

Zulily went public on November 15th at an initial offering price of $22. On Friday the stock closed at $41.02 up 86% in less than two months. For investors it is a very unique and fast growing company.

In the first nine months of this year, sales more than doubled to $438.7 million from $202.8 million. Another unique aspect of their business model is that Zulily doesn’t purchase a product from a supplier until a customer places the order. This help boost cash flow. Everything in its warehouse has been paid for. There is little inventory risk.

It has stocked its flash-sales with product from “smaller boutique vendors” and “emerging” companies—12,000 different sources in all. This allows Zulily to offer unique merchandise not featured at “Big Box” retailers. Zulily has also focused on creating an enjoyable online shopping experience.

Do you think Zulily will continue to grow at a fast pace?

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The C.F Hathaway Company was founded in Waterville, Maine in 1837. The company made shirts for Union soldiers during the Civil War. The company built the ready to wear shirt business in the United States.

For over 100 years, the company succeeded without advertising. In 1951, Ellerton Jette President and Owner decided it was time to expand Hathaway and build it into a national brand. Like other small business owners, he didn’t have much money. However, that did not prevent him from thinking big. He had heard about the advertising talents of David Ogilvy. So he scheduled a meeting with Ogilvy. Hathaway’s ad budget was only $30,000 so his account was not that attractive to major advertising agencies. He knew he had only one chance to forge a relationship with one of advertising’s most creative thinkers. To convince David Ogilvy to handle the account, Jette promised that he would never alter his copy or fire him. The agreement stood for over 20 years. Jette was smart enough to think beyond his own goals and understand the problems that advertising agencies face, clients that change copy and fire them at a moment’s notice.

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While working on the ad campaign, Ogilvy became inspired by photos of politician Lewis Douglas sporting an eye patch and as a last-minute decision at the photo shoot decided to photograph a distinguished looking man wearing a white button-down Hathaway shirt and a black eye patch. The eye patch was a great story and created an emotional connection with consumers. Consumers wondered how the man had lost his eye. The story of the “The Man in the Hathaway Shirt”  advertising was very successful. When the ads ran in The New Yorker, Hathaway’s entire stock sold out. The company’s sales doubled in less than five years. The “Hathaway Man” campaign was selected by Advertising Age as #22 on its list of the greatest ad campaigns of the 20th century.

I have owned several Hathaway white button-dress shirts over the years and appreciated their quality. It’s hard to find a Hathaway shirt today.

The Hathaway Brand has struggled in recent years and has faded from most retail shelves. The brand has been sold several times. Its decline has been blamed on competition and the rise in the trend to casual wear. In 2002, Hathaway closed its manufacturing facility in Waterville, Maine. It was one of the last companies to manufacture shirts in the United States.

From my perspective, Hathaway is an iconic American Brand with a great story. It seems time for a re-launch.

Did you ever own a Hathaway Shirt?

Michael Kors is one of the hottest fashion brands in the world. It is an overnight sensation that has been 30 years in the making. Persistence pays off. Michael Kors was founded in 1981. Michael Kors has become a  strong global lifestyle brand with a broad appeal. The brand’s products have a “jet-set” aesthetic that is both stylish and sporty. Michael Kors sells affordable luxury. The affordable luxury segment has bounced back strong in 2013. The company sells accessories, footwear and apparel in upscale department stores and its own stores. Michael Kors is the “it” brand in this segment of the market. Michael Kors has surpassed Coach as the number one luxury fashion brand.

Success in the fashion industry is often fleeting. However Michael Kors is currently enjoying fame and success. The brand has done a great job connecting with the American fashion consumer. The brand has excelled because it has stayed focused on the market’s sweet spot — people with money who aren’t rich yet. Michael Kors has a strong understanding of the consumer he is designing for.

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Michael Kors has generated a strong buzz in the market. Kors was a judge on “Project Runway” since it first aired in 2004. The exposure has been very important for the brand. It has built brand awareness with young fashion consumers. When Project Runway started in 2004, the Michael Kors Brand had brand awareness that was under 20%. Today over 70% of Americans are aware of the brand.

Michael Kors is also one of the fastest growing stocks in 2013. The stock price is up over 50% year this year. The brand went public in 2011. It had already surpassed Ralph Lauren in market value. The company has delivered impressive earnings growth the last few quarters and a recent pullback to its 50 day moving average may represent a buying opportunity for aggressive investors. Strong brands that understand their target audience continue to be a good investment.

It will be interesting to see if Michael Kors can continue its rapid growth. It is difficult to maintain that competitive edge. The key will be designing relevant products that meet the lifestyle needs of his target consumer and continuing to market in innovative ways. There is always a market for great design. In the short-term, I wouldn’t bet against Michael Kors.

Do you think the Michael Kors Brand can continue its explosive growth?

Levi’s has one of the best stories of any brand in the United States, if not the world. It is an iconic brand. Levi’s is the original blue jean. It has an incredible heritage and is a symbol of youthful rebellion. Levi’s always worked hard to balance making profits with doing the right thing. Strong core values informed how business was conducted. The company gives back to the community and supports many charitable causes. Levi’s is a leader in sustainable manufacturing and responsible sourcing.

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This week, the Levi’s Brand announced that it was parting ways with its advertising agency Weiden and Kennedy after a five-year-stint. The brand has struggled in recent years and stopped growing. It has had a series of leadership changes. The brand has lost touch with its core purpose. Levi’s has failed to engage and inspire consumers with meaningful stories. As a result, Levi’s has struggled to stay relevant with consumers.

In recent years, the brand has tried hard to regain relevance with younger consumers. Many of their recent marketing campaigns have tried too hard to be cool and often seemed very exclusive. Much of their recent advertising feels dark, somber and not for me. The classic Levi’s 501 Blues Campaign from the 1980’s connected emotionally with a diverse audience of consumers on multiple levels. More than anything it was an inclusive campaign that made people feel good about the brand.

Twenty years ago if you visited a high school or college campus, you would see Levi’s Jean everywhere. Levi’s was clearly the blue jean brand of choice. Today if you visit a high school or college campus you see very few pairs of Levi’s being worn.

Rather than hire an advertising agency, I recommend that Levi’s hire a Brand Journalist to help them connect the stories of their past with the stories of their current users. The brand’s loyal followers have great stories. Its time Levi’s told the stories of its most passionate customers and stopped trying to be cool. It is a great story, tell it in a simple inclusive way.

I worked for Levi’s in marketing for nine years. I am passionate about the brand. I hope they turn it around.

What is your favorite brand of blue jeans?

Burberry is a brand with a strong heritage and a modern approach to digital marketing. This combination has given the brand a distinct competitive advantage in the fashion industry. Burberry was founded in 1856 by Thomas Burberry in Basingstoke, Hampshire, England. Burberry is most famous for its trench coat which was designed by its founder Thomas Burberry. Its distinctive tartan pattern is one of the most widely copied trademarks in the world.

By the mid to late 1990’s, Burberry had come to be seen as tired, stodgy brand that put its signature checkered print on far too many items. In 2001, Christopher Bailey joined the company as creative director. Bailey is credited with leading a turnaround of the Burberry Brand through product design and digital marketing.

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Burberry has reinvented itself as one of the most forward-thinking fashion marketers in the world. Burberry has seamlessly integrated digital into everything that it does. Digital is not an afterthought its the way Burberry conducts business today. Its digital focus has differentiated the brand and moved it ahead of its fashion competitors. In 2009, it was one of the first fashion houses to live-stream a runway show. It’s also been known to tweet images of a new collection before a show, effectively giving its Twitter followers a glance at the line before front-row celebrities and high-powered editors get one. The commitment to social media has changed its production schedule. Burberry is one of the few brands that allows consumers to buy clothes immediately after models walk down the runway in them.

Efforts such as “Art of the Trench,” which features consumers wearing the iconic trench coat, and “Burberry Acoustic,” which features collaborations with British musicians, are examples of how Burberry integrates digital. The brand is not afraid to experiment with new ideas. The latest is “Burberry Kisses”, developed in partnership with Google, which lets users capture a print of their kiss on a smart phone or webcam and send it in a digital letter to the object of their affection. Burberry does an excellent job melding the digital and physical world.

Burberry has 16.1 million Facebook fans and 2.1 million followers on Twitter and other impressive social media stats. Luxury Fashion Brands downplayed the internet in the beginning, believing it would cheapen their image, Burberry is now seeing its fastest growth in online sales as it embraces social media and blurs the boundary between its physical stores and the digital world.

Can you think of another heritage brand that has successfully embraced the digital world?

Its Labor Day Weekend and a good time to recognize a brand that understands the people who do physical and manual labor every day. Carhartt makes apparel designed to be worn by farmers and outdoor workers. Carhartt is a brand with a rich heritage that has evolved to remain relevant today.

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Carhartt was founded in 1889 in Detroit, Michigan by Hamilton Carhartt. Carhartt originally made clothing for railroad workers. They initially focused on railroad workers need for durable and long-lasting work overalls. Carhartt’s goal was to set a standard of excellence in “workwear” product design to which all others would aspire. The first products manufactured by Carhartt were overalls in duck and denim fabrics. A variety of features such as premium fabrics, rugged construction, comfortable fit and details like triple-stitched main seams, generous work-functional pockets, heavy-duty zippers, contributed to the quality of Carhartt products. Carhartt’s approach to business is best summed up in the following quote

“I believe that when a man wears an article that I manufacture, his self-respect is increased because he knows that it is made by an honest manufacturer, who is honest with his employees”.

 

Today, Carhartt “workwear” is commonly found on construction sites and anywhere outdoor work is being done.  Their mission is to provide best in class apparel for the active worker. Carhartt has long been recognized for its durable and high quality products. Carhartt makes products for both men and women. All products in its core workwear line are made in the United States. Carhartt is one of the most recognizable and trusted brand in the “Workwear” clothing market. The brand has also been successful developing products for fashion forward consumers. These consumers have adopted Carhartt because of its authenticity and functionality.

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Carhartt has been successful because it understands the needs and pride of the American worker. They understand that these consumer’s want products in their life that says they are proud to be an American worker. Workers view Carhartt as an authentic brand. Carhartt realizes that workers and their employees are what drives the brand. Workers are encouraged to go online and share stories about the most extreme, rugged conditions they have faced on work sites.

The brand has done an excellent job engaging their core target as well as younger people through social media. Carhartt has over 2.4 million fans on Facebook. Carhartt continues to expand its fashion product line under the Series 1889 label.

Carhartt is a great example of a 124 year old brand that has stayed relevant. The challenge in the future will be remaining true to its core target audience while staying current to attract a more fashion forward consumer.

Have you worn Carhartt workwear?

UGG Australia took off in 2000, when Oprah Winfrey included the boots in the annual listing of her favorite things. Suddenly UGGS were a smashing success. They became a fashion must-have especially with college and high school girls. UGG Australia was one of the fastest growing brands of the past decade. The Oprah buzz was just one of the reason’s for the UGG Brand’s rise to fame. In 2003, Footwear News magazine named UGG Australia “Brand of the Year.” Other celebrities wore the boots on television and movies including Kate Hudson, Jessica Simpson, Kate Moss, Pamela Anderson and Kim Cattrall. It seems that UGGS are on every young girls Christmas shopping list. Experian reports that UGGS was the number one searched term during the 2012 holiday shopping season. Sales exceeded $1 Billion worldwide in 2012.

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The origins of Australian sheepskin boots is tough to trace.  Surfers wore sheepskins to keep their feet warm after catching a wave before they were ever commercially produced. UGGS as we know them landed in the US with the Aussie surfer Brian Smith, who hauled a few dozen pairs of his UGG Australia-brand boots to California in 1978.

The boots attracted a devoted clientele in California surf shops and speciality stores. When winter came along, UGG boots were sold in ski shops and were seen in lodges from Mammoth to Aspen. By the mid 1980’s, The UGG Brand became a symbol of relaxed California culture.

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UGG didn’t find a mainstream audience until Deckers Outdoor Corporation bought the brand for $15 million in 1995. Decker’s bought the brand to complement its successful Teva sandal business. At the time, the company wanted a product line they could sell in the winter and keep their sales force busy. Under Deckers, UGG evolved from a brand focused on an outdoor lifestyle into a fashion powerhouse. From 1995 to 2012, UGG sales grew from $18.3 million to over $1 Billion.

For years, many people have predicted the demise of the UGG Brand. 2012, was the first year that UGGS sales didn’t increase. The challenge for UGG Australian going forward is convincing consumers to buy more products than just boots. UGG has expanded into a number of product categories including sneakers, leather coats, gloves and handbags. UGG has also launched a men’s line and uses New England Patriots Quarterback Tom Brady as the spokesperson. Going forward, UGG Australia will need to focus on creating a true lifestyle brand that can become an umbrella for a range of products.

Have UGG Australia sales peaked?