Global warming, high gasoline prices and retailers waiting longer to place their orders are factors impacting the outerwear business.
Vendors across the board agree that profits are being slashed by higher overheads — with increased freight costs brought on by exorbitant gas prices chief among them. And after a string of hot summers, vendors say retailers now wait until closer to the cooler season to place their orders.
“The major thing in the industry is that the buying patterns have changed,” said Jeff Adler, senior vice president of Adler Furs in Sylmar, Calif. “A couple of seasons ago, buyers could come to us early in the year to put away their programs for holiday. But that’s changed like night and day.”
The big difference, he said, is that buyers place their orders almost in season, primarily because they are waiting longer to see how sales are shaping up. “Retailers don’t want to commit all those dollars too early,” Adler said. “As a sector, outerwear has been kind of weak, and a couple of soft seasons in leather has changed the whole scope of buying.”
As a result, said vendors, the onus is on them to be able to provide the newest looks and the quickest deliveries. “This year, everything seems to be happening later,” said Mary Dong, vice president of Maxxsel Apparel in Baldwin Park, Calif. The company produces leather and fur coats for men, women and children at a factory in China, making it somewhat more challenging to provide speedy deliveries. Another concern Dong has is that her factory, which usually is at the height of production by May and June, was still waiting for orders.
“We usually have a lot of bookings in February, with enough quantity and volume to manufacture in China, but this year that didn’t happen. People are waiting to see what happens because it’s been so hot and nobody wants to end up stuck with inventory,” she said, adding that about half of the chain stores she supplies have maintained the same quantity levels, while the others have reduced their orders. “We might have more orders coming in later, but it seems that many stores still have inventory left from last year,” she said. “Last year, even the winter was hot. The weather really hasn’t helped us at all.”
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Outerwear manufacturers said they have to be increasingly innovative in their efforts to circumvent unavoidable factors, such as the weather. Andy Vaios, director of operations for Kaitery Furs in New York, which manufactures under the Dena Products and Vincenza labels, said newer product categories like cashmere capes would help expand the business base.
“These are something that can be worn year-round, through all the seasons,” he said. Vaios added that he had yet to see any adverse affect on his business from hotter temperatures. The company also does a solid business in small fur accessories, which are a more accessible category.
“[The weather] hasn’t affected us yet, and I don’t know if it will,” he said. “So far, we’re trying to be optimistic. Orders have been nice, and in fact we are seeing reorders from many of our customers.”
Achilles Michoulas, president of Vancouver-based Michoulas Furs, said tourists visiting Canada in the summer often buy pricy fur coats. “They like Canadian fur, so sometimes we are busier in the summer than in the winter,” he said. “The weather doesn’t make that much of a difference to us, because there are always plenty of international people here to shop.”
Nor is Michoulas affected by gas prices — his fur coats are priced from $10,000 upward, making any additional overheads negligible.
Some manufacturers are aiming to compensate for lower profit margins through increased volume. Ajay Chopra, owner of Lamith Designs in New York, said while sales overall have been relatively strong, increased shipping costs as well as more expensive raw materials have reduced profits by between 5 and 10 percent. “We have requested some of our buyers to increase quantities to compensate for the lower profits, and many of them have agreed,” he said. “But because they expect to sell a certain number of units in their stores, we are still negotiating.”
Dong said Maxxsel Apparel is covering all its bases by appealing to every price range and category. For next season, she is introducing a line of prestige furs, including chinchilla. Simultaneously, she will also show lighter coats that can be worn from spring to early fall.
“Winter coats are still our main line. But we also want to try and concentrate on lower-priced items, so if people don’t want to spend money there are still collections available to them,” she said, adding that many of her coats carried a wholesale price tag of under $10.
Because of the heightened demand for quicker deliveries, Adler said his company, which has been around for five decades, is now being seen more as a stock house.
“We now have inventory all the time,” he said. “That automatically cuts out people who can’t do that.” Because Adler usually has a warehouse full of merchandise, it attracts the discount chains who are often looking to buy in-season.
Adler said factors like rising gas prices were also a deterrent. “It impacts the buyer’s decision to buy more quantity and volume, because they can’t commit themselves to the same volume as previously,” he said. “Sales have overall been softer because leather jackets aren’t a necessity.”
Companies like his counter these circumstances in myriad ways. “The best thing we can do is to give the sharpest price we can, and to work on very small margins, making it up on volume,” he said. “To really stay in business today, you have to work on smaller margins.” He said that for some outerwear companies, this was really a “three-month business.”
Adler has diversified by launching categories such as handbags in a bid to create a more “seasonless business.” The 14 bags in the line are made from top-grain leather in shades matching the jackets, and carry a $32 to $82 wholesale price point.
“We have had to create new products so we have business the whole year, instead of having eight months when we’re really not doing anything,” he said.
Phil Pabon, general manager of marketing and advertising for Fort Lee, N.J.-based Southpole, said a combination of low prices and innovations in fabric technology have helped maintain sales. Some of the company’s outerwear is being made from canvas cotton for lighter-weight styles that are still durable and rugged.
“We pay attention [to climate changes] through fabrications and technical approaches to design,” he said. “We’re developing and working on some other things that make more of a utilitarian usage in relation to global warming.”
Pabon said the challenges the industry faces are not unexpected. “For 15 years, we’ve tried to stick to the same formula — and that is our price point.” Despite increased costs in freight and raw materials, Pabon said the company’s “price point strategy allows us to weather any storm. We’re still in the position to raise our prices, but we won’t because we don’t have to. It’s the best thing we can give our consumers.”