Photo by Roberta Mitra of Leila Moss in McQ T-shirt
Target Down but Collaborations on the Rise
Target’s bad news this week from 3rd quarter earnings pinned the brand down 23.8% to $369 million from $483 million a year ago. However what’s interesting (as we reported 2 weeks ago in our story on Masstige) is that Target makes some 40% of revenue from its so-called non-essentials lines including trendy fashion and houseware. Which is probably why they are continuing down the road even more aggressively with their masstige program called the Target Designer Collaboration with Alexander McQueen called “McQ” based on his latest muse, the Brit lead singer Leila Moss for the band The Duke Spirit. T-shirts with Leila’s face on it, along with angled, tailored jackets, black, white, and Blondie-esque motifs are likely to be a strong aspect of the punk rock collection of McQ. Interestingly; more fast-fashion retailers are getting into the “Hot Topic” game of creating band collaborations or offering music/band merch items as part of their offerings. Target also promises to significantly discount items for the Holiday season to try and win back those headed over to Wal-Mart.
Abercrombie & Fitch Borders on Being Uncool Again but Approves New Store in Paris
We called this one 2-3 years ago when many people (especially in action sports), were worried that Abercrombie & Fitch and Hollister were copping their scene. Even then in our consumer insights data from our North American Youth Culture Studies you could see that aspects of action sports-related apparel, particularly surf, were simply not what young people were into any longer -or at least the prevalent styles of the genre circa ’05. Last week, Abercrombie & Fitch took down its sales 8% lower than last year at $896.3 million, and showing a drop of 14% in their 3rd quarter. They blame this mostly on economic conditions, but even a Motley Fool saw the forest for the trees on this trend: Young people are far more DIY than many brands realize. Instead of going for simulacra of simulacra offered up by Abercrombie (despite the sexy surfy ads of days past), a large demographic of young people in America are heading to fast-fashion retailers like H&M, Target, or more eclectic retailers that also offer accessories, books, and music such as Urban Outfitters and of course Hot Topic, for different, unique finds. Yet even though A&F predicts that their 4th quarter will be their worst yet for the brand, they have approved a new store to open in Paris in 2011 on Champs Elysees. Like many American brands seeking to cash-in on certain aspects of late-to-market American trends becoming popular overseas, their London Hollister store, which opened last month, appears to be doing well, and they are continuing with plans to open flagships in Copenhagen, Tokyo, and Milan next year.
Quiksilver’s Rossignol Sell Complete and Launch Preview of 2009/2010 Winter Outerwear
Finally, on November 13th Quiksilver could officially say that the sale of their Rossignol Group to Chartreuse & Mont Blanc was complete. The sale included $40 million with $30 million in cash and $10 million in a Seller’s Note. Chairman of the Board and President of Quiksilver, Bob McKnight said, “We’re delighted that we can now return to our roots, do what we do best and once again fully concentrate our efforts on our core apparel and footwear brands Quiksilver, Roxy, and DC.” And that they did. On the same day that the Rossi sale was completed, they showcased a fashion show at their headquarters in Huntington Beach of their 2009/2010 winter outerwear collection by Roxy and Quiksilver. The collection included 2 main themes but both related to contemporary streetwear, including plaids and a return to grunge-esque motifs, and bright, nu rave, angled patterns and colors reminiscent of the day-glo ’80s (think Damian Sanders, for those who remember him) but more modern and new-school rave-punk. Bright pants and patterns for guys and girls are a part of the collection which appeared to be targeted for both snowboarders and cross-over free-skiers with the show’s backdrop showcasing skiers as well as snowboarders.
Volcom Stays Strong and Remains a “Hidden Gem” Prospect
Volcom’s 3rd quarter revenue increased 23% to $11.7 million compared with $91 million in 2007. Like Abercrombie & Fitch, and even Quiksilver, their international expansion is helping–their total revenue in Europe is up 20% to $31 million from $25.8 million a year ago. Buying their Japanese distributor proved to also be a good idea. In addition, buying Electric in January helped with diversification, adding another $7.9 million. According to Volcom’s chairman and CEO Richard Woolcott, “Managing our business with discipline, commitment, and focus is essential during these times of economic uncertainty, and we strongly believe that our current position as an industry leader and our healthy balance sheet will empower Volcom over the long term.” It’s because of this that Volcom remains a so-called “hidden gem” among financial advisors. Generally, they have grown carefully, have cash on hand and no long-term debt, which we all know can be the nail in the coffin these days in terms of expansion.
For those interested in reading more about Volcom from a youth culture consumer preferences perspective, please refer to our Brand Profile on Volcom. Label Networks’ other Brand Profiles currently include H&M, American Apparel, and European Collectives. Coming soon are Brand Profiles on Hot Topic, Converse, and Levi Strauss. Brand Profiles are free to Premium subscribers.