Las Vegas Fashion Trade Shows for Fall15: February 16-19, 2015

Two weeks ago I posted an article on my website, Full Steam Ahead for US Economy in 2015? – Just Hold Your Horses There.

I am not convinced that 2015 is going to be the bumper year that the majority of the financial press has been spruiking. The article details my reasons for rebutting all the hype. Don't get me wrong. I think 2015 will be a better economic year than we have been experiencing. I believe we should be happy with a steady and sustainable economic recovery rather than pumping up another bubble economy.

I was looking to the breaking of the Fall15 wholesale season at fashion trade shows in Las Vegas last week as a benchmark of buyer activity in fashion retail. Would all the talk of a charging economy stimulate a buying bonanza? Or would it be steady as she goes? In my opinion, it was the latter.

My surveying of retailers in the Long Beach, California area tells me that the optimism of the economic pundits is not being substantially felt at the checkouts. Until the buying public give retailers the nod that they have the money to spend, we can expect retail sales to lag behind other economic indicators.

Purchasing power is directly proportional to surplus disposable income. Most people need a job, and usually a well paying job, to have disposable income. Despite what the official job figures say, I believe there are still many unemployed and underemployed who are hidden from the government statisticians. Basically the economy needs to provide more adequately paying jobs before we see any significant spike in retail sales.

We could short circuit sustainable retail growth by just putting everything on credit again. But I hope people's memories can extend back 7 years to the financial disaster of 2008. Then again, the folks who brought you 'Too Big To Fail' got the Senate back last November and increased their majority in the House, so anything is possible.

The California Apparel News review of last week's shows is reposted below and is, as usual, upbeat. CAN is fulfilling it's role as industry cheerleader.

Liberty Las Vegas Fall15

My experience was that activity looked no different from this time last year. While there were lots of bodies at all the shows, I was not sure who they were. The shows are massive. It is difficult to divine who is who. Who are the people walking the aisles? Buyers? Exhibitors? Agents? Media? Industry types? Of course, all of the above. But I didn't see furious order writing in the booths.

I was accompanied on the treks through the Valleys of the Garmentos by fellow countryman, good friend and professional photographer of note, Adrian Wlodarczyk of Shapeshift Photography.

As well as reporting on the shows and meeting with contacts and business prospects, I was buying accessories for the eclectic Long Beach gift store, Z Fabrique.

We walked the Modern Assembly shows at the Venetian/Sands Expo that started on Monday - Liberty, Agenda, Capsule, MRket, Stitch, Accessories The Show. As well as Offprice and CurveNV.

The MAGIC shows at the Mandalay Bay and LA Convention Center started on Tuesday - Project, ENKVegas, WWDMAGIC, Pooltradeshow.

We revisited them all on Wednesday to follow up with some contacts and see if the Day 1 excitement had carried over.

The Modern Assembly shows were busy on Monday. There was a distinct lack of energy at the Mandalay Bay on the Tuesday morning. It picked up a bit as the day went on.

The feedback was mixed when I revisited my exhibitor contacts at both locations on Wednesday. Some agents and designers were very happy with business, some thought it was OK, some thought that things were quieter than expected.

Here are some of the labels that caught my eye:

King Baby jewelry at Liberty

King Baby is always impressive. They have store locations in Santa Monica, Nashville, Caesars Palace Las Vegas, and in Beijing, China. They make their stuff in Santa Monica and actually to export to China.

 

 

 

Brooklyn Hat Co at Liberty

Brooklyn Hat Co. was doing strong business with their floppy hats.

 

 

 

Bread & Butter from Sweden at Liberty

Bread & Butter underwear from Sweden is making a push into the US market at the very affordable wholesale price of US$7.

 

 

 

 

 

JanSport at Liberty

JanSport have been making good quality and affordable backpacks and camping gear for nearly 50 years. They have stayed up with the times, and fit comfortably in with the contemporary labels at Liberty. Their sales people are some of the friendliest you come across.

 

 

 

Wood Underwear at CurveNV

Wood Underwear is one of my personal favorites. Terresa Zimmerman, the founder and designer of Wood was one of my clients when she first launched the label. Terresa has successfully added camouflage prints to the collection over recent seasons. She has added stripes for Fall15.

 

Recycled water pipe bracelets from The Base Project at ENK

I have had my eye on the hand carved recycled water pipe bracelets from The Base Project for a few seasons now. The Base Project provides a bridge between artisans in the developing world (the bracelets are carved by Namibian artisans) and the US fashion market and creates jobs and investment in community development projects.

 

Annie Hammer Jewelry at ENK Vegas

Annie Hammer Jewelry was my find of last week.  The collection beautifully melds hip styling and the use of semi-precious stones in their powerful, raw states. The cuffs come in leather and horn with crystals and silver and studs and prints. There was a Labradorite point leather cuff for $70 wholesale that I would have snapped up on the spot if it had been the last day of the show. Annie also does earrings, necklaces and cuff links.

Do yourself a favor and take a good look at Annie's range if you get a chance.

So that's the Fall15 Vegas round of shows in the books. All in all, it was a positive week. The energy was good thoughout. Then again, that is always the case. When  you have that much creativity and that many creative people clashing with that much business and that many business people, there has to be a reaction.

The week is always stimulating. The start of a new season is always exciting and optimistic. Let's hope the optimism is justified and we have a good, solid year of sustainable growth in the fashion industry and the economy in general.

Paul
paulbrindleyconsults.com 

 

California Apparel News

TRADE SHOW REPORT

Good International Turnout and Strong Interest in Immediates at Las Vegas Trade Shows

By Andrew Asch, | Deborah Belgum, | Alison A. Nieder | Thursday, February 19, 2015

Photo Gallery

Las Vegas Trade Shows

MRket

FNPlatform

LAS VEGAS—International buyers and retailers looking to restock diminished inventories circulated around the more than 20 apparel, accessories and sourcing trade shows in Las Vegas, including the MAGIC Marketplace shows (MAGIC, Project, ENKVegas, WWDMAGIC, Pooltradeshow, Tents at MAGIC, Sourcing at MAGIC, ISAM, FN Platform, WSA Vegas and Playground); the Modern Assembly shows (Liberty, Agenda, Capsule, MRket, Stitch and Accessories The Show); the Offprice show; CurveNV; WWIN (Womenswear in Nevada); and Kidshow.

MAGIC kicked off most of its shows on Feb. 17 with some exhibitors reporting an especially strong turnout.

“This is one of the better first days in a long time,” said Moshe Tsabag, whose Velvet Heart booth at WWDMAGIC at the Las Vegas Convention Center was consistently busy throughout opening day.

“They are coming and asking for Immediate goods, and we have it—we projected earlier,” Tsabag said, adding that some retailers have been struggling to fill in inventories for goods that have been stuck at the West Coast ports during the recent slowdown during contract negotiations. “People are looking for goods, and we are able to fulfill these orders quickly,” he said.

At the end of the first day, Stop Staring!’s James Atyeo was entering a stack of handwritten orders into the computer at the Stop Staring! booth at WWDMAGIC.

“So far, so good,” he said. “I wasn’t sure how this day would go, but from 10 a.m. on it hasn’t really slowed down all day.”

Kristen Keyes Sullivan, director of sales for Compton, Calif.–based Colosseum, was similarly upbeat.

“So far, it’s a great first day,” she said.

Sullivan was showing the company’s 3-year-old activewear collection in WWDMAGIC’s new dedicated section for activewear and yoga collections.

“It’s nice having a real activewear section,” she said.

The semiannual Sourcing at MAGIC show, held in the South Hall of the Las Vegas Convention Center, opened a day early on Feb. 16. Nearly 40 countries represented at the gargantuan show were showing their expertise in manufacturing everything from athletic wear to zippers. Chinese exhibitors made up more than half the show.

This season, there was a focus on Egypt and its 25 qualifying industrial zones, where apparel made there gets duty-free entry into the United States under a trade preference program.

Mandalay Bay shows upbeat

At Project at the Mandalay Bay Convention Center, Christopher Yoo, wholesale director of the Los Angeles–based Andrew Christian fashion underwear brand, said that his booth had 50 appointments.

“Every hour was double booked,” he said.

Mario Pasillas, West Coast sales for 7 Diamonds, said he saw “an upswing in the way people are spending.”

The 7 Diamonds booth was in the same place it’s been for the last three years, Pasillas said.

“It’s tried and true,” he said. “People know where to find us. It’s great.”

At the upscale Tents at Project, retailers Jacqueline Forbes and Arlington Forbes, owners of Canvas Malibu at the Malibu Country Mart and Canvas Woman in Malibu, described business as “solid.”

“There is an uptick in buying,” Forbes said.

Marie Shaffer, who was working with Agave, said she saw Pitkin County Dry Goodsof Aspen, Colo.; Gary’s of Newport Beach, Calif.; Butch Blum, based in Seattle; Rodes, based in Louisville, Ky.; and Baer’s Den, with locations in Memphis and Birmingham Ala.

Opening day of ENKVegas, also at the Mandalay Bay Convention Center, was for window shopping, said Amanda Parenti, a freelance salesperson for women’s contemporary brand Philanthropy.

“During the first day there’s a lot of looky loos,” she said. “The second day they always come back and order.”

Pooltradeshow expanded its style boundaries during its February 2015 run. Best known for T-shirts and casual looks, Pool became a forum for suits when Dutch brand Opposuits made its U.S. debut at Pool. The line’s suits retail for $99 and feature comic prints of dollar signs, leopard skin prints and ugly Christmas sweaters, said Jelle van der Zwet, a founder of the brand. “We saw some serious buyers looking for the latest trends,” he said of Pool.

Busy at the Sands and Venetian

The trade shows held at the Sands Expo & Convention Center and adjacent Venetian ballrooms started early, giving buyers a head start on shopping.

MRket, Accessories The Show and Stitch, all organized by Business Journals Inc., opened on Feb. 16.

By the second day of the show, everyone up and down the wide aisles glowed about the amount of traffic that was seen that Monday.

“We had six people working in our booth, and we could have used more,” said Bea Gorman, who runs the Salt & Pepper Sales showroom with Emmalena Bland at the Gerry Building in Los Angeles and was showing at Stitch. “We booked in one day what we booked the entire show one year ago.”

At the Liberty show, Leary Forteau, sales for Matiere, said he met with a lot of international retailers.

Dale Rhodes, vice president of sales at Katin USA, said he saw all his major accounts, including Nordstrom, Bloomingdale’s and Conveyor at Fred Segal. But many retailers were late on deadlines, Rhodes said. “Our deadlines for Fall and Holiday are past,” he said. “This show is for us to capture new boutique accounts.”

At Agenda, Brian Krauss, president of Carlsbad, Calif.–based footwear line MacBeth, introduced an apparel collection.

“We’re getting a lot of recognition for the brand by being at this show,” he said.

This season, Agenda quietly introduced a section called (+), or Plus, devoted to elevated streetwear.

At Capsule, Tina Ye, national agent for the True Collaborative Fashion showroom, with locations in Portland, Ore., and the Cooper Design Space in Los Angeles, said opening day was busy with buyers looking at the showroom’s lines Nau, Bridge & Burn, Prairie Underground, Curator and Little River Sock Mill.

“People were open to look at the other lines we represent,” Ye said, adding that she saw several buyers from Japan and Korea.

Lingerie and swimwear buyers shopping at CurveNV got the news that the show, organized by French trade show organizer Eurovet, will partner next season with MAGIC and move to the Las Vegas Convention Center.

Among the new exhibitors at the recent show was Joe’s Intimates, the lingerie, swimwear and lounge line from Joe’s Jeans and Onis Design Group.

“Day one has been good,” said Gihan Gabor, vice president of sales for Onis. “They’re surprised to see Joe’s intimates. We keep hearing how much people love their Joe’s Jeans.”

Mona Goldberg, senior vice president of sales and merchandising with luxury eco underwear collection Blackspade, said she was meeting with buyers from “all over,” including many international retailers.

“The energy has been great,” she said.

The Offprice show, held on the first floor of the Sands, opened on Feb. 15.

“This is a very good show for us,” said Patti Luner, director of sales for Studio City, Calif.–based Ingear, which shows its excess inventory at Offprice and its better lines and licensed collections at MAGIC.

“This is the time of year for Immediate goods,” she said. “At this show, they see this body and that print, and they can get it right now.”

Ed Bernard, president of Michigan-based Bermo Enterprises, described this season’s Offprice show as “phenomenal.”

“We had so much activity before the show that we knew it was going to be good,” he said.

We saw all of our domestic companies but quite a few new and more international than ever.”

Brisk at WWIN

The WWIN show at the Rio All-Suites Hotel & Casino had particularly brisk traffic this season. Even during the third day of the four-day event, which ran Feb. 16–19, the tables were packed with buyers perusing new looks, taking notes or placing orders.

Elaine Nieh, president of Flair LLC in Burlingame, Calif., has been attending the event for 10 years to sell her stylish reversible jackets and crinkled polyester tops that are flared at the bottom. They wholesale for $40 to $50.

“It has been a very good show for us,” said Nieh, whose wide booth was separated into sections for Immediates, Spring and Fall. Buyers were placing orders for all three.

“I always feel comfortable at this show, and my clients know where to find me here,” she said, explaining why she keeps coming back year after year.

Over at the Sienna Rose booth, Sasha Rivera was meeting with buyers interested in the line’s vibrant print tops that had a certain bohemian look. Half the line made of georgette, polyester/spandex and polyester knit is manufactured in the Arts District in downtown Los Angeles, and the rest is made overseas. “I think our vibrant prints are attracting a lot of customers and also because of our price points,” she said of the collection that wholesales for $20 to $45.

Apparel News Las Vegas Roundtable: What to Expect at the Upcoming Trade Shows

Next week is the Fall 2015 round of Las Vegas fashion trade shows known ubiquitiously (and misleadingly) as MAGIC.

Following is a re-post of an article from the February 5 California Apparel News that contains insights and tips from industry veterans on what they expect from the shows and how they will be approaching their buying strategies for the week. They also talk about the current economic climate is affecting their businesses.

For my take on where we are and where we are heading for 2015, see my latest article that went out yesterday.

I will be in Vegas for the 3 days of shows and will be reporting on what I saw and heard at the end of next week.

Paul Brindley
paul brindley consults

 

SOUTH HALL: Last August, the Sourcing at MAGIC show was filled with hundreds of booths.

TRADE SHOW

Las Vegas Roundtable: What to Expect at the Upcoming Trade Shows

Thursday, February 5, 2015

With more than 20 fashion trade shows showcasing a huge selection of products and styles, MAGIC and its satellite shows will give retailers an opportunity to view the latest collections from brands across the country and around the world.

From MAGIC—whichincludes Men’s, WWDMAGIC, Project, Pooltradeshow,FNPlatform, WSA@MAGIC, ENKVegas, the Tents at Project, and Sourcing at MAGIC—to MRket, Accessories The Show and Stitch, which are part of Modern Assembly—which also includes Liberty, Agenda and Capsule—to CurveNV,Women’s Wear in Nevada (WWIN), Kidshow and OffPrice, every show offers an eyeball-popping array of choices.

California Apparel News Retail Editor Andrew Asch asked fashion veterans with different perspectives on what they expect from the show and what they are seeing with the economy.

Those interviewed included Alfredo Izaguirre, buyer and general manager for LASC, a 4,000-square-foot men’s boutique that has been serving West Hollywood, Calif., for more than three decades; Barbara Fields, president of the 35-year-old Barbara Fields Buying Office, who shops MAGIC as part of her retail-consulting practice; Mas Hayakawa, president of No Rest for Bridget, a “fast-fashion” style chain, with four locations, headquartered in Costa Mesa, Calif.; and Jennifer Althouse, owner of the Althouse contemporary boutique in downtown Los Angeles.

What season are you buying? How many days are you spending at the show? How many shows are you going to?

ALFREDO IZAGUIRRE: We are buying pretty wide, but we are making our dollars available for Immediates. If we are working with a new line, we’re going to be working with them on consignment. [We tell sales reps,] “In this game, you have options: You can have your merchandise sitting in a warehouse, or you can have it in a store.” I’d prefer a store.

Also, when you go to a show, you cannot go with a narrow mission. You have to be open to possibilities. You have to be open to considering the most alternatives possible. You have to see if a look is the same one as was shown last year. You have to think, “What will make it different from last year?”

If you buy through Fall, it is through lines that have a long relationship with the company. For LASC, these are lines such as Scotch & Soda and G-Star.

We just went to New York. I went to Capsule, Project and Liberty Fairs. I did Agenda in Long Beach. In Vegas, we will definitely go back to Capsule, Liberty and Project. You cannot cover every show.

BARBARA FIELDS: We’ll be there for two days.We’re buying Immediates and Back-to-School. Our primary coverage is for the juniors market—WWDMAGIC for juniors. When we shop the manufacturers there, we find out what are key best sellers. We take pictures of key items and publish them in a book that we call the “Best of the MAGIC Show.” By the end of the trade show, we have a report ready that we publish in our offices. We send it out after the show.

MAS HAYAKAWA: Immediates through Fall. We usually go to MAGIC, Project and Platform.

JENNIFER ALTHOUSE: I’m buying for Fall 2015. I do not tend to place orders in Las Vegas. I go there to see what is going on—who is showing, what are the trends. I only go for 24 to 48 hours. I’ll go to Capsule. I’ll walk Liberty even though I do not buy men’s. (It is in my future.) I do walk ENKVegas. At bigger shows, you’ll always find that small brand hiding in the corner. For me, that is what is so exciting, to find that new designer, the designer who is just starting out. If I find that one brand in Las Vegas, I’m a happy buyer, and it has been worth it.

How is the economy? Are your customers spending more? Will you be spending more at the Las Vegas shows?

A.I.: To be honest, we’ll spend the same as we did in February 2014. The bottom line to the deal is that there are [fewer] customers. Shoppers are more price conscious than ever. You see them coming in and looking at price tags. I really depend on my associates to use every opportunity they have with the customer to see if the price is an issue or if a secondary lesser-price-point item can be found. I do believe every customer that leaves empty handed from the store is an opportunity lost. Some people are still buying the way they had always shopped with us. They’ll spend $1,500 to $2,000 or more when they shop, but they are such a small group of customers. Years ago, $300 for a pair of jeans was not unusual in this shop. Now, perhaps, there’s just one style of jeans in the store at this price range.

In conclusion, my job has two main focal points. I’ll engage the customer so they will spend more money for items that they might not have planned for. I’ll also help them find items that can satisfy their need for deals and popularly priced items. We want them to come back over and over again to shop at LASC.

B.F: Basically, [retailers] are buying for shorter delivery periods, so they can keep track of what is happening trend-wise. Retailers have been buying this way since the Great Recession, and until things open up, this will be the way that they will shop; buying close-in for shorter delivery periods instead of extending themselves for future. It’s so they can keep a leash on the trends. It is where we come in. We take the risk out of buying because of our global sourcing. We have the answers. They can buy with conviction. We project what not to buy, what they should buy and what has peaked, so they can avoid any markdowns.

MH: The economy in the last few years has been a little complicated. I hear from our suppliers that the majority of retailers are suffering. For us, 2014 was the year of re-discovering ourselves and making it clear who we are. We looked at what we are buying, how we merchandise and how we market. I feel great that we went through this exercise in a good economy.

Our customers are used to our fast-fashion pricing. As we add unique products to our merchandise mix, they do spend more. That is the whole idea of our new concept store,OPT by No Rest For Bridget. We are giving our customers more options in shopping, including home goods, beauty, activewear, etc.

JA: I won’t be spending more than I have spent in the past. I have to be careful and make sure that buys are extremely tight. I will focus on the top five brands that sold the best at my boutique and buy deeper in those brands. For the next five brands, I’ll cherry pick items. January is a slow month in general. Even though you have sales, many people don’t want to spend because they spent their money in December. But people love that extra bargain. My expectations for January were low, but I reached beyond what I had thought I would sell. I had a great January.

Will there be an “it” item this season? Are there any fashion trends that will be peaking during the show?

AI: To me this season will be about “short boxers.” They are boxers, but they have loose fabric, and they look like little shorts. There’s a newness.

Also, for the past few years, we have been revolving around four main looks [for men]. There is the fitness/modern look mixed with sportswear that has prints all over. With this look, guys will pay $200 for drop-crotch sweat pants with great cuts. Examples of these brands are Drifter, Matiere and Eleven Paris.

There is the sophisticated dress for a special occasion or business-function look, super tailored European modern cool yet casual with great sneakers or cool modern dress shoes with rubber soles. Think of brands such as Tiger of Sweden, Puma Black Station,Descendant of Thieves and Tom Ford Sunglasses.

There is the Americana look. It’s been called the “Lumbersexual.” It circulates around wearing plaid shirts, slim cargo chinos, tailored jeans that are clean or distressed and boots that look like you can climb up a mountain and chop down a tree. “Lumbersexual” brings the Americana look up-to-date with a very tailored touch. I believe clear examples of this are Woolrich, Hickey Freeman, Burkman Bros, 3X1 and Shwood Eyewear.

There’s a fourth look. It’s the Australian influence in fashion—khaki pants, cargo shorts, drop crotches with chino materials that are gathered at the ankle plus cool surfer–inspired printed shirts, tees and tanks. Examples are Globe International, Ksubi and Insight.

B.F.: We’ll know after the show. But there are some things that have not sold. We’re going to be cautious with projections with denim joggers. They did not do well. Regular joggers did well, but denim joggers peaked.

MH: With the lack of newness in fashion in the last few seasons, we are focusing on our “Bridget style,” which is elegant and wearable for work/play. Our buying is also based on “what not to buy” based on our sales analytics. This year that includes boho, crops, Californian fashion and too many prints.

JA: I’m not sure about fashion trends. Trends are just starting to come in. I have always been a big believer in customers buying a carry-over item. An item that you can dress up and dress down, a staple piece, perhaps an oversize black blazer or a pair of black slacks, items of great quality that they can bring to work or in the evening.

Full Steam Ahead for US Economy in 2015? - Just Hold Your Horses There

Back in mid January the California Apparel News carried an article titled, "Full Steam Ahead for 2015 as Economy Accelerates and Gas Prices Drop". It is reproduced below.

The first two paragraphs of the article state:

Just about everyone agrees that 2015 is shaping up to be a good year for the U.S. economy.

“We believe that 2015, barring any unexpected event, should be the best year since the beginning of the recession in 2008,” said Esmael Adibi, director for the A. Gary Anderson Center for Economic Research at Chapman University in Orange, Calif.

I had the pleasure of seeing Mr Adibi speak at a financial planning conference in Newport Beach in early 2008. The economy was faltering. The sub-prime foreclosures were becoming a serious issue. House prices were beginning their slide. All the indicators were pointing to a serious downturn.

Much to the angst of many at the conference who thought (or hoped, more like) that the housing price drop and the mounting foreclosure were just a short-term necessary correction of a obviously overheated real estate market, Mr Adibi predicted that real estate in Orange County would lose another 20% of its value. There was a stunned silence. After the presentation, there was a self soothing mix of disbelief about the prediction and bravado for the future among the attendees that I spoke to and heard in conversation.

I believed every word. Mr Adibi, who was then on Schwarzenegger's Council of Economic Advisors, was impressive. Cool and dispassionate with an well articulated synthesis of the facts and trends, Mr Adibi ended up being proved right and wrong. Yes, there was another 20% to come off the real estate prices but there was going to be a whole lot more.

Mr Adibi knows what he is talking about. So, let's look at his quote again: We believe that 2015, barring any unexpected event, should be the best year since the beginning of the recession in 2008.

"... the best year ..." Not a good year. And, by the way, not everyone believes that 2015 is going to be a good year. I don't. And I know quite few smart people in and out of the financial industry that are with me.

The New York Times on January 17 quoted Ian Shepherdson, chief economist at Pantheon Macroeconomics as stating that the overall economic benefits of the collapse in oil prices are significant. He predicted that it could add almost one percentage point to real GDP growth in the United States this year. In an economy trending at 2.25 percent annual growth, that’s a sizable gain.

That's great. Typically when the economy is healthy, GDP is growing which leads to low unemployment and wage increases as businesses demand labor to meet the growing economy.

Investopedia tells us that the general consensus is that 2.5-3.5% per year growth in real GDP is the range of best overall benefit; enough to provide for corporate profit and jobs growth yet moderate enough to not incite undue inflationary concerns.

USA Today reported on January 4:

The stronger U.S. economy and increased employer confidence should continue to bolster job gains, and economists expect sluggish wage growth to finally accelerate, though they're divided on how quickly that will happen.

Employers added 321,000 jobs in November, the most in nearly two years, and 2014 is on track to be the strongest for job growth since 1999. Economists expect a Labor Department report Friday to show that 230,000 jobs were added in December, according to median estimates, slightly below the 241,000 average for the first 11 months of the year.

So why am I am not on the "Party like its 1999" bandwagon? The headlines in the financial press are screaming that the economy is charging ahead. Am I just being a wet blanket?

I don't think I am, for these 3 reasons:

1. I am not seeing all this optimism reflected on the street at the retail level.
2. If we are back to pre-Great Recession employment levels, it doesn't feel like it.
3. And I have a sneaking suspicion that we are in for a stock market correction.

Retail
Out there in the real world, the retailers that I am speaking with on a regular basis are not doing well. They are not experiencing the significant bump in business that you would expect from an economic upturn and an optimistic buying public. The holiday season was just OK and January was slow.

When retail sales for the 2014 holiday season fell short of forecasts, many industry watchers declared the crucial shopping season a disappointment.

The Federal Reserve noted that: General merchandise retailers indicate that sales were generally sluggish and below plan for the holiday season overall. However, most retail contacts noted that, while November and early December were sluggish, sales did pick up toward the latter part of the month, especially in the week after Christmas. When everything was on sale, the Fed neglected to mention.

Just last week, Reuters reported that U.S. consumer spending recorded its biggest decline since late 2009 in December 2014 with households saving the extra cash from cheaper gasoline.

But on December 23, Bloomberg reported:
The American consumer is back, recharging the U.S. economic expansion.

Households splurged on new cars, appliances, televisions and clothing as spending climbed 0.6 percent in November, beating the median forecast of economists surveyed by Bloomberg, according to figures from the Commerce Department issued today in Washington. The economy grew at the fastest pace in 11 years, another report showed.

So which is it? From what I am hearing, it is the former.

The nine-month labor dispute at the Ports of Long Angeles and Long Beach that is now threatening to shutdown the already log-jammed ports is having an impact on retail and the economy in general but there seems to be some disagreement in the financial press as to what the effect has been so far.

USA Today notes:
A full-blown port shutdown could cost the U.S. economy some $2 billion a day, the National Retail Federation has warned. Unlike some past labor disputes involving the ports, the latest escalation at least comes at a time when the holiday season has passed and many retailers aren't as in dire need of shipments of merchandise.

CNBC reports:
According to a Kurt Salmon analysis, congestion at West Coast ports could cost retailers as much as $7 billion this year. That congestion cost comes from a combination of the higher price of carrying goods and missed sales due to below optimal inventory levels.

As of now, smaller retailers have been able to manage the shipping delays and inventory levels with suppliers eating increased shipping costs due to rerouting and air freight. The vertical integrated supplies must be feeling the cost and inventory pinch. The independent retailer has the benefit of the importer bearing the increased costs of getting goods to market. The longer the dispute goes on, the deeper the effect on the economy has to be.

Some reports indicate that even if negotiations lead to a quick resolution from here, normal operations are still months away because of the backlog so far. It may even take the bulk of 2015 for shipments to normalize.

Jobs
The recent unemployment figures show an unemployment rate of 5.6%. Supposedly, we are back to pre-Great Recession employment levels? Really? What are these jobs? Are they full-time? What about wages growth for those who are employed? I am very skeptical about the unemployment number. Many unemployed and underemployed are not counted. Without decent paying jobs, there is no disposable income. Without disposable income, there is no significant spending.

The Bureau of Labor Statistics reported the Labor Force Participation Rate at 62.9% for January 2015. That's the lowest it has been since 1978. Why is it so low?

Business Insider explains:
On the one hand, America is aging, and the baby boomers are beginning to retire. That leads to a natural demographic decline in the participation rate.

On the other hand, the US is coming out of the worst recession it has faced in decades, and the participation rate dropped much more sharply since 2008.

But just last week Bloomberg also reported:
U.S. employers added 257,000 jobs in January, capping off the best three months of consecutive employment growth in 17 years. December’s job gains were revised up to 329,000 and November to a whopping 423,000. According to the Bureau of Labor Statistics report Friday, the unemployment rate rose to 5.7 percent as more people started looking for work again. Best of all, average hourly earnings went up by 0.5 percent in one month, the most since November 2008.

The Stock Market
The stock market has been rising steadily since it bottomed out in March 2009. That is a long time. Many believe the market is overvalued and due for a correction. A correction is defined as a reverse movement, usually negative, of at least 10% in a stock, bond, commodity or index to adjust for an overvaluation.

In late January, CNN Money reported that: The bears build their case that a crisis is near on four factors: falling oil prices, stagnant wages, the "two-edged sword" of a strong US dollar and big trouble abroad.

The strong dollar makes US exports more expensive and less attractive to foreign buyers.

While Microsoft, Procter & Gamble and United Technologies reported solid earnings in January, their shares dropped as much as 10% because of forecasts of weaker sales abroad due to the strong U.S. dollar. These companies employ thousands.

Due to the lower oil prices, energy companies and related sectors are laying off thousands. The lower gas prices are helping the economy on one hand but hurting on another.

Global Economy
The global economy is sagging. Just yesterday, NPR reported:

There's good reason to be concerned, says Jeffrey Snider, head of global investment research at Alhambra Partners.

"Whenever you see oil prices collapse, especially by something like 60 percent, something else is going on, and so therefore, any benefit that might come to consumers in the form of lower energy prices is being overwhelmed by whatever it is that's causing oil to fall in the first place," Snider says.

And falling oil prices are a clear sign of a dangerously weak global economy, he says.

"You have economies from Europe, Japan, China that are either in or very close to recession or some form of growth that is significantly degraded," Snider says.

And, he says, recent data suggest U.S. consumers are saving most of their windfall from lower energy prices, not spending it to fuel growth.

"That's an indication of very cautious behavior," he says.

That caution suggests underlying problems in the U.S. economy, including slow wage growth, he says.

From CNN Money:
The question is whether American consumers and businesses will spend enough to offset the global slowdown. But so far, wages have been flat for many Americans during the recovery.

Adjusting for inflation, median weekly wages were $790 in the fourth quarter of 2007; they barely budged up 1% to $796 the last quarter of 2014.

And the CNN Money article concludes with:
Weaving their four factors together, the bears' quilt for 2015 is quickly looking gloomy and gray. The U.S. markets are already overdue for a correction -- a drop of 10% or more -- and this global backdrop could exacerbate the fall when it comes.

I hope that the Bears and I are completely wrong.

So you can see that not everyone is convinced that 2015 is shaping up as a good year for the US economy.

I want the economy to improve as much as anyone else. We have had 6 long years of cold and painful recovery from the deliberate superheating and crashing of the economy by the Bush Administration. While the private sector hasn't completely rebuilt the economy in their own likeness as planned, big business has done very nicely thank you very much after being bailed out by public money, and in place to reap the rewards of the publicly subsidized recovery. It is time for us, the public who rescued the economy from near collapse, to enjoy some economic sunshine.

I'll be happy with the best year since the Great Recession.

Paul Brindley
paul brindley consults

 

California Apparel News

FINANCE

Full Steam Ahead for 2015 as Economy Accelerates and Gas Prices Drop

By Deborah Belgum | Thursday, January 15, 2015

Just about everyone agrees that 2015 is shaping up to be a good year for the U.S. economy.

“We believe that 2015, barring any unexpected event, should be the best year since the beginning of the recession in 2008,” said Esmael Adibi, director for the A. Gary Anderson Center for Economic Research at Chapman University in Orange, Calif.

But how that translates into apparel and textile makers is another thing.

Even though the economy was on solid footing last year with the nation’s gross domestic product rising an estimated 2.3 percent, several clothing manufacturers and retailers saw overwhelming challenges to their business.

A shift in the way clothes are sold and by whom continues to transform the industry, creating winners and losers. Particularly affected are brands and retailers that cater to the juniors market. They have seen the floor pulled out from under them as teens flock to the lowest-priced seller.

“Children’s and teens’ apparel did well last year, but the teen stores didn’t,” said Britt Beemer, a retail analyst and founder of America’s Research Group, which polls 1,200 consumers a week to take the pulse of their retail-spending attitude. “Wal-mart and Target got 9 percent more teen shoppers than one year ago.”

Juniors retailers such as Forever 21 and H&M have been expanding their stores. They offer merchandise at rock-bottom prices and churn out new styles faster than you can sew on two new buttons.

“For us it has been a good year, but it is tumultuous,” said Ike Zekaria, vice president and co-owner of Los Angeles–based teen retailer Windsor Fashions Inc. “A lot of our competitors are going out of business.”

Those competitors are Delia’s, a New York–based juniors apparel retailer that announced at the end of last year it was filing for Chapter 11 bankruptcy protection and closing its 95 stores after being in business for 22 years.

The Wet Seal, a Southern California juniorswear store chain that has been on and off the financial ropes, said in January it would shutter 338 stores and lay off 3,650 employees. The chain still has 173 stores, based mostly in malls. Many speculate that the teen retailer will be headed for bankruptcy court soon if a buyer for the retailer isn’t found soon.

To add to pricing challenges, apparel makers are seeing mid-tier retailers scooping up brand-name licenses or the names themselves and selling them exclusively at their stores. Traditional independent brand names that have been a staple in the stores are being booted out the door.

One Los Angeles company executive, who didn’t want his name or company mentioned, said that for years he supplied Kohl’s. But the Wisconsin-based retailer started stocking the Vera Wang, Rock & Republic and Jennifer Lopez brands. Three years ago he was cut out of the loop, costing him $24 million in sales.

Many apparel makers were working every angle to market their labels. Chaudry, a Los Angeles label started in 1976 by Krishan Chaudry, has seen its revenues increase 30 percent in the last year, but the company has taken to the social-media airwaves to get the word out about the line, known for its brightly colored bohemian prints and crochet details. It caters to the 30- to 55-year-old woman. “We are doing everything possible to reach the influencers and bloggers,” said Ravi Bhushan, the company’s sales director. “We are doing all the trade shows.”

Recently, the brand added a new label called Chaudry Black, a line of hand-beaded dresses and tops selling at Anthropologie and Free People. Wholesale prices range from $99 to $169.

“It is challenging out there. You have to be innovative,” Chaudry said. “If you have things that are different, it is very good.”

Gas it up

This year, retailers and apparel makers have given the gift that keeps on giving. Gas prices have plummeted, now at a national six-year low. Who would have thought that the average price of gas across the nation would nosedive 35 percent in a year, dipping from $3.23 a gallon to around $2.11 a gallon. Gas prices are slightly higher in California.

That means instead of spending $58 to fill up a mid-size car, it now costs $38. Gas prices are expected to remain low through 2016. “Whenever gas prices go down, it is like a tax cut for consumers,” Adibi said. “That extra money does two things. It reduces people’s debt or increases their savings. Or it can be spent. In all likelihood, a good portion of it is going to be spent.”

The downside is for oil-producing states and countries now seeing their oil revenues drop. In the United States, Texas is the country’s No. 1 oil producer, followed by North Dakota and then California. So there could be some layoffs in the state’s petroleum industry and declines in revenue for businesses and services that supply them.

It’s off to work we go

Job creation in California has been more robust than in the rest of the country, offsetting the large number of jobs lost during the recession that started in 2008.

California’s unemployment rate in November was 7.2 percent compared with 8.4 percent during the same month in 2013. The state’s unemployment rate peaked in February 2010 at 12.4 percent.

But Los Angeles County is still behind in tackling its unemployment rate, which stands at 7.9 percent. That should change by mid-2015. “Los Angeles still has not recovered all the jobs it lost during the recession,” said Robert Kleinhenz, chief economist at the Los Angeles County Economic Development Corp. “We are still very reliant on government jobs and jobs tied to the defense industry. Government jobs have been slow to come back. But by mid-2015, Los Angeles County should recover all the jobs it lost during the recession.”

Los Angeles County’s unemployment rate peaked at 13.3 percent in July 2010.

“Industries where gains have been more pronounced have been in healthcare, professional services and business services,” Kleinhenz said. “Leisure and hospitality have been adding jobs over the past couple of years due to the growth in the tourism component of the local economy.”

Jobs associated with the Port of Los Angeles and the Port of Long Beach should also be on the upswing because international trade is expected to rise, even though the ports have been plagued with congestion problems.

“Import volumes on the West Coast, despite all the problems there, were the highest since 2009,” said Ben Hackett, founder of Hackett Associates, which tracks national port traffic for the National Retail Federation.

For the first 11 months of 2014, cargo volumes at the Port of Los Angeles were up 6.5 percent over the previous year while at the Port of Long Beach they rose 1.7 percent.

Jobs in California’s apparel manufacturing sector continued to slide, dipping 4.1 percent in November compared with the previous year. Nationally, they declined 6.4 percent.