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Did You Just Say A ‘Drive-Through General Store’?

May 29, 2009

What are Sears stores going to look like in the future? You might get a clue by visiting the retailer’s latest incarnation: a drive-through general store.

MyGofer debuted in Joliet on May 9 with little fanfare. The Sears name is nowhere in sight. Neither is Kmart’s. MyGofer wants no help or hindrances from Sears Holdings Corp.’s better-known brands. Shoppers can order online and pick up their purchases at a drive-through. They can also order at kiosks inside the showroom.

Sears calls it a marriage of online shopping and bricks and mortar. TheStreet.com called it “a bad cross between Amazon.com and Dairy Barn” and named MyGofer to its weekly “Five Dumbest Things on Wall Street” list earlier this month.

After years of high-profile format flops, Sears is testing its latest prototype far from Wall Street in a suburb about 50 miles west of Chicago, known for its casinos, NASCAR racing and ranking (before the housing crash) as one of the fastest-growing Midwestern cities.

“We are still ironing out a lot of the processes and making sure things run smoothly, so we haven’t shouted to the world yet to come on in,” said Neal Siegler, a former Circuit City district manager who joined Sears in February to run the Joliet store. “We’re relying on word of mouth.”

MyGofer occupies an empty Kmart store in a strip mall off Interstate Highway 55. Instead of a traditional store, the building is a warehouse with a showroom in front. There are no shelves or racks of products to touch. Instead product samples are grouped in displays — some under glass, some on the walls. They showcase the range of items MyGofer sells: Windex, a PlayStation video game player, jewelry, a laptop, a Craftsman cordless drill, a Barbie Beach Party Cruiser, Purina Beggin’ Strips.

The space is airy, clean and modern with silver tables and chairs. There are kiosks for placing orders on flat-screen computers and sales assistants in green T-shirts ready to explain how the process works. On the back wall is a giant screen tuned to CNN. An electronic board over the exit displays shoppers’ names and the status of their orders. Outside a covered bay has parking spaces for about a half-dozen cars.

Eric Plautz, 28, waits inside a sedan full of friends on a recent weekday as a MyGofer employee delivers a Hartz dog toy through the car window. Plautz said he placed the order online at home after reading about MyGofer on the Web.

Retail consultant Mara Devitt is skeptical that the idea will stick because shoppers can already order essentially the same products at Sears.com and pick them up at the store. She asks: Why spend the money on creating a whole new retail concept?

“The idea is valid, and that’s why they’re testing it,” said Devitt, a partner at Chicago-based McMillan Doolittle. “But getting people to change their behavior is very tough.”

For further information, visit: http://www.chicagotribune.com/business/chi-fri-notebook-retail-may29,0,6688468.story?track=rss


Retailers Exceeding Expections Because Expectations Were Low

May 28, 2009

Several apparel makers and retailers, including Polo Ralph Lauren, posted better-than-expected quarterly results Wednesday, helped by tight management of expenses and inventories.

American Eagle Outfitters, which topped expectations by a penny, said it was seeing early indications of its business stabilizing.

Expectations have declined for apparel retailers and manufacturers, which are among the hardest hit sectors in the recession as consumers trim spending for items other than essentials like food.

Polo, a fashion wholesaler and retailer with upscale brands like Polo and Club Monaco, said net income tumbled to $45 million, or 44 cents a share, from $103.5 million, or $1 a share, a year earlier.

But excluding charges, Polo said it earned 86 cents a share, soaring past analysts’ average estimate of 40 cents, according to Reuters Estimates.

Revenue in the period, which ended March 28 and was the fourth quarter of Lauren’s fiscal year, fell 1 percent to $1.22 billion, hurt by same-store sales declines and the stronger dollar, which reduced the value of overseas sales.

Stock in Lauren, which is based in New York, declined 35 cents, to close at $54.03 a share.

American Eagle, which caters to teenagers, posted a profit of $22 million, or 11 cents a share, down from $43.9 million, or 21 cents a share, a year earlier.

Excluding one-time items, profit was 8 cents a share, better than the 7 cents a share forecast by analysts.

Sales in the period, which ended May 2 and was the first quarter of American Eagle’s fiscal year, fell 4 percent, to $612 million.

Stock in American Eagle, which is based in Pittsburgh, fell 15 cents, to close at $14.33 a share.

For further information, visit: http://www.nytimes.com/2009/05/28/business/28retail.html


Surveyed: The Least Affected By the Downturn

May 28, 2009

A shopper profile report issued by mall media operator EYE and Arbitron, which identified three shopper segments — carefree, power and value — found that the 18- to 24-year-old carefree shopper has been least affected by the downturn.

According to the study, just half of the segment has jobs but is supplemented financially by parents. That additional support and a relative lack of obligations allow them to spend around $500 each month at EYE malls, which encompass over 3,500 panels in 250 shopping malls across the country.

Power shoppers skew female, tend to be between the ages of 25 and 44, and are more likely to have children in the household. The power mom shops for the entire family, visits more stores per mall visit and spends over $9,000 per year in EYE malls.

The value shopper specifically looks for sales while shopping and is twice as likely to buy items on sale as other shoppers. Even with these sale strategies, the value shopper spends nearly 25% more than the average shopper as they are triggered to spend more than they intended when they see good value in an offering.

Almost three-quarters of value shoppers are female and are likely to be between the ages of 25 and 44.

“The Adult Shopper Profile is a key measure of consumer spending and engagement with advertising,” said Alton Adams, CMO of Arbitron. “Advertisers can better target shoppers near the point of purchase by including these profiles in their place-based advertising decisions.” For further information, visit: http://www.chainstoreage.com/story.aspx?id=105469&menuid=443


Retail Sales Rise

May 27, 2009

Retail sales in the United States rose in the week ending May 23, the International Council of Shopping Centers-USB reported Wednesday.

Sales were up 0.8 percent in the week and 0.5 percent compared to the same week a year ago, the report said.

Around the country, “favorable weather helped trigger some seasonal spending,” the weekly report said.

Temperatures averaged 1.8 degrees Fahrenheit higher than the same week a year ago, Weather Trends International said.

Store traffic during week picked up “appreciably” in grocer, drug, discount, office supply and clothing outlets, the report said. For further information, visit: http://www.upi.com/Business_News/2009/05/27/Retail-sales-rise-in-week/UPI-98931243435583/


Retailers Supplying Consumers The Forever Sale

May 27, 2009

Retailers are keeping cool when it comes to markdown madness.

Even this past Memorial Day weekend, the traditional trigger for major spring clearances, stores appeared to take a more measured approach to markdowns than that seen last holiday season and earlier this year. And it may stay that way for the summer.

“Promotions through Memorial Day weekend appeared to be ‘deals not steals’ geared at specific categories,” Todd Slater, managing director and specialty retail, apparel and footwear analyst at Lazard Capital Markets, wrote in a research report Tuesday. “Fewer promotions indicate May is on track.”

“It’s sort of moderated. I don’t see anything improving greatly,” said one retail chief executive. “There’s been nothing as momentous as someone knocking down everything in the store 70 percent before Thanksgiving,” referring to Saks Fifth Avenue’s dramatic clearances last holiday season. “It’s really difficult to sell at full price. People have been marking down, but it’s been a little more subtle and not as blatant.”

Given the poor economy, retailers have been marking down spring merchandise almost since it hit the floor in January, offering one-day sales, private events or other promotions and have been fairly successful in getting inventories in line with demand. This month has been marked by steadily increasing markdowns and merchandise deals. Retailers realize they are by no means out of the woods and the vast majority are yielding negative same-store sales results. Business is worst at the high end, and best at a handful of off-pricers, outlets and low-price stores such as The TJX Cos. Inc. and Wal-Mart Stores Inc.

Yet the general tone has changed. There’s none of the despair and desperation that characterized the fourth quarter and early 2009 when store traffic screeched to a halt and retailers responded with chaotic promoting. The price cutting now seems more planned and organized and there’s a growing sense coming from the likes of Saks Fifth Avenue, Macy’s and other big retailers that business has bottomed out despite the rising unemployment rate.

Memorial Day weekend, according to store executives and analysts, was buoyed by some pent-up demand; many buy-one, get-one free deals [known as BOGOs] at youth specialty stores; steep markdowns up to 70 or 75 percent in select categories at department stores, and near ideal weather conditions, particularly in the Northeast.

“Going into Memorial Day, we saw a big pickup in promotional activity and a big pickup in traffic. That tells me there was ground to be made up,” said Amy Noblin, research analyst, Pali Capital. However, “Retailers continue to work through clearance merchandise fairly well as promotional breadth moves down in many cases.”

Noblin noted that Aéropostale Inc. extended its BOGO promotion from tanks and camis to shorts and polos; American Eagle Outfitters Inc. stayed at a similar promotional breadth, even with the arrival of the summer update floor set, and Zumiez saw “a drastic reduction in depth of markdowns compared with previous visits; however, the store still remains promotional.”

“It depends on the player, but my sense is that traffic last weekend was flattish,” said one retail ceo of a specialty chain. “For the month, it may have been down a few points, but it’s looking a little better.”

In addition, comparisons are fairly easy, as Slater noted. He said the retail group faces a 1.4 percent comp in May (except Wal-Mart) and that specialty stores are up against a negative 7 percent in May, while department stores cycle negative 3.1 percent in May.

Macy’s staged a 25 to 75 percent off storewide sale with an extra 15 percent off coupon for selected items. Bloomingdale’s offered an extra 40 percent off almost all permanently reduced women’s fashion, making for 50 to 75 percent off, and 25 to 40 percent off swim, sandals and a selection of designer handbags. Nordstrom started its traditional half-year sale at 33 percent off and higher for select items.

Henri Bendel offered up to 60 percent off a large selection of apparel and accessories.

However, major retailers don’t expect price promotions to reach the levels they did late last year. “I certainly don’t anticipate the kinds of aggressive markdowns we were seeing last fall, largely because you don’t have the same kind of supply-and-demand situation,” Saks’ chairman and chief executive officer Stephen I. Sadove said last week, while the store’s president and chief merchandising officer Ron Frasch added, “Markdown dollars were very much in control. We have been very cautious with the promotional portion of our business. We have every hope of running a normal pattern of promotions this quarter.”

Earlier this month, Macy’s ceo Terry Lundgren said retailers have returned a “pretty regular promotional cadence,” similar to spring 2008. “Supply and demand is back in order again.”

Michael Celestino, executive vice president of stores at Barneys New York, characterized the Memorial Day weekend’s business as “pretty much on par with the trend for the season.”

As far as Barneys’ private sale offering 40 percent off selected merchandise for a week through Memorial Day, Celestino said, “We got a good response. It was what we expected. People are still being motivated by sale. The private sale pretty much followed the normal cadence of our markdown strategy at this point. Items and percentage [discounts] were pretty normal with what we typically do in a normal season.” Barneys will run final markdowns in July in advance of its warehouse sale in August.

Even on Madison Avenue, where the designer business is hurting and customers aren’t satisfied with markdown levels, there is some light ahead. Shipments are coming in earlier than a year ago, potentially spurring traffic. “Our stores are ready for newness,” said Diane Levbarg of Missoni. “Ninety percent of all pre-fall Missoni is ready to be shipped, in time for the beginning of June. I am very pleased with our production department in Milan.”

For further information, visit: http://www.wwd.com/retail-news/the-forever-sale-retailers-slow-pace-of-markdowns-2145445#/article/retail-news/the-forever-sale-retailers-slow-pace-of-markdowns-2145445?page=1


Uncertainty Still In the Air

May 27, 2009

Apparel retailers Chico’s FAS Inc, Charming Shoppes Inc, American Eagle Outfitters Inc and Polo Ralph Lauren Corp posted better-than-expected quarterly results Wednesday, helped by tight management of expenses and inventories.

American Eagle also said it is seeing early indications of its business stabilizing, though it forecast second-quarter earnings that could be below Wall Street estimates.

Apparel retailers and manufacturers have been among the hardest hit sectors in the recession as consumers cut back on spending for anything other than essentials like food.

Retailers have responded by cutting inventories and sharply reducing expenses in order to preserve profits or mitigate losses as sales fall.

While consumer confidence has improved, unemployment continues to rise, credit remains tight and home values continue to fall, keeping pressure on consumer spending, which makes up more than two-thirds of the U.S. economy.

“We are now two months into fiscal 2010 and there is still tremendous uncertainty regarding how long the current retrenchment in consumer spending will last or how much additional deterioration in personal consumption may occur,” Polo Chief Financial officer Tracey Travis said on a conference call with analysts.

PROFIT FALLS AT AMERICAN EAGLE, POLO

American Eagle, which caters to teenagers and young adults, said net income tumbled to $22.0 million, or 11 cents per share, in its first quarter, ended on May 2, from $43.9 million, or 21 cents per share, a year earlier.

Excluding items, profit was 8 cents per share. Analysts on average were expecting 7 cents per share, according to Reuters Estimates.

Sales fell 4 percent to $612 million.

On the women’s apparel side, Chico’s said net income in its first quarter was $14.5 million, or 8 cents per share, up from $12.7 million, or 7 cents per share, a year earlier.

Excluding charges, the company earned 11 cents per share, topping analysts’ average estimate of 8 cents per share, according to Reuters Estimates.

Chico’s cited a higher gross margin and lower expenses for its improved profit.

As previously reported, sales edged up to $410.6 million from $409.6 million. Same-store sales fell 3.2 percent versus the 17.5 percent drop in the year-ago quarter.

Charming Shoppes, which specializes in plus-size clothing with chains like Lane Bryant, had a surprise profit of 1 cent per share, excluding items, according to Reuters Estimates. Analysts were expecting a loss of 5 cents per share.

Charming Shoppes’ sales fell 16 percent, but total expenses also fell 16 percent.

Polo Ralph Lauren, the fashion company that makes upscale brands like Polo and Club Monaco, said net income was $45 million, or 44 cents a share in its fiscal fourth quarter ended March 28, down from $103.5 million, or $1 per share, a year earlier.

Excluding impairment and restructuring charges, the company said it earned 86 cents per share.

Analysts on average forecast 40 cents a share, according to Reuters Estimates.

Polo shares rose $3.20 to $57.58 on the New York Stock Exchange on Wednesday morning, while Chico’s rose 67 cents $9.52, and American Eagle rose 71 cents to $15.19. Charming Shoppes rose 15 cents to $3.73 on Nasdaq. For more information, visit: http://www.nytimes.com/reuters/2009/05/27/business/international-usa-retail-apparel.html


Consumers Are More Optimistic

May 26, 2009

Consumer confidence extended its rebound in May, soaring to the highest level since last September as more shoppers are feeling the worst of the recession is behind them.

The Conference Board said Tuesday that its Consumer Confidence Index, which had dramatically increased in April, zoomed past economists’ expectations to 54.9 from a revised 40.8 in April. Economists surveyed by Thomson Reuters were expecting 42.3. In February, confidence levels had hit a new historic low of 25.3.

The reading marks the highest in eight months when the level was 61.4. The levels are also closer to the year-ago’s 58.1, though the widely watched barometer is still below 100, which indicates a healthy economy.

The Present Situation Index, which measures how shoppers feel now about the economy, rose to 28.9 from 25.5 last month. But the Expectations Index, which measures shoppers’ outlook over the next six months, climbed to 72.3 from 51.0 in April.

Investors focused on the upbeat sentiment reading, shaking off a mostly downbeat report on the housing market, also released Tuesday. In midmorning trading, the Dow Jones industrial average rose 130.62, or 1.6 percent, to 8,407.94.

“Looking ahead, consumers are considerably less pessimistic than they were earlier this year, and expectations are that business conditions, the labor market and incomes will improve in the coming months,” Lynn Franco, director of The Conference Board Consumer Research Center, said in a statement. “While confidence is still weak by historic standards, as far as consumers are concerned, the worst is now behind us.”

The confidence report offered encouraging news to merchants,which are counting on consumers to be in the mood to spend after confidence plummeted to historic lows late last year but has been rising since March. A two-month stock rally has helped make shoppers feel a little better about their retirement funds, spurring dramatic rebounds in confidence in April and May levels.

Meanwhile, better-than-expected earnings results from such retailers as Sears Holdings Corp. and Gap Inc. have offered the latest evidence that spending has begun to stabilize, though overall business is still weak.

The size of the monthly increases in April and May in consumer confidence encouraged economists. Gary Thayer, chief economist at Wells Fargo Advisors, says that unless the economy suffers from major financial shocks, it looks like “we’ve turned the corner” on confidence.

“This is a significant change,” said Thayer. “While (consumers) are unhappy about their job situation and their home values, they see light at the end of the tunnel.” He added, however, sentiment has a way to go before shoppers go back to splurging. That can only happen when the job and housing markets, which have been holding down sentiment, start to turn around.

The latest report on home prices, released Tuesday, wasn’t comforting. Home prices fell at the fastest annual rate on record in the first quarter, though the pace of month-to-month declines continues to slow, according to a closely watched housing index.

The Standard & Poor’s/Case-Shiller National Home Price index reported home prices tumbled by 19.1 percent in the first quarter, the most in its 21-year history.

Home prices have fallen 32.2 percent since peaking in the second quarter of 2006 and are at levels not seen since the end of 2002.

Meanwhile, Americans continue to cut back on nonessentials like furniture while focusing on buying necessities as they worry about their jobs. The unemployment rate is expected to climb to 9.2 percent in May from 8.9 percent in April and employers are expected to shed a net total of 523,000 jobs, according to economists surveyed by Thomson Reuters. The Labor Department is expected to release unemployment figures on June 5.

The Consumer Confidence survey – whose responses were received through May 19 from a representative sample of 5,000 U.S. households – showed a marked improvement in consumers’ outlook for jobs. The percentage of consumers expecting more jobs in the months ahead increased to 20.0 percent from 14.2 percent, while those anticipating fewer jobs declined to 25.2 percent from 32.5 percent. The proportion of consumers anticipating an increase in their incomes edged up to 10.2 percent from 8.3 percent. For further information, visit: http://www.forbes.com/feeds/ap/2009/05/26/ap6464963.html


According to the Stocks, the Worst of the Recession is Over

May 26, 2009

A more upbeat mood among consumers is spreading to Wall Street.

Stocks jumped Tuesday after a research group reported consumer sentiment rose in May to the highest level since September.

The Conference Board’s Consumer Confidence Index vaulted to 54.9 from 40.8 last month, soaring past the 42.3 figure that economists surveyed by Thomson Reuters were expecting.

Investors watch that indicator closely to get a sense of whether consumers may start shopping more or making bigger purchases such as cars and homes, which could help get the economy going again. Spending by consumers makes up more than two-thirds of U.S. economic activity.

Stocks had opened lower after North Korea reportedly defied the United Nations by firing two short-range missiles after detonating a nuclear bomb underground on Monday. The U.N. Security Council condemned the test.

Jim King, chief investment officer at National Penn Investors Trust Co., said the improvement in consumer confidence surprised investors. With unemployment still high and expected to go higher, many market watchers thought the mood on Main Street would remain gloomy.

“I think the consumer confidence figure is one that no one really pinned a lot of hopes on as going higher,” he said.

In midday trading, the Dow Jones industrial average rose 175.62, or 2.1 percent, to 8,452.94. The Standard & Poor’s 500 index rose 19.27, or 2.2 percent, to 906.27, and the Nasdaq composite index rose 52.60, or 3.1 percent, to 1,744.61.

Stocks dependent on strong consumer spending jumped. Macy’s Inc. (M, News) rose 52 cents, or 4.7 percent, to $11.71, while Best Buy Co. (BBY, News) advanced $2, or 5.7 percent, to $37.18. Home builder KB Home rose 76 cents, or 5.2 percent, to $15.40.

The gains in home builder stocks came as investors shook off a mostly downbeat reading on the housing market. S&P/Case Shiller reported a 18.7 percent drop in its March home price index. The decrease was a little bigger than in February, and slightly larger than economists predicted.

Investors have been questioning whether the stock market’s massive two-month rally can be sustained given the continuing weakness in the global economy. The Dow is still up 26.4 percent from its 12-year low hit on March 9.

After mixed economic data over the last couple weeks, as well as a huge number of stock offerings by banks, the market is likely to stay volatile in the coming weeks, said Steven Goldman, chief market strategist at Weeden & Co. “The market’s had a pretty huge gain here,” he said.

Last week, the major market indexes ended modestly higher, but only after seesawing on worries about the economy and banks.

This week, the market is not only hoping for signs of global stability, but also watching General Motors Corp. (GM, News) as the automaker’s June 1 restructuring deadline approaches. GM is expected to close more plants and force more employee concessions as it tries to avoid bankruptcy court.

On Friday, GM borrowed another $4 billion from the U.S. government, after already received $15.4 billion. GM shares fell 20 cents, or 14 percent, to $1.23.

In other trading, the Russell 2000 index of smaller companies rose 19.02, or 4 percent, to 496.64.

About five stocks rose for every one that fell on the New York Mercantile Exchange, where volume came to 488.3 million shares.

Bond prices fell, pushing the yield on the 10-year Treasury note up to 3.47 percent from 3.46 percent late Friday.

The dollar was mixed against other major currencies, while gold prices fell.

Light, sweet crude fell 7 cents to $61.60 per barrel on the New York Mercantile Exchange.

Overseas, Japan’s Nikkei stock average fell 0.4 percent. In afternoon trading, Britain’s FTSE 100 rose 1.1 percent, Germany’s DAX index rose 1.4 percent, and France’s CAC-40 rose 1.2 percent. For further information, visit: http://www.examiner.com/a-2034924~Stocks_jump_after_consumer_confidence_level_surges.html


Retailers Create an Eco-Friendly Niche May 26, 2009

May 26, 2009

The Hive, a new boutique in Costa Mesa, Calif.’s The Lab shopping center, is taking a recession-friendly approach to eco-retailing.

Owner Natasha Quinn, who worked as the buyer for the Habit boutique, which formerly occupied the 2,200-square-foot space, has dedicated approximately 400 square feet to eco-conscious apparel, housewares and body products. “The concept for The Hive is to have a very feminine boutique that is divided into different departments. We opened two months ago, and from the beginning, we were very conscious of the recession, so we make sure to stock great, reasonably priced product that makes shopping possible and fun for our customer,” Quinn said. “Our ‘eco’ department definitely adheres to those specifications.” Other departments in The Hive include women’s, kids’, vintage, apothecary and books.

The Hive’s eco section, which accounts for about 15 percent of its business, is housed on a raised platform with signage that differentiates it from the rest of the store’s offerings. Made of reclaimed wood, vintage furniture and recycled rope, the eco section sells eco-conscious apparel with a contemporary vibe. “We look for pieces that are affordable and fashion-forward. Totally organic lines can be pricy, so we focus on buying tops and dresses that retail for between $50 and $100. Customers don’t necessarily come in looking for green fashion, but I think they are interested in it and are willing to buy a great $38 sustainable T-shirt.” J Brand’s eco-conscious denim shares the section with offerings from brands such as Trinity and Suburban Riot. Elsewhere in the store, Quinn sells goods from Lollia, Voluspa, Heartloom, Current/Elliot, Hudson, Dolce Vita and Deer Creatures.

Quinn said customers’ response to the eco section has been great and she hopes to expand the number of brands represented in it. “With our customer being price-conscious at this moment, we will need to pick and choose our lines carefully to still offer eco-friendly lines with a desirable price tag,” she said. For further information, visit: http://www.apparelnews.net/news/retailing/Retailer-Carves-Out-Green-Niche


Recession-Proof Denim

May 26, 2009

For fashion blogger Jessica Morgan, finding the right jeans is almost a religious experience.

Morgan just bought a pair of $100 Madewell jeans, but her denim nirvana comes from True Religion Apparel Inc. of Vernon. Even at $170 to more than $300, the designer dungarees represent a sacrifice she’s willing to make despite the fraying economy.

“They make my butt look perky,” said Morgan, 33, who owns five pairs of True Religion Brand jeans. “That is the Holy Grail of jeans.”

“For women in Los Angeles, who wear jeans almost all of the time, it’s an investment,” said Morgan, half of the duo responsible for the popular “Go Fug Yourself” blog devoted to outing celebrity fashion victims. “If I wear them every day, they really are not that expensive.”

While consumer spending remains woefully depressed, expensive designer jeans have been one of the few bright spots for manufacturers and retailers, according to NPD Group Inc., a market research company.

Sales of premium brand jeans grew by 17% during 2008 and eked out a 2.3% increase in the most recent three-month period that ended in February, making premium denim one of a few “pockets of growth in an otherwise fizzling fashion market,” NPD Group said.

“That is the time period that was the most challenging in terms of consumer spending, so any growth during that time is significant,” said Marshal Cohen, NPD Group’s chief industry analyst. “With the newfound focus on fit by some of the commodity brands coupled with women’s never-ending quest for the perfect pair of jeans, the passion for denim is alive and well.”

Denim is one area in which some of the most fundamental rules of the global economy don’t appear to apply. Other industries turn to the least expensive foreign labor pools for production. Jeans makers have found that the high cost of manufacturing in the U.S. is actually a selling point.

“In the U.S., people care that their jeans are manufactured here,” said Eric Beder, an analyst for Brean Murray, Carret & Co. “To consumers outside the U.S., it’s crucial. Jeans are considered an American tradition. To be considered a real premium brand, you need to have the ‘made in the USA’ label on it.”

Adriano Goldschmied, the Italian designer of European jeans brands Diesel, Replay, Goldie and Rivet, agrees. In 2007, Goldschmied’s luxury denim label GoldSign merged with Paris-born Jerome Dahan’s Citizens of Humanity, based in Huntington Park.

“Nothing more than jeans represent the spirit of America,” Goldschmied said. “It’s about going to the mall, driving, having fun at the beach. Jeans still represent the life.”

Denim buyers aren’t going to pull the U.S. economy out of recession, but “it does show that there are people out there who are willing to pay for this sort of thing,” Beder said. “It’s a relative bargain. The most you are going to pay is $200 to $300. It’s affordable luxury. It lasts, and it has a lot of versatility that other clothing items do not have.”

Karen Short, an analyst with Friedman, Billings, Ramsey, said that this year has been tough for even the most resilient brands. Short noted that it is difficult to maintain sales at boutique clothing stores when the boutiques are folding.

Recent financial results show that the few publicly held premium jeans manufacturers are holding up fairly well.

True Religion beat analysts’ expectations with first-quarter net income that increased 10% to $7.6 million and net sales that rose 19% to $63.6 million, year over year. Joe’s Jeans Inc., a Commerce company whose pants retail for $120 and up, saw net income more than double to $800,000 and sales increase 8% to $16.5 million. Guess Inc. posted a 12% boost in adjusted net earnings of $55.3 million, excluding a $22.3-million non-cash impairment charge, and a 9% increase in revenue to $561.1 million in its most recent quarter.

But VF Corp., which owns brands such as low-cost Wrangler and high-cost 7 for All Mankind, said first-quarter profit fell 32% to $100.9 million and revenue slipped 7% to $1.73 billion as shoppers shied away from its upscale denim.

Some companies are trying to combat faltering consumer spending, in part by opening more of their own stores.

Joe’s Jeans and True Religion made up for weakness at department stores and boutiques by going directly to customers with their own stores and websites. True Religion’s direct sales increased 96% to $23.1 million. The company had 49 of its own stores by the end of the first quarter, up from 18 stores in March 2008.

“The most important thing about my jeans is the fit,” said True Religion chief Jeffrey Lubell, whose products are made in L.A. “I try to make your jeans feel like they have been in your closet for 30 years.”

At the recent opening of the True Religion store at the Westfield Century City Shopping Center, the retailer’s 51st, Scott Icenogle, a marketing director at MGM, bought a pair of straight-leg Ricky jeans. Icenogle, 39, said he was treating himself after getting a break on his 2008 taxes.

“They fit me well and I know they are going to last a long time,” the Hancock Park resident said.

Joelle Forte Casady of Castle Heights is another true believer in quality denim. The wardrobe stylist recently added to her collection of about 30 pairs, which includes five by Hudson Brand and 12 by Frankie B.

“I wear jeans five out of the seven days of the week. If I’m spending $150 to $250 a pair, I feel I’m getting my money out of it if I wear them 10 times, and I wear them a lot more than that,” Casady said. “That’s instead of some sexy heel shoes I might wear six times a year.”

“When you think it looks nice and feels right on you,” she said, “then it is worth every penny.”

For more information, visit: http://www.latimes.com/business/la-fi-jeans22-2009may22,0,2251065.story