As New York's fashion week starts Friday, many designers are courting overseas retailers in an effort to make up for expected cutbacks in orders from U.S. department stores.
Oscar de la Renta Ltd. expects buyers from 25 foreign stores at its runway show Wednesday, compared with three or four who have made the trip in the past, says Alex Bolen, chief executive officer of the New York fashion house.
Designers Thakoon Panichgul and Derek Lam, meanwhile, have added longer hemlines and, in the case of Mr. Lam, long sleeves, to appeal to buyers from the Middle East. Mr. Lam plans to unveil the styles in his showroom rather than on the runway.
Menswear designer John Varvatos is skipping the New York runways this season, after showing for nine consecutive seasons. Instead, he presented his line in Milan in June, as part of an effort by Greensboro, N.C.-based VF Corp., which owns the label, to boost business in Europe and Asia. The label is expected to generate about $80 million in revenues at retail this year.
The designers are responding to the dismal state of consumer spending in the U.S., which has caused retailers to trim orders even for designer clothes.
Stores typically place orders at showroom appointments after shows in Manhattan's Bryant Park -- roughly four to six months before the styles show up in stores. But with August sales continuing to sag, some U.S. retailers have been signalling that they won't be buying as much as in years past. 'We're going to be very conservative' in purchasing spring designer looks, Saks Inc. Chief Executive Officer Stephen Sadove told investors in late August, noting a wobbly stock market has left wealthy Americans insecure about their finances.
In wooing foreign retailers, designers are taking advantage of the weak dollar. 'The economy here is just so terrible. The dollar is horrible, which makes their buying power amazing,' says Carmen Marc Valvo, who sells $600 cocktail dresses and evening gowns that retail for $1,500 to $3,000 at stores such as Saks Fifth Avenue. Although the dollar has strengthened lately, he adds: 'What we offer, and the price we offer it at, makes it like candy for the Europeans.'
After staging his usual runway show in New York, he plans to take his spring collection to a Paris showroom for the first time, so he can pitch his apparel to retailers from Europe and the Middle East.
Another thing U.S. designers have going for them is that they deliver fresh styles more frequently than European designers. 'Having newness on the floor all the time is great,' says Laura Larbalestier, a buyer for Selfridges & Co. in London, who has gotten more comfortable with American styles in recent years.
Designer Phillip Lim's clothes have sold well at the U.K. department-store chain, says Ms. Larbalestier, giving her confidence to add other U.S. designers such as Mr. Panichgul. At fashion week, she plans to check out several U.S. labels, including Rodarte and Erin Wasson.
Going global nevertheless can be risky for U.S. designers, many of whom run small businesses without a lot of financial backing. American styles don't always translate well, and there's no guarantee emerging markets such as Russia or China will continue to grow. Some designers say their European sales are already softening and they could delay expansion plans if the slowdown continues. What's more, while many U.S. designers buy fabrics and base some production abroad, leasing a warehouse or opening stand-alone stores certainly adds to their costs.
'When things weren't working in New York in the '80s and '90s, people would say, 'well, there's a good business in Japan,'' notes designer Vera Wang. But then the luxury market in Japan stalled. Still, earlier this year Ms. Wang began leasing a warehouse outside Hong Kong to speed shipments to Far East customers.
The economic slowdown is adding urgency to designers' overseas push. Tracy Reese, whose U.S. sales began softening this summer, signed a London distributor last month to add customers in Italy, Spain, Ireland and Germany. She hopes international sales, which now contribute 15% of her business, will generate 25% of sales by the end of next year.
At Oscar de la Renta, total sales are up more than 25% so far this year, but international sales are stronger and now account for 30% of the total, Mr. Bolen says. The privately held company doesn't disclose financial information. Last year, Oscar de la Renta brands were estimated to generate retail revenues of about $750 million. The company plans to open boutiques in October at Harrods in London along with stores in Athens and Madrid this fall. A Moscow store is planned by year end.
Some small labels say they have little choice but to go overseas. 'We knew if we wanted to stay alive we had to,' says eveningwear designer Pamella DeVos. A number of U.S. specialty stores that sold her Pamella Roland label have closed and wholesale sales in the U.S. were flat in 2007, she says.
She hit the road, displaying her collection at a Paris showroom earlier this year. In October, she plans a runway show and party in Dubai in conjunction with a trunk show at Saks Fifth Avenue there. She hopes overseas sales will generate 40% of her business by 2010, up from 25% now, and says sales so far this year are up a bit, due to new orders from stores in Russia, Japan and France.
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