HONORING CHRISTIAN DIOR/3 GUCCI’S LEATHER LINE/9 Women’s Wear Daily • The Retailers’ Daily Newspaper • May 17, 2005• $2.00

WWDTUESDAYReady-to-Wear/Textiles

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See Limited, Page12

Limited’s Tough 1st Qtr.:Earnings Fall 76 PercentAs Express Unit FaltersBy David Moin and Meredith Derby

NEW YORK — First-quarter earnings atLimited Brands Inc. dropped 76 percentand missed analysts’ expectations asmerchandise shortcomings at Expressdragged down results.

The specialty retailer on Monday alsoforecast second-quarter and full-yearearnings below analysts’ projections.

“There’s no silver bullet” for Express,Limited chairman and chief executiveLeslie H. Wexner said during the annualshareholders’ meeting at corporateheadquarters in Columbus, Ohio. A“number of fashion judgments have been

SectionII

Sourcing Horizons

Sourcing Horizons

Inside:

NEW YORK — “East meets West meets Park Avenue.” That’s how

Dennis Basso described the fabulous collection he showed on Monday

afternoon. In it, he ditched all traces of camp in favor of a highly

polished presentation in which he delivered an earthy boho attitude

with ultrarefined execution. Here, Basso’s ruffled beauty in sueded

mink and Russian sable. For more fur news, see pages 6 and 7.

NEW YORK — “East meets West meets Park Avenue.” That’s how

Dennis Basso described the fabulous collection he showed on Monday

afternoon. In it, he ditched all traces of camp in favor of a highly

polished presentation in which he delivered an earthy boho attitude

with ultrarefined execution. Here, Basso’s ruffled beauty in sueded

mink and Russian sable. For more fur news, see pages 6 and 7.

WWD.COM

GENERALFirst-quarter earnings at Limited Brands dropped 76 percent, asmerchandise shortcomings at Express dragged down results.

A reorganization of management at VF Corp. will see a new head of globalbrands and the creation of a global supply organization.

EYE: Michelle Monaghan goes back to her roots in “Kiss, Kiss, Bang,Bang”…Princess Ira von Furstenberg and her objets d’art.

FASHION: Fur is a sure thing for fall, as evidenced by Dennis Basso’s boffoshow, Michael Kors’ sleek styles and handbags in mink and rabbit.

Born from a creative challenge, La Pelle Guccissima is intended to boostGucci’s leather segment and pump its accessories business.

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WWDTUESDAYReady-to-Wear/Textiles

● DOCKERS’ PRESIDENT: Levi Strauss & Co. has tapped JohnGoodman to be president of the company’s U.S. Dockers business.Goodman, 49, comes to Dockers from Kmart Holding Corp., wherehe had been senior vice president and chief apparel officer sinceDecember 2003. Goodman will replace Bobbi Silten, who is step-ping down in June. A year ago, Levi’s put Dockers on the sellingblock to raise money to pay down a chunk of the firm’s $2 billiondebt. In October, the company called off the sale because no bidshad been high enough. The U.S. Dockers brand posted gains dur-ing its most recent quarter, rising 3.8 percent in sales to $147.2million. Operating income increased 33.3 percent to $33.4 million.

● SCARPA HONORED: On Saturday, Roberta Scarpa receivedthe Designer of the Year Award at Miami Fashion Week, whichwas held last Wednesday through Saturday. The Venetian-borndesigner, who presented 25 styles from her fall-winter collectionthat closed the fashion week, was given the award for her suc-cess as an entrepreneur and stylist. Scarpa is represented inNew York by Attila at 552 Seventh Avenue, and the line is cur-rently sold in 40 stores in the U.S. and Canada. Scarpa and herhusband, Rinaldo Lorenzon, own Dressing, the Treviso, Italy-based firm that produces several international brands and gen-erated $69 million in sales in 2004.

● A-OK: The board of directors of the Fair Labor Association has ac-credited six participating companies’ compliance programs, signi-fying satisfactory completion of a three-year initial implementationperiod and a find by the FLA that each company is in substantialcompliance with the association’s requirements to implement a rig-orous workplace code of conduct in factories that make the compa-ny’s products. The firms are Adidas-Salomon, Eddie Bauer, LizClaiborne, Nike, Phillips-Van Heusen and Reebok. “Collectivelythese companies are responsible for consumer products made in2,800 factories in 62 countries. Each of them has worked hard to es-tablish a workplace standards program that complies with FLA’sconsiderable requirements,” said Auret van Heerden, presidentand chief executive officer of FLA, in a statement.

In Brief

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By David Moin

NEW YORK — Saks Inc. has pro-moted Kevin Wills to executivevice president of finance andchief accounting officer, report-ing to R. Brad Martin, chairmanand chief executive officer, andthe audit committee of theboard of directors.

It’s a key appointment, par-ticularly in light of last week’swave of forced departures atSaks Inc. and the Saks FifthAvenue division stemming frominvestigations into impropercollections of vendor allowancesand accounting practices. TheSecurities and Exchange Com-mission, the U.S. Attorney forthe Southern District of NewYork and Saks itself have beenconducting probes.

Wills succeeds Donald Wright,the former chief accounting offi-

cer, who was among those askedto resign. Others forced out wereDonald Watros, the chief admin-istrative officer of the Saks FifthAvenue Enterprises, and BrianMartin, a senior vice presidentand brother of R. Brad Martin.

Last week, eight merchantsworking in the bridge depart-ment of SFA were also let go, ac-cording to several sources at ven-dors and retailers in New York.Key bridge vendors at Saks in-clude DKNY, Ellen Tracy, AnneKlein, Theory and Elie Tahari.

Others at SFAE and Saks Inc.are receiving disciplinary ac-tion, including R. Brad Martinand Saks Inc.’s chief financialofficer, Douglas Coltharp, both ofwhose bonuses are being eitherreduced or eliminated. In addi-tion, Coltharp no longer willhave responsibility for account-ing or financial reporting but

will continue to supervise treas-ury, strategic planning, externaldevelopment and real estate.

Wills, a certified public ac-countant, joined the company in1997 as vice president of finan-cial reporting, rose to senior vicepresident of strategic planning in1998, and then to senior vicepresident of planning and admin-istration for the Saks departmentstore group in 1999. In 2003, Willswas promoted to his most recentpost of executive vice presidentof operations for Parisian, wherehe oversaw the financial opera-tions, store operations, humanresources and merchandise plan-ning functions of that $700 mil-lion division.

Prior to joining Saks Inc.,Wills was vice president and con-troller for the Tennessee ValleyAuthority and an audit managerwith Coopers & Lybrand.

Saks Taps Exec VP of Finance

By Amanda Kaiser

MILAN — Benetton saw flat sales in the first quar-ter of the year as higher costs bit into profits.

Net profit for the three months ended March 31fell 16.9 percent to 23 million euros, or $30.1 mil-lion, from 28 million euros, or $35 million. Revenuedipped 0.8 percent to 378 million euros, or $495.2million, from 381 million euros, or $476.6 million.

Dollar figures have been converted from theeuro at average exchange rates.

Benetton said sales of casual clothing, its corebusiness, were 339 million euros, or $444.1 mil-lion, in line with the year-earlier period.

Operating profit for the quarter shed 21.5 per-cent to 36 million euros, or $47.2 million, from 45million euros, or $56.3 million. Benetton saidhigher costs linked to the expansion of its directlyowned retail network hurt margins.

Benetton said first-quarter investments rose to23 million euros, or $30.1 million, from 21 millioneuros, or $26.3 million. Of this year’s expendi-

tures, about 15 million euros, or $19.7 million,went toward commercial activities.

Meanwhile, a Benetton board meeting namedAlessandro Benetton as a vice president.Alessandro is the 41-year-old son of presidentLuciano Benetton and is being groomed to oneday take over the company’s helm. Shareholdersvoted to modify corporate statute to allow thecompany to have two vice presidents. Alessandrowill share the title with his uncle, Carlo.

Benetton’s board also gave Alessandro Benettona mandate to expand the company’s activities inAsia, especially in China and India. Last month,Alessandro Benetton traveled to China to startstudying the market. Benetton plans to open 40stores there this year, including flagships in Beijingand Shenzhen. The goal is to roll out as many as200 stores in China by 2008.

Alessandro Benetton, who already sits on theboards of Benetton and other family controlledbusinesses such as Edizione Holding and Autogrill,founded merchant bank 21 Investimenti in 1993.

Benetton Net Declines 16.9%

By Ross Tucker

NEW YORK — A reorganization ofVF Corp.’s management put intoplace a new head of global brands,created a global supply organiza-tion and led to the departure of34-year veteran Terry Lay.

The branded apparel giant onMonday promoted Eric Wisemanto executive vice president ofglobal brands, effective June 1.Wiseman, 49, will be responsiblefor the growth of the company’score brands, which include Lee,Wrangler, The North Face, Jan-Sport and Nautica. Six presi-dents of VF’s jeanswear, inti-mates, outdoor and sportswearcoalitions will report to him.

Wiseman joined VF in 1995,and has been vice president andchairman of the company’s out-door and sportswear coalitionssince February 2004.

Generating synergies be-tween brands has been a focusof management for some time.Mackey J. McDonald, chairmanand chief executive officer, saidthe new management structurewill help efforts across the com-pany’s business segments.

“This allows [our brands] towork more closely together and,at the same time, remain very fo-cused on their specific brands,”McDonald said.

On the supply-chain side, thecompany has tapped GeorgeDerhofer, 51, to head a new globalsupply organization aimed at con-solidating that function. Derhoferwill assume responsibility for allmanufacturing, sourcing, opera-tions and information technology,and will continue to oversee thecompany’s imagewear coalition.

“[Supply chain] has been acompetitive weapon for VF for

many years,” said McDonald. “Wewant to maintain the advantagewe feel we have in that area.”

Several other executiveswere promoted or given new re-sponsibilities, as well.

McDonald said the companyhas been preparing for thechange for the last two years bybringing in outside talent andgrooming internal candidates.

“It is a significant change inour organization, but very muchin line with our growth plan thatwe initiated at the beginning oflast year and will be continuingfor the next three-and-a-halfyears,” McDonald said.

That evolution will not includeLay, chairman of the jeanswearcoalition since February 2004.Lay has announced his retire-ment and, McDonald said, willphase out of the company by theend of June.

Lay, who was 57 years old atthe time the company filed itsmost recent proxy statement inMarch, joined VF in 1971. Heserved as president of the Lee di-vision from 1996 to 1999 and chair-man of the international jean-swear coalition from 2000 to 2004.

VF Corp Revamps Upper Management

The embroidered, beige cotton tunic andstriped cotton and linen capri pants, picturedon page 17 in Monday’s issue and cited as abestseller at Neiman Marcus, are by ElieTahari.

Correction

2 WWD, TUESDAY, MAY 17, 2005

Eric

Wiseman

WWD, TUESDAY, MAY 17, 2005WWD.COM

By Robert Murphy

GRANVILLE, France — LVMH MoëtHennessy Louis Vuitton chief Ber-nard Arnault watched the sun slicethrough the storm clouds just as hearrived here Saturday to inaugu-rate an exhibit honoring the 100thanniversary of the birth of Chris-tian Dior.

For the incredibly superstitiousDior, who was known to consult histarot card reader before every col-lection, the breaking sun wouldhave been just the auspicious turn required after a violentmorning downpour on this small Normandy seaside townwhere he was born.

Dior’s family house here is now a museum devoted to thememory of the man who invented the New Look and revolu-tionized post-war Paris fashion.

His centenary has given the museum a reason to put on itsbiggest and most ambitious show to date: “Christian Dior,Homme du Siècle,” or “Man of the Century.” It is meant todraw parallels between the influences of Dior’s youth here,his artistic proclivities as a young gallery owner in Paris andhis fashion career, which began in 1947 when he founded hishouse on the Avenue Montaigne.

Several dozen of Dior’s most recognizable dresses are juxta-posed alongside paintings of artists he knew or admired, fromChristian Berard and Balthus to Emilio Terry and André Derain.

A selection of Dior’s personal effects, including his lucky starand the daily diary he kept in 1957, the year he died of a heartattack after going to a spa in Italy to lose weight, are spotlighted.

And there are bottles of Dior perfume dating back to thedesigner’s first fragrance, Miss Dior, as well as confections cre-ated by his successors, from Yves Saint Laurent, who catapult-ed to fame when, at 21, he succeeded the great couturier, toJohn Galliano, who guides the house today.

But it is the quaint pink stucco belle époque house andthe contiguous ambling garden, much of which Diordesigned, that best bring to life other facets of his aestheticleanings and superstitions.

Each of his collections had a “Granville” model. And in everyshow at least one model wore his favorite flower, the lily of thevalley, which is planted abundantly in the garden in Granville.

“This was his paradise lost,” said Marie-France Pochna,

who wrote a 1994 biography called “Christian Dior.” “It wasthe starting point for everything. Everything he created afterwas his attempt at getting back a lost perfection.”

The Diors lived in the house in Granville, perched on a cliffwith magnificent views over the dramatic coastline and sea, until1910, when they moved to Paris. But they owned it until 1931,when Dior’s father went bankrupt and the house was sold off.

Arnault said he was struck by the extent to which thehouse had been integrated into Dior’s symbolic universe.

“The pink of the house is Dior pink,” he said during apress conference.

Flanked by French Minister of Culture RenaudDonnedieu de Vabres, who has designated the Dior exhibitone of 12 in France this year with “national interest,” Arnaultrelated his own childhood memory linked to Dior. Herecalled that his mother used to wear the Diorissimo jas-mine-based fragrance.

“The garden here is redolent of jasmine,” said Arnault. “Ismell my mother in this garden.”

Dior is the cornerstone on which Arnault built the LVMHempire, with brands from Louis Vuitton and Celine toGivenchy and Kenzo. He got it as part of the bankruptBoussac textile business, which he acquired in 1984 for asymbolic franc. Dior had sales of 595 million euros, or $773.5million at current exchange, last year, with LVMH’s sales ris-ing to 13.2 billion euros, or $17.16 billion.

Donnedieu de Vabres called Dior representative of theFrench “cultural exception,” and the ambassador for “Frenchelegance” around the world.

“It is remarkable because [Dior] shows that culture is also aneconomic and industrial motor,” he said. “Culture can createvalue, employment and wealth. Culture is at the heart of ourinfluence [as a country] and our economic future.”

After a private visit of the exhibit with the minister,Arnault said he was impressed by the modernity of many ofDior’s creations.

“I was looking at a dress and thought it was a Galliano,”said Arnault. “I was very surprised to learn it was byChristian Dior. He was incredibly modern.”

He added, “Creation remains the bedrock of the house.Marketing comes after the creation.”

Asked if he ever second-guessed Galliano’s exuberant aes-thetic, Arnault said never.

“I’m very sensitive when I see a runway show,” he said. “I liketo be surprised, and it’s when I’m surprised that I know its good.”

“Christian Dior, Homme du Siecle” runs through Sept. 25.

HOMMES SWEET HOMMES: Taking over amagazine is never easy, but it’s a little lessdaunting when you can hit someone suchas Graydon Carter up for an assist. That’swhat Bruno Danto, the new editor in chiefof Vogue Hommes International, didMonday, hours before catching a planeback to Paris. Having succeeded RichardBuckley in February, Danto, who had beendeputy editor, is looking to broaden thetitle’s appeal beyond hard-core fashioninsiders. His model for the transformationis Vanity Fair, he said. “They have the bestwriters and photographers, but they stillhave the mass audience.” (Both titles arepart of Advance Publications Inc., parentof WWD.) Hence his hour-long sit-downwith Carter, Vanity Fair’s editor in chief.According to a Vanity Fair spokeswoman,Danto even asked Carter to writesomething for the next issue of VogueHommes, but Carter, who is gettingmarried next weekend, declined, saying hewas too busy.

Danto seemed less interested ingetting pointers from other Condé Nasteditors. He said he wouldn’t be involvedin any way with Men’s Vogue, which willlaunch this fall, around the time the nextissue of Vogue Hommes comes out. “Isee it as a competitor within the group,”he said. As for Cargo, Danto said hedoubted European men would have muchinterest in the shopping magazine format.“Taste is a French game. People like tohave their own style. They’re very picky

about this. Shopping, to me, is not reallya vision for a magazine.” — Jeff Bercovici

LOCKED AND LOADED: With its official launchjust days away, Radar has moved to solidifya couple of key positions on its masthead.Last week, the magazine hired GrayleHowlett as publisher, replacing Linda Sepp,who left in April. Howlett was most recentlypublisher of Tracks, the ill-fated music titlefor people older than 35. He was also anassociate publisher at Sports Illustrated.

Meanwhile, Radar’s creative director,Richard Christiansen, has agreed to comeon board full-time, according to editor inchief Maer Roshan. Christiansen, who wascreative director of Suede until itsFebruary demise, originally signed uponly for the now-completed first issue,and the talk was that he didn’t plan tostick around longer than that. But thatgossip appears to be wrong — for now, atleast. (Christiansen did not return calls.)

Speaking of the first issue, one storythat’s sure to cause a stir in media circles isJay Cheshes’ article on lunchtime at the FourSeasons. For the piece, Julian Niccolini, co-owner of the popular power-lunch spot,agreed to draw up an annotated seatingchart for 27 editors, moguls, politicians andcelebrities. Here’s him on Michael Eisner:“He’s clearly in love with Michael Ovitz.”And on Ovitz: “No one goes over [to talk tohim] anymore.” And on Bonnie Fuller: “I’mnot impressed with her at all.” Didn’tanyone ever tell Niccolini — who also pensa column on manners for Details — thatyou’re not supposed to talk about yourfamous patrons? Reached by WWD, he saidhe hadn’t seen the article, but didn’t think itwould be bad for business. “A lot of this

stuff is taken totally out of context. Myintention was not to upset anybody.” — J.B.

UNDER COVER: Imagine finding out you andyour toddler are on the cover of a magazinejust days before it hits newsstands.

Back in January, Marisa Noel Brown wasphotographed with her four sisters and theirvarious offspring at their parents’ new homeon the Caribbean island of Mustique. The

images weresupposed to befor the interiorof Town &Country’s Mayspecial homeissue, but abouta week beforethe issueshipped,Brown’s mother,Monica Noel,received an e-mail with thesurprising newsthat Brown’sfamily had

become the cover story. The e-mail didn’tindicate which image had been selected forthe cover, but a few days later, when Brownreceived her comp issues at home, shediscovered that she and her 18-month-oldson, Ford Brown, were featured on the glossy.

“I was happy. It was a cute picture,”said Brown. “But I was wondering how ithappened. Do they not know who it’sgoing to be? Do they know and not sayanything? Maybe they don’t want to getyour hopes up.”

Editor in chief Pamela Fiori demystifiedthe process, saying, “We never go into a

photo shoot knowing which image willgrace our cover. Rather, we review all ofthe images once they are shot and selectthe one that we feel best represents thatparticular issue.”

Brown added, “My husband was like,‘Was [our son being on the cover] evergoing to be discussed? Was anyone goingto ask?’ But Ford thinks it’s hysterical.Whenever he walks by, he says, ‘Mommyand Fordy?’ I don’t think he quiteunderstands yet. I’ll have to save a fewissues for his scrapbook.” — Sara James

TODAY IN COURT: The suspect in the ChristaWorthington murder, Christopher McCowen,is expected back in court today for apretrial conference. McCowen, the garbagecollector at Worthington’s Cape Cod house,has pleaded innocent to charges ofmurder, rape and armed robbery in thefashion writer’s 2002 stabbing.

Cape & Islands District AttorneyMichael O’Keefe, who was criticized formaking disparaging remarks about thevictim in Maria Flook’s book, “InvisibleEden: A Story of Love and Murder onCape Cod,” said it has not beendetermined who will prosecute the case.“I don’t know. That’s a year away. We willlook at people’s schedules and make thedecision at the appropriate time.”

Both sides agreed that it may take up toa year for the case to go to trial. McCowen’slawyer, Francis O’Boy, said he is consideringrequesting that the trial be moved or a jurybe selected from another county due to theinvestigation’s heavy media coverage. Heplans to request funds to hire an expertwitnesses to review the DNA evidence.

— Rosemary Feitelberg

Honoring Christian Dior on Centenary

MEMO PAD

The exhibit.

The Diors’ homein Granville.

Bernard Arnault and French Minister ofCulture Renaud Donnedieu de Vabres. PH

OTOS

BY

THIE

RRY

CHOM

EL

Marisa Noel Brown and

son Ford on the May cover

of Town & Country.

3

WWD, TUESDAY, MAY 17, 20054

CANNES — Michelle Monaghan is knownfor playing blondes in films like “TheBourne Supremacy,” but as a ceaselesslyambitious actress in “Kiss, Kiss, Bang,Bang,” which just premiered here, she’sback as a saucy va-va-voom redhead.

“I’m back to my natural color,” she says,stroking her long brown hair and soundingrelieved. “It’s me. It’s what I’m used to.”

Indeed, the bright, up-and-coming actresshas a strong sense of herself and her style. Aself-described “clothes whore,” she’s partialto Marni, Proenza Schouler and RolandMouret, just to name a few. She also loves highheels. “Bring on the Christian Louboutin,” shedeclares, flailing her long arms.

And given the growing buzz around thefresh-faced actress, she’ll have plenty ofopportunity to play dress-up. In addition to“Kiss, Kiss, Bang, Bang,” which got goodreviews here, the versatile and well-readMonaghan will be seen in the forthcoming “Mr.and Mrs. Smith,” with Brad Pitt and AngelinaJolie, and “Syriana,” opposite George Clooney.

Marching up the Croisette for the first timelast week, Monaghan, 28, couldn’t resistsnapping a picture of herself on the ubiquitous“Kiss, Kiss” film posters, which feature herwith co-stars Robert Downey Jr. and ValKilmer. “I’m a newbie at this,” she confessed.

Still, her fashion choices are on point.Monaghan opted for a slinky Elie Saab gownfor her maiden voyage on the Cannes redcarpet but said she’s partial to streamlinedcasual, such as her interview outfit of ayellow leather Roberto Cavalli jacket withmatador airs worn over a green Maylechiffon top and slim jeans.

Not that she has much time to shop thesedays. Monaghan just finished shooting astill-untitled film by director Niki Caro,with co-stars Charlize Theron, Sissy Spacek and Frances McDormand. It’s a fictionalized account of thefirst major successful sexual harassment case in the United States. Still, Monaghan, having spentmonths sparring with Kilmer and Downey Jr., can’t resist calling it a “chick flick.”

Despite her keen interest in fashion, Monaghan said she has no ambitions to become a designerherself — except for perhaps the bedding department. “I’d like to design pillows one day,” she says,revealing a quirky hobby. “It’s something me and my mom do. I’d like to go to the fabric shows.”

But as with her acting, Monaghan takes her handicraft seriously. Leaning into the table, she declareswith a laugh: “Martha Stewart, watch out!”

—Miles Socha

NEW YORK — While many of New York’ssocial ladies have only recentlyembarked on their own businesses,Princess Ira von Furstenberg has beencreating small objets d’art for the last 11years. That this is not a new endeavorfor von Furstenberg keeps hercircumspect about what she does. Work,alas, doesn’t get in the way of pleasure.

“It’s half a business, half a hobby,”she says at The Chinese PorcelainCompany on Park Avenue, which isexhibiting a selection of her latest

pieces through Saturday. “It’s fun. It gives me a little satisfaction.I don’t want to kill myself for work. You have to do it with arelaxing attitude.”

The business started when von Furstenberg — who in herlifetime has been married to the German-Spanish Prince Alfonso

von Hohenlohe and the Brazilian industrialist “Baby” Pignatari andworked as an actress under contract to Dino De Laurentiis — waslooking for hostess gifts to give to friends. Cartier and Tiffany didn’thave anything original, in her opinion, so she decided to makeanimal sculptures herself. Those pieces have since become her mostpopular. The current presentation includes such beasts as a rock-crystal elephant with emeralds, a rock-crystal dolphin with ruby eyesholding an enameled ball and a rhinoceros made of turquoise with agold chain decoration.

“Everything is just mass produced,” she explains of the kinds ofcrafts around these days. “I’m one of the few left who do one-of-a-kind.”

Von Furstenberg likes to keep her prices relatively low, too. Theaforementioned animals run between $1,500 to $2,500. The mostexpensive item in the show is a $45,000 pair of crystal candlesticks,but most are below $4,000. “They don’t ruin you,” she insists.

Having 11 years under her belt has given von Furstenberg an eye.While she spends much of her travels socializing, she has the addedimpetus of shopping, since she’s always on the lookout for things thatcan be remounted. “You can’t buy objects that are too overdonealready or too expensive,” is a motto.

Desired destinations change over the years. Turkey, where she’sfound many pieces in the past, has become too expensive. Havingmined many of her sources in Morocco, she’s over it. “India is theplace now, I think.” She plans to spend two months there at the endof the year, after she’s moved to her apartment in Rome, the citywhere many of her objects are now produced.

But she doesn’t collect her pieces herself, much preferring to visitthem at the houses of friends who’ve purchased them. (Lynn Wyatt,for instance, is a friend and client.) “I enjoy making them and gettingrid of them,” she explains. “I’m quite happy, because I like to makemoney to create new things. I don’t want to spend my own money todo this, but to spend the new money I’ve earned.”

— Marshall Heyman

PARIS — Take a pinch of PJ Harvey, anounce of Björk, the pipes of BillieHoliday and the gap-toothed smile of ayoung Jane Birkin and you get La BrisaDay Roché, a 31-year-old Californian inParis who’s just been signed by theFrench arm of the legendary Blue Notejazz label.

With photographers already circlingin interest, self-styled Day Roché standspoised — on her towering Japaneseplatform sandals, no less — to seducemusic and fashion circles alike.

“My physique gives the feeling of apinup look, and my voice goesnaturally to jazz,” explains the singerafter a recent knockout gig at Paris’trendy Le Baron. “But I’m really tryingto experiment with rock ’n’ roll.” Shedescribes her performance style as“intimate, cinematic, pop rock ’n’ rollwith a Sixties sensibility.” Day Roché’sas yet untitled first album is slated for release this fall in France, with an international rollout to follow.

The musical combination parallels Day Roché’s fashion sense, also a clash of styles that somehow works. She’ll wear,say, a pair of slim pants from the Sixties with an Adidas men’s running top cinched at the waist and accented withdiamanté cuffs she sews on herself. “I’m particular about what I like, so it’s easier to make it,” says Day Roché, whoshops in charity and activewear shops.

But for diva impact, the singer says exaggerated accessories are key. A huge wrestling belt, for example, is somethingshe’ll wear over tight black pants. Or she’ll string toy guns on a faux leopard skin belt one day and strap them to a kid’splastic crown the next for a kitsch hat à la Courtney Love. “Americans improvise with what they’ve got,” reasons DayRoché, who grew up combing Californian thrift stores.

As for inspirations, the starlet’s muses span several generations, with Madonna as much an icon as Nico or thelegendary Peggy Lee. “She was more hot sh-- than we think,” says Day Roché of the Sixties jazz and pop singer, whomshe lauds as “so stylish and so in charge of the public in such an overblown way.”

— Katya Foreman

Like a maid of honorupstaging the bride,Kristin Scott Thomasstole the show as sheglided into the

premiere of JulietteBinoche’s new film,

“Caché,” at the CannesFilm Festival last Saturday.Dressed in a peacock blue,custom-made silk, cashmereand organza Yves SaintLaurent gown that perfectlyoffset her pale complexion,Scott Thomas oozed coolglamour. “There is anabundance of talent andelegance in Madame ScottThomas, as well as anintriguing personality,” saysdesigner Stefano Pilati, whoplayed with transparencies,draping and multiple panelsin crafting the moderncolumn, inspired by his fall2005 collection. ScottThomas was in Cannes topromote “Chromophobia,”the latest from Britishdirector Martha Fiennes, inwhich she stars along withMartha’s brother RalphFiennes, Penélope Cruz andBen Chaplin. Though thefilm holds the honoredclosing spot in the Cannesschedule, it appears ScottThomas has already madeher premiere. Just don’tinvite her to your wedding.

WWD.COM

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SOCIAL WORK

Princess Ira von Furstenberg

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La Brisa Day RochéLa Brisa Day Roché

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WWD, TUESDAY, MAY 17, 20056

A Fur ThingMichael Kors for Pologeorgis: Michael Kors might just beNew York’s most stalwart supporter of exuberantAmerican sportswear — luxed up to the nth degree and be-yond. Which is precisely the attitude he worked for his furcollection for Pologeorgis, presented last week in a seriesof low-key showroom presentations. In a 15-piece capsuleof the much larger collection, Kors played smartly to hiscustomer’s sleek tendencies with trim shapes and a racyattitude — a sheared mink pea jacket, anyone? How abouturbane Aspen in a white mink lodge jacket? Of course, theKors girl loves to indulge in a bit of decoration now andthen. For her more lady-fied moments, he offered a jew-eled, shrunken broadtail jacket, and when her mood callsfor glorious indiscretion, a long, bright red sheared minkcoat with an enormous raccoon collar.

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Fur is a sure thing for fall, and the evidence can be found in every direction: Dennis Basso held his biggest presentation to date,while Michael Kors cut furs into sleek, long and cropped versions. Further proof, too, is in retail sales, which are only going up.

Dennis Basso

Michael Kors

Michael Kors

7WWD, TUESDAY, MAY 17, 2005

ngWWW.WWD.COM

MONTREAL — Retailers shopping the 23rd an-nual North American Fur and FashionExhibition here May 8-11 at Place Bonaventuresaid they were enthusiastic about the upcomingseason.

The 200,000-square-foot exhibition hall wassold out, as 200 exhibitors were kept busy writ-ing an estimated $1 million worth of ordersfrom about 4,000 buyers from around the world.And overall demand for fur products continuesto increase, with retail fur sales in the U.S. lastyear at $1.8 billion, up 7.5 percent comparedwith 2003. Canadian fur exports, 80 percentdestined for the U.S., totaled $288.8 million in2004, an 8 percent increase from the previousyear. Total fur exports have increased by one-third in the past five years, according to the FurCouncil of Canada.

Exports of raw furs to the U.S. accounted for$185.7 million of total exports, followed by $73.1million in fur garments and $30 million indressed furs. All figures have been convertedfrom Canadian dollars at the current exchangerate.

Flemington Fur Co., of Flemington, N.J., hada “terrific season” with a 20 percent increase insales, said owner Bob Benjamin. “We buy year-round, and our inventory is clean. Fur is veryhot and this winter worked well for us with coatsales coming on strong as winter approached.”

With a 40,000-square-foot store, possibly thelargest fur retailer in North America, Benjamincarries a “tremendous amount of inventory,”which he shops for all over the world, in addi-tion to manufacturing mink coats. The Montrealshow accounts for about 25 percent of his pur-chases, where he bought a lot of sheared beaver and shearling.

One fur retailer who didn’t enjoy a good year was Paul Dittrich ofDittrich Furs, in Detroit.

“We thought it would be a good year and bought heavy last year. Butwith the GM and Ford layoffs, our sales were down 18 percent,’’ hesaid. “I had over 300 garments in storage that never saw the shop floor.As a result, my open-to-buy is reduced by 45 percent.”

Stuck with heavy inventory, Dittrich was selective in his buying atthe show. He left paper with Furko Canada for reversible beaver andsuede jackets.

“I’ve noticed an increase in jacket sales this season, but we stillseem to do better with long furs compared to sheared mink or beaver,”he said.

Business at Lazare’s Furs across the Detroit River in Windsor,Ontario, was better, although it, too, was down, said owner Paul Twigg.

“We’ve had better years, but we still sold a lot of merchandise. Ournumber-one seller was mink, followed by sheared beaver,’’ Twigg said.“Our sales were off by about 10 percent, due mainly to our store inDetroit. In fact, the whole southeast of Michigan took a hit this year.”

Despite the drop in sales, Twigg’s inventory was “fairly clear” be-cause he manages it on a regular basis. “If something’s not moving,we’ll take a hit (cut prices) by clearing it out. My open-to-buys weregood, because we watched ourselves last year and didn’t overstock.”

Twigg bought from Natural Furs and Global Furs, his major privatelabel supplier and also purchased accessories from Mitchie’sMatchings and Luna Fur. In addition to his own business, Twigg is pres-ident of the Retail Fur Council of Canada and said none of his mem-bers had a bad season.

“People who are reinvesting in their businesses and buying morecreatively to reach younger consumers are doing well,’’ he said. “Theservice end of the business — like remodeling — is really doing well.”

Exhibitors felt traffic at the show was the same or slightly betterthan last year.

“We wrote orders the first day, which is unusual,” said MikeConstantopoulos of Palais de Fourrures, a local mink coat manufactur-er. But Tommy Kotsovas of Zuki Furs here felt traffic was about thesame as last year, with a lot of looking on Sunday before buyers wroteon Monday.

Angelo Tsangaropoulos of Mink Mart on Seventh Avenue in NewYork, thought traffic was heavier than in 2004.

“Last year, the first day was pretty quiet,’’ he said. “But the buyerswho know us come early to beat the rush. A lot of our customers fromthe States come to the show but don’t come to New York.”

Aaron Lishman of knitted fur specialist Paula Lishman Furs ofBlackstock, Ontario, felt traffic was the same as last year. “We expectedmore buyers, but it was better than most previous years.”

Traffic was up 5 to 7 percent over last year at Natural Furs, saidowner Christina Nacos.

“We were working more consistently throughout the entire show,’’she said. “Luxury items like Persian lamb, reversibles and long-hairedwere our strongest sellers.”

To exploit emerging opportunities around the world and to protectCanadian manufacturers from low-cost countries, the Fur Council ofCanada announced it will spend about $1 million on a print and bill-board campaign next fall. The “Beautifully Canadian” campaign andgarment label will promote the superior quality of Canadian furs in theface of growing competition, said council executive vice president AlanHerscovici.

“Like the rest of the Canadian garment industry, we are facing avery serious challenge from low-cost producers. In response, we willplay to our strengths — extraordinary craft skills and beautiful furs.”

— Brian Dunn

High Spirits at Montreal Fair

Dennis Basso: There’s a difference between a fur show and a fashion show, andthis has seldom boded well for the fur market. But with the presentation hestaged on Monday afternoon, Dennis Basso crossed over brilliantly, with a sure-ty and style his colleagues would be well advised to take note of, should FICAever choose to revive its now-dormant group show.

The presentation had all the makings of a real fashion show: live models,nonhideous hair and makeup, professional production and a point of view be-yond the latest redux of classic glam for the tony matron set. It also had somenews behind the chic: the elevation of longtime design assistant Nicolas Petrouto the position of creative director, a point Basso heralded boldly on his shownotes but played down in a telephone chat. The show was styled to near perfec-tion, with multiple strands of massive beads and embroidered underpinningsheightening the controlled exotica. But really, it was the furs that sparkled, figu-ratively if not literally. They dazzled with a bold, unfussy attitude that veered to-ward the earthy while flaunting their ultrarefined execution for a look Bassocalled “East meets West meets Park Avenue.”

He could write fashion copy. Early looks hinted at Native American influ-ences but moved seamlessly into Indian of the Eastern persuasion, with asoupçon each of Mongolian and au courant witchy wear. The predominantshape was lean through the waist then flared and done up with all kinds of ex-tras — bright embroideries, beadwork, lace, scallops and whipstitching, as wellas a bounty of material mixes strong on broadtail and sueded mink and sable. Itwas all the kind of fabulous that will make hard-core fashion lovers take notice,if they haven’t already.

As for Basso’s core customer, in the throes of heady post-show/new-title excite-ment, Petrou maintained that, given her current substantial fur wardrobe, “She’snot looking for a classical, traditional coat....If it’s not creative, I don’t want to doit.” But the boss said au contraire. Suffice it to note that when Liza, Star or Mrs.Smith is in the market for a new full-length sable, Dennis will still be her go-toguy, and he would be loath to disappoint.

A look

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Dennis Basso

By Brian Dunn

MONTREAL — Montreal-based Utex FashionGroup, founded by two brothers in a bicycle shop,is celebrating its 60th anniversary this year.

The company is a designer and distributor ofmisses’ outerwear under the Utex, Hilary Radley,Jones New York and Perry Ellis labels. It also de-signs and distributes men’s outerwear under theUtex, Massimo Moda and Perry Ellis labels andmen’s suits, jackets and sportswear under the Utex,Perry Ellis and U & I names. Private label is also animportant component of the company’s business.

Started as Utility Textile Industries by Irving andHarry Gurberg in Victoriaville, Quebec, about 50miles east of here, Utex’s first product was theUtexans men’s Western sports shirt. From there, itmoved into a former biscuit factory, and in 1960, intoits own 100,000-square-foot factory with 1,200 workers.

Today, the company’s head office is in a 140,000-square-foot building that is mostly a warehouse, de-sign and distribution center, with a minimal amountof production done locally. Most production comesfrom China, Eastern Europe and Bangladesh.

Utex began sourcing products in Japan in theearly Sixties and started importing cottons andwool from Romania, Bulgaria and Czechoslovakiain the late Sixties. From there, it moved into main-land China.

In addition to its head office, Utex has a 70,000-square-foot warehouse and distribution center inFairview, N.J., and showrooms here, as well as inToronto, New York and Chicago.

“We work with a few factories in China where werepresent such a high percentage of their businessso they won’t take on extra accounts for a dollarmore,” said David Gurberg, who became companypresident after the death of his father, Irving, in1991. His sister Marian Gurberg is vice president.

“We used to supply everything, like fabric,thread and buttons,’’ he said. “It was a logisticalnightmare. Now the factories are a lot more so-phisticated, and we just send technicians over-seas to supervise overall quality inspection.”

When David Gurberg joined the company in1961, annual sales were $5 million. By the end of theSeventies, they topped $35 million. Today, they arecloser to $80 million, with half generated in the U.S.

But the company’s customer base has shrunkwith the bankruptcy of the Eaton’s department storechain in Canada and retail consolidation in the U.S.Utex products are in stores like Saks Fifth Avenue,Bloomingdale’s, Nordstrom and Lord & Taylor.

“We’re also facing competition from some ofour retail customers who buy on their own,’’Gurberg said. “They’ll take 60 items of ours thenorder 6,000 similar items produced at the low end.That’s why it’s important to have a label that con-sumers can identify with.”

Utex decided to mark its 60th anniversary witha major branding campaign that includes bill-boards, airport advertising and print ads.

“We’ve been around for 60 years, but with quotasending, we’re facing more and more competitionfrom wholesalers and retailers, and that’s why it’simportant to have brand recognition,” Gurberg said.

In terms of fashion products, Utex faces themarketing juggernauts of companies like DKNY,Calvin Klein and Hugo Boss that put a lot ofmoney into advertising. But the company’s chal-lenges don’t end there.

“Outerwear drives our business and a lot ofthat is now carried by big-box stores and discountchains like TJ Maxx, Winners [in Canada] and

Burlington Coat Factory who compete with tradi-tional department stores who are our main cus-tomers,” David Gurberg said.

Utex has responded by operating at both endsof the market. In addition to supplying SearsCanada and the Hudson’s Bay Co., it sells downjackets and PVC products to Costco.

“We’re apparel-driven and can focus on otherareas,” Gurberg said. “The word ‘collection’ comesto mind, as in ready-to-wear for both women andmen, which we will be launching for fall 2006.Right now, we’re debating which labels to use.”

Despite keeping one step ahead of other com-petitors, Utex is facing an even bigger adversary.

“Now we are facing competition from overseasmanufacturers who may even be one of our ownsuppliers. We will continue to find ways to bring thelatest fashions out at very attractive prices. If wecan’t, we won’t survive,” Gurberg said.

NEW YORK — Unlike the Dutch Village theme park in Holland,Mich., where visitors can linger at the wooden shoe factory or Pieter& the Dike, the Dutch Village that Donna Karan welcomed into herlate husband’s work studio Fridaynight was artistically minded.

A bevy of wide-eyed Dutch in-dustrial artists and other designersbuzzed around the cavernousspace, admiring each other’s work.Their one common link was theiralma mater, the Design AcademyEindhoven, the epicenter of Dutchdesign today. Jurgen Bey, HellaJongerius, Maarten Bass and twinbrothers Joep and Jeroen Verhoev-en helped build the village.

The only person more pleasedwith the outcome than Karan wasthe academy’s chair, Li Edelkoort. Standing next to Roel vanHeur’s red bicycle equipped with a fire extinguisher, she said,“This is amazing. The generosity of Donna Karan to give me thisspace is enormous. For the last 10 years, our graduates have ex-plored many traditions using futuristic technology to make themlook familiar. We love to blend the old and the new. All theseproducts have a great emotional and romantic quality.”

All too familiar with how fine craftsmanship in ceramics, glass,wood, metalworks, embroidery and knitting is being replaced bymass production, Edelkoort’s crew tries to hold on to some of thosefeatures in their work. The old-new combo was evident in JoepVerhoeven’s chain-linked fence that looks like it was in bloom;Jeroen Verhoeven’s curved table that appeared to have been laser

cut, and Kiki van Ejik’s hooked rugwith a gigantic rose motif. The exhi-bition folds this evening.

Karan eyed the work like aprospective buyer, examining thehandiwork with great interest andpeppering the designers withquestions about their techniques.The designer said she couldn’tthink of anything more appropri-ate to host in her late-husband’sstudio, since he started out as afurniture designer, creating setsfor Broadway. On top of that, thegathering captured the spirit ofGreenwich Village, which hasbeen a harbor for artists as farback as the Twenties.

Karan credited her friend, Edel-koort, for helping to bring it all to-

gether. “Li has been my inspiration in so many different ways — asa woman, as an artist, as a teacher. I think we talk the same lan-guage.” Karan said.

Earlier in the evening, Edelkoort insisted the academy was afine-tuned machine before she got there. “All I had to do was flythe kite,” she said humbly.

One of her prodigies, Kiki van Ejik, created a color-coded,Mondkiaan-inspired piece on the second-floor. She placed a varietyof traditional Dutch foods in primary colored square frames, sothat viewers would look into eachas if they were a little museum.

“I think this is the best exhibitspace that we have ever had. Thecolor and the space itself is justperfect for the objects,” she said.

Murray Moss, one of the first topick up on designers such as HellaJongerius, agreed. “The students’work is usually not shown in thistype of polished environment eventhough it is by far the best designschool in the world. It gives it therespect which I think it deserves.

Moss liked the juxtaposition ofthe new and old, especially JobSmeets for Royal TichelaarMakkum, the event’s sponsor anda centuries-old ceramics company.“To have young artists share thespace with the oldest company inthe Netherlands is a lovely andcorrect idea.” Even Julianne Moore checked out the scene.

Edelkoort’s next project is what she calls a “humanitarian ef-fort” to try to revive the textile industry in its mills in Prato andComo, as well as India, which have been hard hit by China’sdominance in recent years. She is hoping to pull together a sym-posium of fashion leaders to discuss the problem.

— Rosemary Feitelberg

Donna Karan’s Dutch Treat

Ready-to-Wear Report

8 WWD, TUESDAY, MAY 17, 2005WWD.COM

A shearling

jacket from

Hilary

Radley.

Donna Karan and Li Edelkoort

Kiki van Ejik’s work.

Dressing Dutch at Weiss Studio.

NEW YORK — Polo Ralph Lauren Corp. tapped Scott Bowman as president of international businessdevelopment, a new post.

Before joining Polo, Bowman was president of Scott Bowman Associates, a consultancy firm hefounded in 2003, which focused on offering global retailers and brands business development supportand strategic planning services. According to Bowman, the consultancy will now “be winding down.”

Prior to launching his firm, Bowman was chief executive officer of Marc Jacobs, a division of LVMHMoët Hennessy Louis Vuitton. He managed the label’s planning from licensing to the expansion ofJacobs’ retail network in Asia. He had also been president and ceo of DFS Mid-Pacific Region and heldseveral management posts at Limited Brands, Macy’s and Maas Brothers/Jordan Marsh.

At Polo, he will be in charge of the company’s businesses in Australia, Far East Asia, Japan andSouth and Central America, some of which are licensed, and he will report to Roger Farah, Polo’s presi-dent and chief operating officer.

“He brings leadership to our long-term strategic initiative to increase the Ralph Lauren busi-ness internationally, specifically in the luxury markets in Japan and the Pacific Rim,” Farah saidin a statement.

Scott Bowman Heads to Polo

Ringing In 60 YearsAt Utex Fashion

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WWD, TUESDAY, MAY 17, 2005 9WWD.COM

By Alessandra IlariMILAN — Born from a creative challenge, LaPelle Guccissima is intended to boost Gucci’sunderexploited leather segment and pump itsaccessories business.

The new project, which will hit the Guccistores in August, comprises bags, footwear,small leather goods, luggage and watches, aswell as printed silk, velvet and cashmerescarves, imprinted with the double-G logo orthe horse bit motif.

“We worked on this line for over a yearwith the intention of giving leather — whichis our heritage — a new focus, energy and mo-mentum,’’ Mark Lee, Gucci’s president andmanaging director, told WWD in an interview.“We felt that aspect was missing and that ourleathers weren’t immediately recognizable,since Gucci is very much associated with thelogoed canvas.”

A special advertising campaign that beginsat the end of June will support the new line.

Frida Giannini, creative director for ac-cessories and women’s ready-to-wear, is up-beat about her latest undertaking and Gucci’ssupport of it. “From a creative standpoint, Iwas ready to shift the focus from the canvas-logo combination,’’ she said. “I find thatleather is very rich and luxurious, especiallyif it says Gucci all over it, and it targets awider clientele.”

Sales projections for the line were notavailable.

La Pelle Guccissima’s specialty — hard tocounterfeit — is that artisans use handmadepresses to hot-print the classic double-G logoand the horse bit onto the hides.

“The imprinting is the same, but depend-ing on which way you turn the hide, the effectis embossed or in relief,’’ Giannini said. “Weall agreed that the double-G logo worked bet-

ter embossed while the bit, which is biggerand more detailed, looked better in relief.”

Stressing that it takes one worker a full dayto treat a hide, Giannini mapped out theprocess: Once the raw materials are selected— in terms of quality and resistance to heat —they are waxed, hot-printed and finally hand-sponged to remove any wax remnants.

The designer admitted that she pushed her-self and the artisans working in Gucci’s Tuscanfactory to nail down the labor-intensive techni-calities. “At first I was frustrated because thehides weren’t responding they way they shouldhave,’’ she said. “We really had to sit in the fac-tory for days, trying, trying and re-trying.”

Luxurious, with a slight retro feeling coun-terbalanced by clean shapes and modern col-ors, La Pelle Guccissima “has one foot in thepast and one in the future,” Lee said.

That’s because Giannini, who never tiresof mining Gucci’s past, has a knack for meld-ing yesterday with tomorrow. “Modernity isthe consequence of how you apply a retroidea in terms of shapes and product cate-gories,” she noted.

All the footwear and the bags, which includesacs, hobo bags, shoppers and Treasure, a newFifties-inspired rigid style with locket, are linedwith a multicolor horse bit-printed cotton. Thethree key materials are calfskin, velvet andpatent leather, at times partnered with lizard orcrocodile. They are served up in anything frombitter chocolate brown, midnight blue, creamand lavender. On the footwear front, there areboots, pumps and loafers.

Prices for leather, patent and velvet bagsstart at $700 and jump to $5,700 for patent andcrocodile versions. The entry price for lug-gage is an $850 beauty case, while the mostexpensive is the $3,100 leather trolle. A wo-men’s loafer or velvet ballerinas costs $350,with patent leather boots $1,400.

Accessories fanatics will immediately penLa Pelle Guccissima in their wish list. Theline was conceived to last.

“It’s not one more accessory, but a wholenew project that will stay around for manyyears,’’ Lee said. “We will add seasonal newstyles and colors, but in terms of quality we’retrading up just as many of our competitorsare trading down.”

In sync with the line’s back-to-the-futuremood is the ad campaign shot by Craig McDean.

The concept is a modern-day revival of thecelebrity-filled paparazzi shots stored inGucci’s archives. “Many of the shots weretaken on the streets with the VIPs carryingnumerous bags,” Lee said.

In a similar form, this campaign zeroes inon a male and female model walking downthe street toting different kinds of bags.“Though product-driven, the images are fast,modern, strong and sexy,” Lee noted.

He said Gucci has made a significant invest-ment, which he declined to disclose, behind thisproduct launch. The company has also in-creased its overall communications spending in2005, with ads in new titles that include VitalsWomen, Elle Accessories and Lucky in the U.Sand El Mundo and Fuera de Serie in Spain.

“As part of a larger strategy, we’re animat-ing the season with twice the number of adpages, diversified for the months: Augustthrough October with apparel and accessoriesfrom the fashion show and November andDecember dedicated to flash, cruise and jew-elry,’’ Lee said.

NEW YORK — Ruehl, the new Abercrombie & Fitch brand intended for22- to 35-year-olds, encompasses a range of merchandise, includingmen’s and women’s casual sportswear, jeans, outerwear, fragrance andaccessories sold in stores that usually average 8,000 square feet.

That kind of retail space is virtually unheard of in Manhattan’s WestVillage, where Ruehl set its sights on opening a store. But the architec-ture of the neighborhood dovetails well with Ruehl’s concept, involving atown house with a brick facade and wrought-iron fence.

The first Ruehl handbag-only store is scheduled to open in Novemberin a 600-square-foot former antiques shop at 370 Bleecker Street.Handbags in the line sell for $268 to $1,098.

The store will be among neighbors Ralph Lauren, Lulu Guinness,Cynthia Rowley and Marc Jacobs, who made the thoroughfare trendywhen he became the first designer with a national profile to open a storethere in the mid-Nineties.

A Ruehl spokeswoman said other handbag-only stores are planned butdeclined to discuss specific locations. Ruehl stores have bowed inInternational Plaza, Tampa, Fla.; Woodfield Mall in Schaumburg, Ill;Garden State Plaza in Paramus, N.J.; 12 Oaks in Detroit, and Easton TownCenter in Columbus, Ohio. Other units are planned for the RooseveltField Mall in Garden City, N.Y. and Tyson’s Corner in McLean, Va.

Meanwhile, Abercrombie & Fitch is moving ahead with its FifthAvenue flagship.

The A&F magazine makes it seem as if the world is populated by im-possibly beautiful, athletic creatures, all under the age of 25. ChaiseMooty, a face in the Summer 2005, Issue 4 magazine, upholds that as-sumption. There’s more Mooty plastered across the facade of 720 FifthAvenue, the site of the flagship.

The company in November is opening a 23,000-square-foot store inthe space, which formerly housed Fendi. The store, designed byAnnabelle Selldorf in collaboration with A&F chairman and chief execu-tive officer Mike Jeffries, will sell the Abercrombie & Fitch brand, EzraFitch and abercrombie for kids, for ages 10 to 14.

— Sharon Edelson

By Vicki M. Young

NEW YORK — While chapter one in the J.C. Penney turnaround storywas about getting the merchandising, operations and numbers right,chapter two is going to be all about the people.

To that end, J.C. Penney chief executive officer Myron E. Ullman 3rdsaid he’s taking steps to ensure that employee ownership becomes a cor-nerstone of the retailer’s five-year growth plan.

“Implicit in that is having people focused on the initiatives that drivegrowth, such as better assortments, easier shopping environment, moreexcitement in the stores and attracting new customers through in-creased emotional articulation, through lifestyle merchandising. We be-lieve that we can unite people in terms of feeling great, while movingahead of the pack,” Ullman told WWD.

When Ullman first took the helm of the company in December, one of thethings he did was spend time visiting J.C. Penney stores and getting inputfrom various levels during town hall-style meetings, said a source close tothe company. The source said Ullman, after developing his ownership planwith his senior management team, made sure everyone inside the organiza-tion knew about the strategy before the company disclosed it to the public.

In line with the employee-ownership strategy was last week’s an-nouncement that Michael Theilmann was appointed executive vice pres-ident, chief human resources and administration officer. Theilmann, 41,joins J.C. Penney from Yum Brands Inc., where he served most recentlyas senior vice president, human resources and chief people officer of itsinternational business. He replaces Gary Davis, 62, who will retire after41 years with the retailer.

“For the last nine years, the business was downtrending, [and] thepeople component wasn’t part of the turnaround. There were so manyother critical elements that needed to be addressed,” the ceo said.

The people-focused strategy is being honed by Ullman’s past retailingexperience as well as the observations made while serving as a boardmember at Starbucks.

The ceo recalled his days running a bankrupt R.H. Macy in the early1990s. Macy’s was taken over in 1994 by Federated Department Stores,which at the time was led by Allen Questrom, Ullman’s predecessor at J.C.Penney. “While everyone feels that [Macy’s] didn’t fail, I’m not sure they feltgreat doing it. The Macy’s experience gives you a sense of accomplishmentat the end, but it was painful while going through it,” Ullman explained.

As a Starbucks board member, Ullman values the emotional connectionbetween associates and their customers. It can bolster a company’s prof-itability. “It’s about having your associates engaged from when they get upin the morning, and to think about ways to service the customer,” he said.

Theilmann, who starts his new post on June 1, plans to do his share ofstore tours as he determines how best to meet his mandate of creating a“people culture” at the retailer.

While at Yum, Theilmann had the opportunity to create an ownershipculture based on performance as Yum was preparing for its spin off fromPepsico between 1997 and 1998.

“We wanted to get employees to think like shareholders. I call it hav-ing skin in the game,” Theilmann explained.

Here and below: Looks from La Pelle Guccissima.

Ruehl Finds West Village Home

Gucci Project to Boost Leather Ullman’s People Plan

NEW YORK — A.P. Moeller-Maersk is beefing up its position as the world’s largest ship-ping company.

The firm said last week it reached an agreement to acquire Royal P&O Nedlloyd NVfor 57 euros per share, bringing the total purchase price to about 2.3 billion euros, or$2.9 billion at current exchange rates.

The purchase price represents a 40.6 percent premium to the May 9 closing price,according to a joint statement from the companies. The deal is expected to close byAugust, after a special meeting of P&O Nedlloyd shareholders scheduled for July.

“The cash offer from Maersk represents full and fair value for P&O Nedlloyd share-holders and accordingly, the board of P&O Nedlloyd has no hesitation in recommendingthe offer to them,” Philip Green, chief executive officer of Nedlloyd, said in a statement.“At the same time, we believe the combination of our two businesses will ensure that bothcustomers and employees will enjoy the benefits of a substantially enhanced business.”

If the deal reaches completion, Maersk will pick up the world’s fourth-largest ship-ping company. Maersk Sealand, with more than 300 container vessels and 1 million con-tainers, is already the world’s largest shipping company. Adding Nedlloyd will giveMaersk an additional 156 ships and 428,000 containers.

The planned acquisition comes as Nedlloyd is posting significant gains in its ship-ping volume. In 2004, the company shipped a total of 4.1 million 20-foot-equivalent units— the standard maritime industry measurement used to count cargo containers — a 10percent increase from the 3.4 million TEUs shipped in 2003. The largest gains camefrom its transpacific routes, rising 17 percent to 614,000 TEUs from 523,000.

— R.T.

NEW YORK — Ocean carriers shippinggoods from Asia are getting most butnot all of the rate increases they hadproposed heading into negotiationswith importers.

A spokesman for the 13 carriers thatparticipate in the Transpacific Stabili-zation Agreement said that talks fornext year’s contracts with importerswere 90 percent complete, and that theremainder should be finished by theend of the month.

“The rate hikes did not come throughas announced,” said Hubert Wiesen-maier, executive director of the Ameri-

can Import Shippers’ Association, atrade group that negotiates freight rateson behalf of an estimated 200 small tomid-size corporate members.

“Certain trade lanes where the ves-sels are full, the carriers managed to getmodest rate increases. In other tradelanes, they had to be very flexible.”

Actual rates were not disclosed,largely because each importer negoti-ates its own rates with freight carriers,using the TSA as a guideline.

Heading into negotiations in mid-April, the TSA recommended a $285increase on each standard 40-foot con-tainer, known as a FEU, shipped fromAsia to the West Coast.

For shipments moving on from theWest Coast to inland locations via roador rail, the carriers sought an increaseof $350 per FEU. On shipments from

Asia to the East Coast, which requirespassing through either the Panama orSuez Canals, shippers sought anincrease of $430 per FEU.

“Carriers had greater luck passing oncost increases they incur from third par-ties other than just increasing their ownrates,” said Wiesenmaier. “There wasmore understanding on things like bunkerfuel than just general increased costs.”

Carriers don’t disclose their basecharges publicly, but studies have shownthat the cost of shipping a containeracross the Pacific is $1,500 to $2,000.

Peak season charges may still putthe pinch on importers.

“Peak season generally has beenextended by a month,” said Wiesenmaier.

Heading into negotiations, the TSAhad recommended a $400 increase oncontainers arriving between June 15 andNov. 30. However, this year’s suggestedincreases were lower than in years past.

In 2003, the TSA asked for a $450increase on FEUs shipped from Asia tothe West Coast and asked for increasesas high as $900 on other routes.

In justifying this year’s increases,the TSA pointed to an expected surgein shipments from Asia to the U.S.,which is projected to grow by 10 to 12percent this year to a total of 5.8 millionFEUs. Rapid growth has alreadycaused backups at West Coast portsover the past two years.

The members of the TSA areAmerican President Lines, CMA-CGM,COSCO Container Lines, EvergreenMargin Corp., Hanjin Shipping Co.,Hapag Lloyd Container Line, HyundaiMerchant Marine Co., Kawasaki KisenKaisha, Mitsui OSK Lines, Nippon YusenKaisha, Orient Overseas Container Line,P&O Nedlloyd and Yang Ming Marine.

— Ross Tucker

By Kristi Ellis

WASHINGTON — Heading for apotential showdown with theWhite House, Senate membershave added billions of dollars to ahighway bill in excess of the Bushadministration’s budget. Theyinsist the money is critical toupgrade the decrepit U.S. trans-portation system.

Importers and apparelexporters are concerned aboutthe nation’s transportation infra-structure and congested portsand highways, particularly inlight of dramatic shifts in globalsourcing.

The Senate, expected to vote onthe measure this week, voted 72 to22 last Wednesday to add about$11.5 billion to the $284 billionhighway bill, which is intended toimprove roads and bridges.Several Republican senatorsjoined with Democrats supporting the increase in the funding, present-ing a challenge to Senate leadership, which is controlled by the GOP.

The additional money is a challenge to the administration’s pledgeto control fiscal spending and sets the stage for a possible showdownin the House and a potential veto by the President.

Sen. Judd Gregg (R., N.H.), chairman of the Senate Budget Committee,criticized the increase on the Senate floor last week, calling the move “simplyunequivocally, unquestionably a budget buster” and adding that the President’s posi-tion on maintaining a ceiling on the measure is being “ignored.”

Sen. James Inhofe (R., Okla.) countered that the measure is critical to revitalizingthe nation’s roads, railways and buses.

“This bill is not just any type of bill that is coming along,” said Inhofe, according totranscripts in the Congressional Record. “This is a bill that is a matter of life and death.”

Inhofe also maintained thatthe $11.5 billion in additionalfunding is inadequate to addressthe infrastructure problems overthe six-year period the measurecovers. Congress has failed toapprove the bill in the last twoyears because of disputes overcosts, and the program has beenoperating under extensions. Thesixth extension is set to expire atthe end of the month.

For U.S. companies exportingand importing billions of dollars inproducts a year, the infrastructureissues are raising concerns to anew level.

Peter McGrath, chairman ofpurchasing for J.C. PenneyPurchasing Corp., recently toldan audience of apparel manufac-turers he is “scared to death” ofthe aging infrastructure.

McGrath, speaking at theAmerican Apparel & Footwear

Association’s annual meeting in Palm Beach, Fla., in February, saidthe insufficient number of ports, aging railroads and lack of truck

drivers is alarming.“The infrastructure in the U.S. is falling apart,” he said.

Julia Hughes, vice president of international trade at the U.S.Association of Importers of Textiles & Apparel, said importers are primari-

ly concerned about congestion in ports but look at the whole host of issues,including railway lines and trucking facilities, as needing improvements.

“The clock is ticking, and there hasn’t been investment [in infrastructure],”Hughes said. “Plus, more and more companies are following the business model ofjust-in-time shipments. A delay used to be built into shipping times to clear customs,but companies don’t have that flexibility anymore and they can’t afford to miss deliv-eries to customers.”

The acquisition will give Maersk

more than 450 ships and nearly

1.5 million containers.

Maersk to Acquire Nedlloyd

In Transit

10 WWD, TUESDAY, MAY 17, 2005

Shippers Get Modest Rate Hikes

WWD.COM

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“The rate hikes didnot come through asannounced.”— Hubert Wiesenmaier, AISA

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Senators Make $11.5B Stand on Bush Highway Budget

Sen. Judd Gregg (R., N.H.) was one

of the few to criticize the move.

▲

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WWD, TUESDAY, MAY 17, 200512

Continued from page onenot as good” as they should have.

Executives said that there were noplans to shed the apparel division, whichincludes Express and Limited Stores,and that setbacks in sportswear won’t im-pede initiatives in the fast-paced lingerieand personal care divisions. On the agen-da: the Pink subbrand of Victoria’sSecret will begin opening stores, andBath & Body Works will soon start sellingonline and via catalogues.

Limited said net earnings in the quar-ter ended April 30 fell to $23.1 million, or6 cents a share, dropping below WallStreet’s expectations of 8 cents.Comparatively, Limited earned $96.6 mil-lion, or 19 cents, in the first quarter of2004. Shares closed at $20.45 on Monday,up 0.1 percent in New York StockExchange trading.

On an adjusted basis, which excludes a$44.9 million, or 6 cent, pretax gain fromthe repayment of a New York & Co. subor-dinated note, Limited Brands postedearnings of $67.8 million, or 13 cents, inthe first quarter of 2005; Limited soldNew York & Co. to Bear Stearns MerchantBanking in November 2002.

Net revenues in the latest quarterwere essentially flat at $1.97 billion,down 0.2 percent from last year’s $1.98billion. Same-store sales in the perioddeclined 5 percent.

Limited said in a statement that it seessecond-quarter earnings at 23 cents to 25cents and full-year earnings at about$1.41. Analysts are calling for 29 cents inthe second quarter and $1.50 in the year.

First-quarter operating income totaled$48.3 million, down 59.6 percent from theprevious year’s $119.4 million. Operatingincome at Victoria’s Secret increased by$6.2 million; Bath & Body Works in-creased by $7.8 million, apparel operat-ing income declined by $79.2 million.

Same-store sales in the second quar-ter are anticipated to be flat. May compsare expected to be down in the low-sin-gle digits.

The company completed its previous$100 million share repurchase programand has authorized an additional $100million share repurchase.

Wexner kept the spotlight on Victoria’sSecret and its subbrand, Pink, and brightearnings news for Limited Stores. The in-troduction of the IPEX bra “will probablybe a major volume and income generatorfor Victoria’s Secret” and the in-storebrand Pink is being expanded after a suc-cessful fall launch throughout Victoria’sSecret stores and will emerge as its ownstore in 2006, Wexner said.

Victoria’s Secret and Bath & BodyWorks account for 70 percent of the salesfor Limited Brands, which now considers

itself more of a packaged-goods company,as opposed to strictly a specialty retailer.Limited Brands operates 3,699 stores andposted $9.4 billion in sales last year.

With Express a major drag there hasbeen speculation of an apparel spin-off.

Leonard Schlesinger, vice chairmanand chief operating officer, said duringthe conference call: “While we have al-ways in the past demonstrated our will-ingness to adjust the portfolio in thename of shareholder value and will al-ways continue to do that, that doesn’tdrive us right now having a specific timeframe for the disposition of any of ourbusinesses….At the moment, we’ve indi-cated quite clearly that we have no plansto sell either of those businesses.

That got reaffirmed in the annual re-port letter from Wexner, who wrote:“Some have suggested to me that weshould think about selling both of them.Let me be crystal clear: Express andLimited are not for sale. They both havesignificant growth opportunities.”

Apparently, there’s a bigger opportu-nity at Pink, the more youthful, casuallingerie line launched at VS stores over ayear ago. Schlesinger said this fall Pinkwill test accessories, sportswear, denim,and “pickups” at the cash register in 40“solution” VS stores as a prelude to open-ing Pink stores. In-store marketing ideaswill be tested, too.

Other growth strategies:● Bath & Body Works is working on

“full-direct capability to sustain its mo-mentum, and plans to launch e-com-merce in October, and a catalogue in2006. The division is close to completingan agreement with a third party to out-source technology and fulfillment. Theoutsourcing decision is “driven especial-ly by the fact we want to get into the mar-ket quickly,” Schlesinger said. “It’s notintended to state a strategic direction.”

● Breathe, a collection of “mood en-hancing” fragrance and skin care line,will be launched by BBW in July. NeilFiske, BBW ceo, called the line an “ac-cessible trade up opportunity and a mod-ern alternative to everyday body care.”

● C. O. Bigelow, Limited’s take on a21st Century apothecary, plans to opensix stores in September and October inChicago’s Water Tower Place and theHawthorne and Woodfield malls;Boston’s Copley Place and suburbanNorthshore mall, and in Garden StatePlaza in Paramus, N.J. The prototype de-buted in the Easton Town Center nearColumbus. As Bigelow rolls out, the keyis to maintain differentiation from BBWstores and customers.

Last week, Limited bought Slatkin &Co., a force in the home fragrance market.“The integration will happen very quicklybeginning this week,’’ Fiske said. “We’vealready mapped out ways this companywill be integrated into ours. We alreadyhave been working with Harry Slatkin[founder and president] on a consultingbasis. We will hit the ground running withhis ability to contribute a wealth of ideasto the home fragrance business.”

At Express, comps fell 21 percent andhad a higher markdown rate, KennethVenner, chief information officer, said onthe call. “Growth continued in pants butwas more than offset by declines in casu-al bottoms and knit tops,” Venner said.“Selling on crop pants in the first quarterwas well below our expectations, drivenby color and fit issues. We expect that thesecond quarter will continue to be chal-lenging for Express, although we aredoing everything we can to optimize mar-gins. Our priorities are clearing throughunderperforming merchandise and fix-ing our fashion issues by the fall season.”

Emme Kozloff, an analyst with SanfordBernstein & Co., noted in a report that the

quarterly loss at Express “is twice theamount that Express earned in all of 2004,which was half that earned in the prioryear.” However, “while investors might beclamoring for disposal of the apparel busi-ness now more than ever, the value equa-tion is unlikely to work in shareholders’favor given the deterioration in perform-ance. Even if the business was up for sale,it’s unclear whether any buyers would beinterested for a reasonable price.”

Lazard Capital Markets analyst ToddSlater said in a report that it would take24 to 36 months for Express to get back totypical operating margin levels of about10 percent seen from 1999 to 2000.

“We’re embarrassed by the perform-ance at Express and would like to em-phasize that we are very committed to re-turning the brand to better perform-ance,” Schlesinger said. “The Expressteam, with significant input from JayMargolis and the rest of the executivecommittee, are working feverishly tomove the business ahead.”

Margolis, former president of Reebok,was hired as group president of apparelin February, as part of a management re-structuring.

Paul Raffin, president of Express,added that a strategy of emphasizingwear-to-work and trading up has notworked. “We got fashion wrong, we drift-ed older, we drifted more expensive, andin fact alienated a large percentage ofour total customers.”

He added, “Wear-to-work can in factbe young and sexy. Wear-to-work and ca-sual balance is the key to effective repo-sitioning. We were getting too old, with alack of excitement and sexiness, and justturned people off.” He added, “We’repragmatic about reducing color and pat-tern and focusing on black and neutrals.

In other divisions, VS Stores wasroughly flat against a strong year-ago per-formance, and fell below corporate ex-pectations. VS Direct sales rose 10 per-cent, with strength in bras, swimwear,woven and knit tops. Internet continuesto grow as a percent of sales. VS Beauty,which operates at three U.K. airports, is“actively” considering expansion intoGermany and Brazil.

BBW rose 5 percent, driven by prod-uct introduction.

— With contributions fromBrent Wilder, Columbus, Ohio

Limited 1st-Qtr. Net Drops 76%WWD.COM

Victoria’s Secret, above, saw

operating income increase by $6.2

million, while comps at Express

declined 21 percent.

WWD, TUESDAY, MAY 17, 2005 13

NEW YORK — Kellwood Co. is standing be-hind Russell Simmons.

According to a published report Monday,Simmons was quoted in a civil depositionthat he falsely stated his company’s volume“to mislead the public” as a way to developan image for his company. When he ap-peared on CNBC in February 2003, he saidPhat Fashions was doing upward of $350million, when in fact, his revenue for 2002totaled $14.3 million. Simmons gave thedeposition as part of a lawsuit involving alongtime business partner.

Kellwood acquired Phat Fashions inJanuary 2004 for $140 million in cash, plussignificant incentives for Simmons and hiswife, Kimora Lee, creative director of BabyPhat, based on the brands’ future growth.

“All the conversations Kellwood had withRussell have been accurate as it relates tothe numbers,” said Donna Weaver, vicepresident of corporate communications forKellwood Co. “Our relationship and experi-ence with Russell has been positive andstrong. Kellwood conducted an exhaustivedue diligence examination of Phat Fashionsprior to the purchase. The price was appro-priate for the size of the business and busi-ness opportunities.”

Weaver added that Phat Fashions rev-enue was $500 million at retail when thefirm was purchased and has generated $750million in retail sales for the last 12 months.

“Business is doing well. The brand is ex-panding domestically with several new li-censees and internationally in Spain, theMiddle East and Far East where we contin-ue to add licensees and international part-ners,” she said.

— Lauren DeCarlo

Simmons DepositionNot Fazing Kellwood

By Amy S. Choi

NEW YORK — An aggressive new productpipeline for Inter Parfums Inc. in 2006 in-cludes new women’s fragrance launchesfor Lanvin and Christian Lacroix, andmen’s launches for S.T.Dupont, Nickel and PaulSmith. The company alsowill roll out a fifth Bur-berry fragrance collection for both menand women.

Later this year, the company alsoplans to launch Tumulte by Christian La-croix and Arpège Pour Homme by Lan-vin. It will release a limited edition ofBurberry Brit Gold for holiday.

The new launches should aid the com-pany in building its concentration of pres-tige products, which account for 88 per-cent of its sales. Inter Parfums’ net salesrose 22 percent at the end of the firstquarter this year to $71.1 million from$58.4 million, excluding the benefits ofcurrency exchange. The geographic roll-out of Burberry Brit for Men and the ex-pansion of the Burberry Brit Red distri-bution contributed to roughly 40 percentof the sales gain in the quarter.

Net income for the company dropped7.8 percent to $4.4 million, or 22 cents adiluted share, from $4.8 million, or 23cents. Selling, general and administrativeexpenses nearly doubled in the quarter,with royalty expenses up to $7.7 millionfrom $3.4 million in the year prior. Thecompany also spent $11.1 million in pro-motion and advertising in the first quar-ter, up from $4.6 million in the year prior.

Inter Parfums maintained its earlier

net sales guidance of $280 million for2005, a 19 percent increase from 2004.Net income is expected to reach $15.8million, or 77 cents a diluted share.

Although the lion’s share of the compa-ny’s business is in prestige products and

mass continues to de-cline, Inter Parfums ex-ecutives said they haveno intention of exiting

the soft market.“Even though the mass business is rel-

atively small, the amount and the numberof products that we push through thechannel is tremendous, and it does giveus quite a bit of economy of scale when itcomes to purchasing bottles and thingslike that,” Russell Greenberg, chief finan-cial officer and executive vice president,said on a conference call with analysts.“There are some savings that pass over tothe prestige side of our business. There isabsolutely no plan to exit at this point.”

Beiersdorf Brands Up in Qtr.BERLIN — Beiersdorf ’s branded con-sumer division improved operatingearnings by 4.2 percent in the first quar-ter of 2005, whereas consumer saleswere flat for the period ended March 31.

Earnings before interest and taxes roseto 129 million euros, or $171 million. Alldollar figures are converted from the euroat average exchange rates. Sales reached995 million euros, or $1.32 billion, thoughwhen adjusted for currency effects, con-sumer sales rose 0.7 percent for the peri-od, Beiersdorf said. The company alsonoted that sales levels were influenced by

a high level of product launches in thefirst quarter of 2004, compared with alater schedule of launches in 2005.

Beiersdorf ’s consumer division in-cludes the skin care brands Nivea, Eu-cerin, La Prairie, Juvena, Marlies Möller,Labello, Florena and others, as well asbandages under the Hansaplast, Curad,Curitas and Elastoplast names.

By region, sales in Europe fell 0.4 per-cent to 746 million euros when adjustedfor currency effects, or $988.7 million.Sales in Germany fell 3.3 percent. Sales inthe Americas fell 3.6 percent, but grew 5percent in Africa, Asia and Australia.Beiersdorf ’s prestige Juvena/La PrairieGroup had double-digit sales gains.

“Even in a saturated market like Ger-many, new products will generate growthfor Beiersdorf,” said Rolf Kunisch, thefirm’s chief executive, who is retiring thisweek and being succeeded by Thomas-Bernd Quaas. “New launches are target-ed from the second quarter on, includingNivea Sun with new sun protection fac-tor, Nivea Beauté with a new volumemascara, Nivea Vital with soja proteins, 8x 4 with Fresh Energy and Eucerin withAnti-Redness.”

Beiersdorf lowered its forecast for theyear and is projecting consumer sales to“grow slightly stronger than in 2004,” withimproved EBIT margins.

Group sales, which include the Tesa ad-hesives division, were expected to be“clearly ahead” of last year, but are nowprojected to reach last year’s levels, withan EBIT margin of about 11 percent andreturn on sales after tax of 7 percent.

— Melissa Drier

Inter Parfums Bolstering Prestige Lineup

We mourn the passing of our beloved friend and partner, Sy Stewart.Sy left behind many valuable lessons on life and friendship which we lovingly

refer to as “Sy-Isms”. The following are just a few:

• Take advantage of every advantage

• You don’t have to start big; you have to start right

• If you love what you do, you will never work a day in your life

• If you plan your work, you can work your plan

• No one can make you feel inferior without yourconsent

• An idea is only as good as its execution

• You can’t build a business on orders but will on reorders

• There are those that read history and those that make it

• Mediocrity emerges in good times, greatness emerges in bad times

• If you don’t know where you are going then you are there

• A wise man spends money, a fool wastes it

• A newspaper can’t sell unless it tells news, a fashion retailer can’t excel without a continuity of newness

Sy Stewart1925 – 2005

Sy’s vision, kindness and generosity touched so many of us. His memory will live on in our hearts forever.

Much love,James Mitarotonda

And all of Sy’s friends at The Barington Capital Group, L.P.

WWD.COM

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DATA ENTRYApparel firm in Elizabeth, NJ seeks abright, detail oriented individual to workin our data entry/order processing dept.Must have min. of 2 yrs. experience inapparel industry. Duties include: EDI, or-der entry, invoicing, etc. Small, friendly,smoke free office. Salary commensuratewith experience. A great opportunity!Please fax or email resume Attn: Lisa M(908) 352-6219 / lisa@childapp.com

DESIGN

ASSISTANT DESIGNEREstablished, fast-paced private label co.is looking to fill 2 entry level assistantdesign positions. Qualified candidatesmust have a degree in Fashion Design,be proficient in Illustrator & Photoshop,and be able to flat sketch and illustrate.

Please fax resume attn: MAS(212) 203-1856

Design AssistantFast growing import ladies outerwear& sportswear is looking for a highlymotivated, organized Design Assistantfor an entry level position in a superfast paced, exciting design office. Flatsketching, specs & knowledge of garmentconstruction a must. Candidates musthave excellent communication skills &follow-up, must be a self starter & mustpossess the ability to work well underpressure & multi-task for different labels& accounts. Computer skills (Excel/ WP)necessary with graphic design programs(Illustrator/Photoshop) preferred. Know-ledge of Cantonese/Mandarin preferredbut not necessary. This position givesthe right candidate the opportunity tobe involved in all aspects of an importbusiness. Only goal oriented, resultsdriven team players need apply.

Please fax resume + cover letter to:(212) 221-3169

DESIGN

Assistant Jewelry DesignerNew fashion jewelry company seekingassistant jewelry designer, with 2years experience working in accessorycompany. Sample making and basicjewelry skills a must. 40-60k.

Fax Resume to: 212-398-0030 orE-mail: Debbie.Karp@Carlen.com

DESIGN ASSISTANTMajor bridge label seeks an organized,motivated, creative and experienceddesign assistant to be part of a winningteam. Must have exp. working with in-house sample room and knowledge offabric market; exp. with beading, trimand embroidery from China and India.Fax resume & salary reqs attn: HR Dept

212-643-2083

DESIGNER $85K+Womens Runway Designer Sweaters

Jobs@TheFashioNetwork.com

DESIGNERGrowing accessories co. seeks highlymotivated designer w/license & acces-sories market exp. Must be team player& proficient in Illustrator/Photoshop.Specing skills required. Min. of 3 yrsexp. Work in a team oriented environ-ment w/ an excellent oppty for growth.Email: resumesonweb@hotmail.com

or FAX 212.947.7968

Accounts Receivable/Chargeback AnalystMajor Apparel Company searching for a seasoned Collection/Chargeback Analyst. Ideal candidate must possess 5+ yearsexperience within the apparel industry. Applicant should haveexpertise in the management and handling of heavy chargebackvolume, customer calls, and various types of vendor allowances.Strong knowledge of mass merchants and major retailers amust coupled with excellent communication and organizationalskills along with the basic understanding of accounting.

We offer competitive salary and benefits including 401k planand healthcare coverage. For immediate consideration, pleasee-mail your resume along with your salary requirements to:

jacgltd@yahoo.comOnly qualified candidates will be contacted

DESIGNERS*Sr Dsgnr-New Div Girls 7-16 $80-110KYoung Edgy Look. Asian A+. Better Mkt*ASSOC DESIGNER-Missy Wovens $50-60K

Moderate Sportswear. Illust a Must.*DESIGNER ASSISTS $35-50K

Flat Sketching & Design Ability*DESIGNER Dress & Tops $90-110K

Vertical Better BridgeMayJessilyn@aol.com Call 212-947-3400

Designer

Urban Sportswear lineWell established co. seeks a creative men’sdesigner with a minimum of 2 yearsexperience. Please forward all replies to:

Box#M 1039c/o Fairchild Publications7 West 34th Street, 4th Fl

New York, NY 10001

FABRIC R&D $70-85KMust Have Asian Market Experience

ToddWayne1@aol.com Call 212-947-3400

FASHION FACULTYPrivate College seeks faculty forFashion Program. Ph.D Degree preferred,Master’s degree required, along withsignificant industry experience. Knowl-edge of textiles, product development,buying, visual merchandising,merchandise planning & control.

Send resume to: Fashion Search,Berkeley College, 44 Rifle Camp Road,

West Paterson, New Jersey 07424.Fax: 973-278-0080 or

Email: ga@BerkeleyCollege.eduEqual Opportunity Employment

Graphic DesignerChildrens Co. seeks graphic designer.

Repeats in production packaging.NY LOCATION.

FAX PATTI 973-812-1731

KNITWEAR DESIGNERLeading missy sportswear manufacture ris looking for an experienced designer.Must have proven skills in creatingupdated knit tops and 2 piece dressing.A strong color sense and talent tointerepret current trends is needed.Knowledge of knit fabric market amust. A good chance to grow in an ex-panding well established company forthe right candidate.

Fax resumes to Sandy: 212-768-3588

Marketing DevelopmentManager

This position is to promote and sellorganic cotton fabric and / or garmentto branded names, retailers as well asintroducing organic cotton products.Using organic cotton is a trend, andhas a big potential market. Ideal can-didate must be enthusiastic, have goodconnection, & able to present organiccollection to brands / retailers.

Fax resume to 212-631-0689

MENSWEAR (5) $$$$$$*JEANS TD (2) $80K*WOVENS TD (2) $60-75K*UNDERWEAR TD $55K

SusieJessilyn@aol.comCall 212-947-3400

MERCHANDISINGVice President

Well Est’d Men’s & Boy’s Sport & Dresswear co. seeks top level person w/ knowl-edge & experience. Must be familiar w/accounts like Wal-Mart, Target, J.C.Penney, & Kohl’s. Great growth oppor-tunity! Please fax or email resume:Attn: Steven

212-629-3506szirdok@ringosport.com

Phila Patternmkr $$$$$ToddWayne1@aol.com

Call 212-947-3400

PlannerLeading Intimate Apparel Companylocated in Secaucus, NJ seeks experi-enced Planner to analyze and forecastinventory needs for a multi-million dollarbusiness. Major job functions include:

• Creating and maintaining unit sales/inventory plans by style and by product category• Generating and presenting weekly/monthly sales/inventory reports• Creating seasonal and yearly financial plans and forecasts• Working with production team to ensure a smooth flow of product to support sales• Working with the distribution team to ensure on time shipment of product

Successful candidate will possess thefollowing:

• Minimum 4 years retail or manufac turing planning experience, preferably with mid-tier or mass-market retailers• Superior computer proficiency, specifically Microsoft Excel• Merchandise flow and product delivery knowledge• Proven problem-solving skills• Strong follow-through skills and ability to work independently• Strong communication skills and ability to present analytical reports to Management and to Buyers• Ability to travel domestically and internationally

Excellent salary and benefit pkg. Forimmediate consideration, please

forward your resume to:Email: jobs@us.deltagalil.com

Fax: 201-392-9608

Prod Developer $50-60KMissy Sportswear. Work w/PrivateLabel Customers. Fabric Knldeg necSusieJessilyn@aol.com 212-947-3400

Prod’n Coord $60KWovens, Knits, Better Sportswear MfrStrong Cutting Tickets, Inventory &

Spread Sheet Exp.SusieJessilyn@aol.com

Call 212-947-3400

Production $125K++Sample Room MGR

Work w/Designers & PattMkrs. RunSample Rm. Work w/Overseas factories ,liasion w/ all depts. Piecegoods, imports,warehouse & Q/A. Strong Productionexp a must. Time & Action.ToddWayne1@aol.com 212-947-3400

Production AssistantFor color submittals. Well establishedapparel mfr & importer seeks anexperienced individual to do colorapprovals on woven and knits usingthe Data Color spectrometer. Lab dipsand shade bands to be submitted toWal-Mart electronically. Must beorganized and prepared to work in thisfast paced environment. Computerexperience and knowledge of the datacolor equipment is helpful. Good start-ing salary and benefits. Fax resume to:

Mark Rubin at 212-444-6019

Production AssistantImporter seeks organized detail orient-ed self-starter to assist in all aspects ofoverseas production. Duties includecommunicating w/ overseas office, specsheet preparation & order development.Must have excellent follow-up skills,MS Word & Excel knowledge. Technicalgarment knowledge a plus. Min 3 yrs.exp. Fax resume: 212-594-2227

Production AssistantLadies Garment Importer is seeking adetailed applicant with knowledge ofExcel and garment construction. Greatoppty for growth! Fax resume Attn: Stu

212-921-8369

Production AssistantNanette Lepore seeks indiv. withknowledge of garment constructionand specs. Needs computer skills. 2yrs. exp. in fashion industry a must!

Fax resume: 212-947-5651

Production CoordinatorEstablished co. looking for ProductionCoordinator of knit and woven sports-wear loungewear and sleepwear. Dutiesinclude issuing PO’s, grading & specs,sample tracking, shipment tracking,scheduling, 1st sample & top approval.Minimum of 3-5 years experience.Please email: LACERA@LCNY.COM

or Fax: (212) 683-6598

Production CoordinatorLadies Knit Co. seeks organized, detail-oriented person to handle & track allprod’n. issues from order receipt to finalshipment. Min. 5-7 years exp. in design& prod’n. Tech design & computer skillsreq’d. Compensation commensurate w/exp. Please Fax or E-mail resumes to:212-764-0704 / vivian@sweaterworks.com

ProductionCoordinator(s)

Responsible for conducting fittings,creating garment specifications &approving graded specs for production .As well as correspond with overseasfactories on garment detail. Must becomputer literate. 35–45K.Email resumes: admin@mrnorthpc.com

RETAIL

Store ManagerSARASOTA, FLORIDA

Nationally recognized luxury specialtyretailer with top tier designer brandsfor men & women seeking focused &motivated SALES MANAGER. Requiressales, management & merchandisingexperience with designer brands in cli-entele driven environment. Base + profitcommission, 401K, health care & vacation.Please fax resume to: (941) 388-2949 orEmail: gmichel@themetsarasota.com

Senior CustomerFulfillment ManagerFast paced Junior Sportswear Co seeksan experienced applicant to handle or-der mgmt/EDI, manage inventory, al-location and distribution process. Mustexecute order entry, customer set-upand EDI transactions. Must be able tocoordinate with int/exp customers andsupply chain partners. Fax resume to:

212-764-0352

Sewing/CoutureMust be exp’d working w/ high qualityfabrics, hectic deadlines. Emphasis on

custom evening wear. Team player.Please call (212) 869-2296

SOURCINGMajor N.Y.C. Ladies’ Sportswear Mfr.seeks an individual w/minimum 5 yearsexp. sourcing garments in Asia & CentralAmerica. Strong negotiating skills &flexible travel availability a must. PleaseFax resume to Shari at: 212-221-0571

Sweater VP $100-175KProd’n Mgr Sweater $85K

Source, Load, Factories, PricingCosting and Quotas

ToddWayne1@aol.com Call 212-947-3400

TD Sweater/Knits/Wovens

*SWEATERS-TD Bet Bridge $55-70K*FULLY Fashion Knit TD $65-70K*Sweater Cut/Sew Knit Spec Tech $35-45K*SWEATER TD Walmart/Sears $55-70K*WOVENS TD-Better/Bridge $70-80K*WOVENS Jr Top TD $65K*WOVENS Spec Tech Bet Sprtwr $60K*WOVENS TD-Jeans/Bottoms $50-70K*FOUNDATION TD-Swimwear $60-$85K*SPEC TECH-Wovens $35-45KSusieJessilyn@aol.com Call 212-947-3400

TECH DESIGNERFast growing Missy / ContemporaryKnit House seeks experienced &highly organized tech designer. Strongtech knowledge, flat sketching &computer literate. Conduct fittingswith ability to translate changesnecessary to specification. 2 to 5 yearsexperience. Great Co. atmosphere!Great benefits! Salary based onexperience. Fax resume to: 212-221-1353

TECH DESIGNERPRODUCTION

Fast growing Missy cut & sewknitwear Co. seeks production technicaldesigner. Responsibilities include cre-ating 1st spec. & tech. sketches. Proc-essing sample requests. Tracking &approving lab dips on order. Mustpossess good communication andfollow up skills. Proficient in Exceland Photoshop. Great Co. atmosphere!Great benefits! Salary based onexperience. Fax resume to: 212-221-1353

Technical DesignerOPENINGS

*Spec. Techn-Dsgnr Label Knit Tops*Techn. Dsgnr-Suit, Jackets, Pants, Skirts*Sr. Techn. Dsgnr - Sweaters & C.N.S Knits*Sr. Techn. Designer - C.N.S. Knits Exp

www.apparelstaffing.com orFax resume to: (212) 302-1161

WWD, TUESDAY, MAY 17, 2005 15

NEW YORK — Mossimo Inc. reporteda 53 percent increase in first-quarterprofits and a 39 percent rise in rev-enues, due to demand for its fashionsat discount retailer Target.

In the three months ended March31, the Santa Monica, Calif.-basedcompany earned $1.8 million, or 12cents a share, versus $1.2 million, or 8cents, a year ago. Analysts, however,had been expecting a profit of 13 centsin the latest quarter.

Net revenues increased to $8.7 mil-lion from $6.2 million a year ago.

“Our results for the first quarterwere primarily driven by improve-ments in our Target business, partiallyoffset by challenges at ModernAmusement and Zellers,” said EdwinLewis, president and co-chief execu-tive officer of Mossimo, in a Mondaystatement, released after the close ofthe stock market. “We are workinghard to fine-tune our merchandisingand distribution strategies, and we re-main focused on executing our busi-ness plan.”

Shares of Mossimo closed at $4.26,unchanged in Monday’s Nasdaq session.

— Meredith Derby

Mossimo ProfitsJump 53 Percent By Samantha Conti

LONDON — Onward Kashiyama, theTokyo-based fashion manufacturer, re-tailer and distributor, has purchased100 percent of Joseph in a deal valuingthe U.K. retailer at $258 million, or 140million pounds.

“We have known Onward Kashiyamafor many years as our men’s wear partnerin Japan, and the combination offers sig-nificant advantages to Joseph, especiallyin respect of expansion in the Far East,”said Joseph’s managing director ThierryLetrilliart in a statement Monday.

Joseph is one of the U.K.’s leadingdesigner-label retailers and a whole-saler of its own private label. Foundedin the Seventies by Joseph Ettedgui, ithas 63 stores, mainly in the U.K. andcontinental Europe.

Onward owns such labels as ICB, orInternational Concept Brand, and has astake in the Florence-based clothing man-ufacturer Gibò. It also distributes clothingfor designers including Michael Kors,Calvin Klein and Jean Paul Gaultier.

Industry sources said the sale came atthe end of an “extremely competitive”auction and that the new owners are keenon tapping Joseph’s potential for interna-tional growth, especially in the Far East.

“They feel they can expand thebrand aggressively in the Japanese mar-ket, and they’re also looking to grow itin Hong Kong and China,” said an in-dustry source.

Meanwhile, the statement went on tosay that Joseph’s sales increased 3 per-cent to $129 million, or 70.3 millionpounds, in the fiscal year ended inMarch.

It added that EBITDA, or earnings

before interest, taxes, depreciation andamortization, gained 34 percent to $24million, or 13.3 million pounds.

The company said the current fiscalyear has started with a bang: Retailsales are “substantially ahead” of lastyear’s, and the autumn wholesale orderbook is up 12 percent up, comparedwith last year.

As reported, in November CompagnieNationale à Portefeuille, the investmentcompany that held a 54 percent stake inJoseph, gave a mandate to BNP Paribasto conduct a strategic review, with theaim of selling the company.

In mid-February, the financial docu-ments went out to potential bidders,with industry sources estimating thevalue of the company at $184 million, or100 million pounds.

It is unclear whether Joseph and hisbrother Franklin, who sold their minori-ty stakes in the company to Onward, willcontinue to be involved in the day-to-dayrunning of the business. A spokesmanfor Joseph did not return phone callsMonday.

— With contributions fromKoji Hirano, Tokyo

Onward Acquires U.K.’s Joseph

Technical DesignerWestchester based Sportswear Mfrseeks indiv w/ both knits and wovenbottom exp. Person must have knowl-edge of garment construction, patternsand specing ability. Daily correspond-ence w/ factories and customers as youfollow samples from 1st fit thru prod’n.Please fax your resume to 914-328-7941or E-mail Donna@niteksusa.com

Technical DesignerWomens Outerwear and SportswearManufacturer seeks a technical de-signer. Work with design, productionand customer QA departments. 2-3 yrsexperience preferred. Email resume:

techdesresume@yahoo.com orfax to 646-435-7412

Warehouse ManagerNJ location. Great oppty for self-starterwith warehouse exp! Must be computerliterate, have knowledge of EDI, ASN,and allocations. Fax resume attn: Jack

212-921-8369

Women’s Contemporary SportswearManufacturer seeking to fill the

following positions:

A. Knitwear Sample DevelopmentPosition requires a highly motivatedorganized individual with experience.Must be detail oriented with excellentfollow up skills. A knowledge of Can-tonese a plus, but not required.

B. Assistant Tech Designer3 years experience in Women’s Sweaters.Must be organized, skilled and able tosketch. Pattern making backgroundpreferred. Computer literate.

For confidential consideration pleaseE-mail us at: theenergyisinus@aol.comPlease indicate which position you are

applying for A. or B.

SALESPERSON - USARentex Inc., North America’s leading producer of high quality circular &warp knit fabrics seeks an experienced SALESPERSON / SALES MANAGER . Rentex,established 41 years ago, operates state of the art knitting, dyeing and finish-ing facilities. Rentex produces the broadest range of circular / warp knitfabrics and sells to all segments of the Apparel & Non-Apparel Markets.The suitable candidate will have at least 5 years experience selling fabrics as well asound technical base. Ideally, he or she will have an established track record inselling to end users in multiple apparel and non-apparel market segments.The successful candidate will have a keen entrepreneurial sense and anability to work with all levels of the organization.

This is an ideal position for someone wanting to build a career with adynamic and future oriented company. Please Fax resumes to the

attention of Jay Derstenfeld at: 514-735-5253

SALES EXECUTIVEContemporary Sweaters/Knitted Tops

Established Branded Contemporary Manufacturer has an ex-citing opportunity for a self starter to run our NY showroom.Qualified candidates must have a min. of 5 years experiencein sales and merchandising, strong relationships with major &better specialty stores, and be able to assemble and run theroad sales force. If you are interested in joining a dynamiccompany we want to hear from you! Please email resume to:

greatfashionjob@yahoo.com

Account ExecutiveMajor juvenile bedding and décor man-ufacturer seeks experienced accountexecutive for our licensed division(Disney, Warner Bros., etc). Must be ahighly motivated, detail oriented teamplayer. Fax resume to 212-643-0684.

Denim SalespersonLooking for salesperson with experi-ence only in denim fashion. Junior /kids / missy / large sizes. Call 917-328-2361 or send by fax to: 212-869-6882.

Dresses & SportswearEst’d. Importer seeks exp’d. & aggressiveSales Pro. Must have contacts withMajor Chains & Private Labels. PleaseFax resume to: 212-944-3604

Knitwear Co.Seeking a strong, motivated, and detailoriented Account Exec w/existing rela-tionships and 2+ years experience sellingSpecialty & Mid-tier Stores. Some travelreq’d. E-mail resume & salary require-ments to: nfarneselutz@aol.com

(List "SALES POSITION" in header)

Los Angeles ShowroomYoung contemporary & missy salesrepresentative wanted for our LAshowroom. Must have experience withdept stores/chain stores.

Fax resume to 213-623-4596

PERSONAL SHOPPERWomen’s Fashion Clothing Companyseeks a personal shopper with a strongsales background and super service expe-rience. Must have excellent phone andwriting skills. Also must have computerexp. and laptop to maintain customerbook and correspondence. Base andcommission as sales exceed goals.Email Resume to: omonk@inch.com

SALES EXECUTIVEMissy woven shirts mfr. seeks sales profor NY showroom. Must have strong dept.and chain store contacts. Fax resume to:

(201) 330-0002

SALES EXECUTIVEWomen’s contemporary sportswear co.is seeking a highly motivated & exp’d

Sales Exec. with ties to specialty &better dept. stores. Excellent growthpotential. Fax resume: (212) 354-6052

or E-mail: sibel.saral@gmail.com

SALES PROOff-price wholesaler of children’s,

women’s & men’s clothing looking foran experienced Sales Pro, NY based.Must know retailers for mass market

& branded goods. Please send resume:Briara Trading Co., Fax: (610) 828-1799

or Email: Briaratra@aol.comNo telephone calls please.

TIBILeading young designer company, Tibi,is looking for an ACCOUNT MANAGERfor their Soho showroom. Canidate mustbe enthusiastic, have contemporary salesexperience, and existing relationshipswith boutique and specialty departmentstores. Please Fax resume and salaryrequirements to: 212-966-2961

V.P. of SalesWell Est’d boyswear Co., holding a ma-jor brand is seeking a top level personw/knowledge & experience in J.C.Penney, Kohl’s, and all mid tier levelaccounts. Great opportunity! Pleasefax or email resume to:

Attn: Valerie (212) 629-3506Valerie@ringosport.com

Luxury French Storeon Madison Ave seeks Sales Associ-ate. Candidate must possess strongcommunication skills, be energetic andprovide excellent customer service.

Salary + Commission + BenefitsPlease fax resume: (212) 421-9094

Luxury Lingerie StoreStore Manager and

P/T & F/T Sales StaffLuxury lingerie store, located in theMeatpacking District, seeks motivatedcandidates to build a brand which iscommitted to provide superior prod-ucts, exceptional customer service anda quality store experience. Qualifiedindividuals must be eager and enthusi-astic with excellent communicationskills. Currently seeking store mgrwith outstanding proven sales skills,as well as full and part time sales staff.

E-mail resume to:employment@catrionamackechnie.com

Major textile Fabric line wanted for sales to the outerwear

markets. Excellent contacts and yearsof exp.!!

Box#M 1038c/o Fairchild Publications7 West 34th Street, 4th Fl

New York, NY 10001

Knits, Denim, OuterwearGarment mfr in knits, denim, andouterwear w/ facilities in Pakistan,India, UAE, Jordan, China, & T-shirtin Central America seeks salesperson with exp in selling toimporters & private labels. Com-mission only. Office is in NYC.

Call 212-629-1078 orE-mail: info@anchorapparel.com

ROAD REPS WANTEDLeading European Lingerie & SwimwearMfr. is looking for independent reps tosell lines to dept. and specialty stores.Most geographic territories available.

Fax resume to: 954-730-8723

Quality Control SpecialistMIAMI BASED - Exp’d. individual withpatternmaking background & ability totravel overseas. Call Leon @ 305-302-5134

WWD.COM

“We have known Onward Kashiyama formany years as our men’s wear partner inJapan, and the combination offers significantadvantages to Joseph.” — Thierry Letrilliart, Joseph

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WWDSourcingHorizonsThe rules of international apparel and textile trade changed dramatically

on Jan.1 when the 148-member World Trade Organization dropped

quotas. China and India have seen their imports to the U.S. and European

Union soar, while African nations have suffered setbacks in building

industries and U.S. manufacturing jobs continue to be lost. But the U.S.

slapped fresh quotas on China last week, leaving the industry to figure

out whether safeguards will ever go away. Meanwhile, the Bush

administration and U.S. importers look to garner congressional support

for the Central American Free Trade Agreement, which has divided the

domestic textile sector.

The rules of international apparel and textile trade changed dramatically

on Jan.1 when the 148-member World Trade Organization dropped

quotas. China and India have seen their imports to the U.S. and European

Union soar, while African nations have suffered setbacks in building

industries and U.S. manufacturing jobs continue to be lost. But the U.S.

slapped fresh quotas on China last week, leaving the industry to figure

out whether safeguards will ever go away. Meanwhile, the Bush

administration and U.S. importers look to garner congressional support

for the Central American Free Trade Agreement, which has divided the

domestic textile sector.

SECTION II

Winners and Losers

WWD.COMSECTION II

By Kristi Ellis

WASHINGTON — MOMENTUM IS A RELATIVEterm in Washington, but it is one the White Househas latched onto, as the debate over the CentralAmerican Free Trade Agreement intensifies.

More than a year has passed since the U.S. com-pleted negotiations with Guatemala, Nicaragua,Costa Rica, El Salvador, Honduras and theDominican Republic, but President Bush has not yetsent CAFTA to Congress, in large part because ofstrong opposition on the Hill, according to trade vet-erans.

The battle over CAFTA is expected to be one ofthe most definitive trade fights in Congress since theNorth American Free Trade Agreement was imple-mented in 1994, and the administration’s recent ef-forts to bolster support for the agreement reflect the

tension between the White House and the Hill.As the Bush administration kicked the pro-CAFTA

campaign into high gear last week, opponents of thetrade pact galvanized efforts to block the deal.

President Bush stepped into the spotlight last weekas he hosted the presidents of the six CAFTA partners,who were on a lobbying blitz through the U.S.

“CAFTA brings benefits to all sides,” Bush said ina Rose Garden ceremony at the White House honor-ing the six presidents.

He said the deal would strengthen fledglingdemocracies in the region and, conversely, level theplaying field for U.S. manufacturers, including tex-tile producers.

“By passing CAFTA, we would open up a marketof 44 million consumers who already import more ofour goods and services than Australia or Brazil,”Bush said in a speech. “And we would create incen-tives for factories to stay in Central America and useAmerican materials rather than relocate to Asia,where they are more likely to use Asian materials.”

The textile industry has been considered one ofthe remaining hurdles against CAFTA’s passage inthe House, which is considered to wage the toughestbattle. Other opponents include the sugar industry,faith-based groups and organized labor.

Blocs of House Republicans, including the TextileCaucus, which currently has about 80 members, havejoined scores of Democrats who have said they will

vote against CAFTA, in the face of a mounting tradedeficit and widespread manufacturing job lossesoften linked to the impact of trade.

Leaders of the House New Democrat Coalition —moderate Democrats who often support free tradeagreements — have even taken a tough stanceagainst CAFTA, citing concerns for workers’ rightsand calling on the administration to renegotiate whatthey feel is a flawed pact.

For the moment, the Bush administration has thetextile vote in its crosshairs and is concentrating onlawmakers in Southeastern states, including theCarolinas and Georgia.

Political maneuvering is going strong, as the ad-ministration seeks to secure votes in the House. It re-cently dangled commitments to the National Councilof Textile Organizations, a key textile lobbying asso-ciation, in exchange for its support of the deal, and in

so doing fractured textile industry lobbying, with theAmerican Manufacturing Trade Action Coalition andNational Textile Association remaining opposed tothe accord.

The stakes are high for both sides of the dividedtextile industry, which has lost hundreds of thou-sands of jobs in the past decade.

The CAFTA region is the second-largest marketfor U.S. textiles and accounted for $4.2 billion in ex-ports in 2004. The region represented 22.5 percent ofall U.S. textile exports.

The administration’s pledges to the textile indus-try will play a key factor in which way many lawmak-ers ultimately vote. Rep. Howard Coble (R., N.C.), co-chair of the House Textile Caucus, has slated a paneldiscussion for May 24 to discuss the pros and cons ofCAFTA for caucus members. The six-member panelwill include representatives from the government,NCTO and American Apparel & FootwearAssociation — on the pro-CAFTA side — and execu-tives from AMTAC, National Textile Association andUNITE HERE on the opposition.

At least one of the pledges to NCTO has raisedconcerns and could impact the potential supportamong lawmakers.

The administration is seeking a modification tothe negotiated accord to require that pocketing andlining fabrics be supplied by the U.S. or the six signa-tory countries in order to be exported duty-free, but

any amendments have to be approved by all of thecountries involved in the trade deal.

In a wrinkle that could have a negative impact,some of the Latin American leaders said late lastweek they are not sold on whether to support theBush administration’s proposed change. That doesn’tsit well with lawmakers seeking concrete commit-ments on which to base their votes.

Sen. Lindsey Graham (R., S.C.) said at a press con-ference last week it would be “irresponsible” tomove forward with a vote on CAFTA until the sixother signatory countries indicate whether they willsupport the change. House lawmakers are also con-cerned about whether the commitments are attain-able or enforceable.

It is still difficult to gauge how House TextileCaucus members will weigh NCTO’s endorsementagainst the remaining industry opposition andwhether one association’s support will be enough toswing key votes.

Ultimately, the votes could come down to whether alawmaker’s key constituents support or oppose the pact.

Many House Republicans representing textileconstituencies remain undecided, but a few are will-ing to go on the record opposing CAFTA.

At the time the deal with NCTO was announcedon May 10, Coble’s chief of staff, Ed McDonald, saidthe congressman would vote ‘no’ on the agreement ifa vote were held that day, but he stressed Coble isstill gathering the facts. Many textile firms in Coble’sdistrict support CAFTA, sources said.

“Congressman [Robin] Hayes (R., N.C.) is still con-cerned about the loopholes China can get aroundand the continued dumping of its cheap goods to thedetriment of our domestic textile industry,” saidCarolyn Hern, Coble’s communications director.“From what we understand, those loopholes have notbeen addressed in any deal that was made [withNCTO]. That is still a great concern for him.”

Hern noted that nothing is “cut and dried” at thispoint. He added, “Other countries have to do what isbest for their country, and at this point I’m not surethey are looking out for the U.S. textile industry.”

Rep. John Spratt (D., S.C.), co-chair of the HouseTextile Caucus, said he is still opposed to CAFTA, de-spite the administration’s recent commitment onpocketings and linings.

“That is a small one, and it is not enough for me toturn [in favor of] the deal,” he said in a phone inter-view. “I wonder how that will be policed.”

Spratt assailed CAFTA’s textile and apparel rule

of origin, which allows numerous exceptions for for-eign fabric and yarn.

“The problem with those exceptions is they havenot just weakened the rule of origin but they are dev-ilishly difficult to police,” Spratt said, both on theU.S. side and in the region.

He also criticized the CAFTA countries’ “notori-ous lack of transparency in their Customs’ opera-tions, and consequently that makes the already atten-uated proposal thin as a reed.

“Those of us who have seen our textile industrydiminish and fade away look upon this as one of thelast stands,” Spratt said.

Rep. Sue Myrick (R., N.C.), on the other hand, saidmany textile employers in her district have said theyprivately support CAFTA, and she is leaning towardsupporting it.

CAFTA Debate Heats Up on the HillSOURCING HORIZONS

WWD, TUESDAY, MAY 17, 20052

“By passing CAFTA, we wouldopen up a market of 44 millionconsumers who already importmore of our goods and servicesthan Australia or Brazil.”— President Bush

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WWD.COMSECTION II

By Evan Clark

WASHINGTON — THE STAKES OF THE CENTRALAmerican Free Trade Agreement are higher thanjust textiles and sugar — the two big U.S. constituen-cies that have opposed the agreement.

Hanging in the balance are social structures andnascent democracies in Central America, said thepresidents of the Latin American countries, whowere in Washington last week pushing CAFTA.

The leaders made stops at 10 cities, Capitol Hilland the White House, painting the agreement as astruggle to maintain democracy in the region and

shore up shaky economic foundations.On the tour were the leaders of the Central

American countries Costa Rica, El Salvador,Guatemala, Honduras and Nicaragua, as well as theCaribbean nation, the Dominican Republic.

“Approving DR-CAFTA will create new hope inour nations,” President Leonel Fernandez of theDominican Republic said in the wood-paneled Hallof Flags at the U.S. Chamber of Commerce last week.

The event was part pep rally, part preamble to ameeting with President Bush later in the week.

“Democracy up until now has not been able to de-liver,” said Fernandez, noting that CAFTA is needed

to shore up the country’s fragile economy.The U.S. market was initially opened to

the region by the Caribbean BasinInitiative, which promoted a switch fromagricultural exports to manufacturing.

“Having this access to the U.S. has trulytransformed the nature of our economies,”said Fernandez.

That access expires in 2008, though, andCAFTA is needed to make permanent re-ciprocal trade possible, he said, acknowl-edging that the agreement is also a toughsell to farmers in the region who arescared of losing their jobs.

“Your neighbor, Central America, needsCAFTA,” said Nicaraguan President EnriqueBolanos. “I care for CAFTA because it’s goodfor my country. It’s good for my people.”

He pointed out that Nicaragua has anunemployment rate close to 40 percentand lags other Central American coun-tries economically.

Honduran President Ricardo Madurohighlighted the importance of the agree-ment at an earlier stop on the tour in Miami.

Earlier this month, a small plane carry-ing Maduro lost power and crashed intothe Atlantic Ocean near a beach inHonduras. As the plane fell, Maduro, ac-cording to a report in the Miami Herald,said his unfinished agenda ran though hismind and CAFTA was at the top of the list.

The presidents have the backing of theBush administration, which is trying toshore up support for the agreement inCongress.

“CAFTA is ultimately about freedom and econom-ic opportunity,” said U.S. Trade RepresentativeRobert Portman, at the Chamber of Commerce event.

“Violence and civil war were part of life in manyof these countries,” said Portman of the not-too-dis-tant past. “Now they want to strengthen the founda-tions of democracy. It is the opportunity of a lifetime.We must seize that opportunity.”

CAFTA builds a more permanent relationship thatcompanies can depend on, said Stephen Johnson, asenior policy analyst for Latin America at theHeritage Foundation.

“It helps your neighbors be more prosperous at atime when competitive advantages are very slim,” saidJohnson, pointing to the lower wages paid in Asia ascompared with Central America. “They need some-thing to be competitive, and if they’re not competitiveand businesses can’t function, then they’re going to besending their unemployed to the United States.”

Ed Gresser, trade policy director at theProgressive Policy Institute, said countries in the re-gion, particularly the Dominican Republic, ElSalvador and Honduras, have become successfulclothing exporters to the U.S.

“They have used the clothing industry to reallyhelp build up their societies,” he said, noting thatpermanent access as opposed to periodic reviews isimportant to the countries, especially given the as-cent of China as a manufacturing powerhouse.

“They feel the environment is changing aroundthem, and it’s a pretty major thing they have atstake,” said Gresser.

The success of the CAFTA presidents’ lobbying ef-forts remain to be seen, but the Chamber’s seniorvice president for international affairs, DanielChristman, was encouraged by the crowd last week,which included five of the six Latin American presi-dents, Commerce Department secretary CarlosGutierrez, several congressmen, Portman and busi-ness leaders.

“We now have CAFTA critical mass,” Christmansaid. “Let’s take it across the goal line. We have achoice: two paths, two futures.”

If approved, the fragile economies of the LatinAmerican countries taking part in CAFTA would get aneconomic boost from the more-open markets, he said.

“If CAFTA is defeated, hundreds of thousands ofjobs will be lost,” he said, adding that the countries“will view it as a kick in the teeth.”

WWD, TUESDAY, MAY 17, 20054

A Presidential Bid for Trade Pact

SOURCING HORIZONS

President Bush in the Rose Garden with presidents of the CAFTA countries.

From left: Elias Antonio Saca of El Salvador, Abel Pacheco of Costa Rica,

Enrique Bolanos of Nicaragua, Ricardo Maduro of Honduras, Oscar Berger

of Guatemala and Leonel Fernandez of the Dominican Republic.

President Bush in the Rose Garden with presidents of the CAFTA countries.

From left: Elias Antonio Saca of El Salvador, Abel Pacheco of Costa Rica,

Enrique Bolanos of Nicaragua, Ricardo Maduro of Honduras, Oscar Berger

of Guatemala and Leonel Fernandez of the Dominican Republic.

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WWD.COMSECTION II

By Kristi Ellis

WASHINGTON — THE FIGHT TO BREAK THROUGHtrade barriers into new markets around the world is adecades-old story and one that still bewitches U.S.companies looking to pry open the door to untappedconsumer markets.

Trade barriers are a U.S. exporter’s and retailer’sbiggest headache. That’s why retailers and apparelexporters are pinning their hopes on the current roundof global trade talks, which aim to significantly reduceor completely eliminate tariffs and nontariff barriers.

The global trade talks under the auspices of theWorld Trade Organization have limped along, however,since they collapsed in Cancún in September 2003, andmany leaders are trying to revive the talks in advanceof a critical meeting in Hong Kong in December.

In the meantime, U.S. companies continue to pressfor more aggressive action against countries thatmaintain high trade barriers.

While some countries have madeimprovements in the past year toeliminate barriers such as tariffs,ownership requirements and bur-densome licensing arrangements,others have erected new obstacles.

China and India took some stepsto lower impediments to trade lastyear, for example, but many barriersremain despite years of consultationsand diplomatic pressure.

The Office of the U.S. TradeRepresentative said in its recentannual report on foreign trade barri-ers that China, India and Egypt stillmaintain some of the highest hurdleson imported apparel and textile prod-ucts, as well as burdensome businesslaws on retailing and distribution.

“This is a work in progress,” saida U.S. trade official who briefedreporters at the end of March whenthe report was released. “We need tocontinue more efforts but we havemade substantial progress.”

The official cited a dispute theU.S. resolved with Egypt over exces-sively high tariffs on apparel andtextile imports without having toform a dispute settlement panel atthe World Trade Organization.

The official said the U.S. prefersto resolve problems and lower barri-ers through dialogue and diplomacy, but it will nothesitate to “use all of the tools at its disposal,” such asfiling WTO cases.

Dialogue can take several years, however, and U.S.apparel companies are forced to come up with cre-ative ways to get around some of the barriers.

“One of the challenges in India and Pakistan is U.S.apparel companies make a lot of goods there, but thechallenge is trying to get the goods in the retail envi-ronment,” said Kevin Burke, president and chiefexecutive officer of the American Apparel & FootwearAssociation. “The government makes it difficult forgoods made in the countries to be sold there.”

Burke noted that the Chinese, carrying out com-mitments made to join the WTO, have recentlychanged a law to allow the sale of products made inChina for export to be sold in the country.

The Chinese law now allows U.S. branded productsto be made and sold in China, but the government hasnot issued regulations instructing local governmentshow to allow foreign companies to sell apparel locally.

It is this bureaucratic red tape that many U.S. com-panies run into even when the laws are loosened.

Mark Jaeger, senior vice president and generalcounsel at Jockey International, said: “The challengewith apparel is whether it is more economical toexport from the U.S. or to make or license productionin the market we are trying to service. Some markets

are more difficult to penetrate directly with invest-ment or exports,” citing China as an example.

Foreign companies can now produce goods inChina to sell to the Chinese market. Previously, foreigncompanies that manufactured in China had to havehard-to-obtain licenses to sell to the domestic market.That barrier, coupled with China’s 30 percent duties,made it difficult for foreign brands to sell there.

In addition, China changed its internal distribu-tion rules on Dec. 11, per its WTO commitments, andforeign companies are now allowed to own their dis-tribution centers and distribute goods produced out-side of the country.

“We look forward to increased flexibility in sellingbranded goods in China, but there have only been high-level commitments to permit internal distribution, andwe haven’t seen detailed regulations,” Jaeger said. “Wewould like to see detailed regulations and how theywork in practice before considering other models.”

Jaeger said Jockey has also had problems in theCaribbean region shifting regional production intothe local marketplace. To get around the trade barri-ers, Jockey produces in the Caribbean, exports theapparel back to the U.S. and re-exports it back to theCaribbean to sell to the local economy, he said.

“Presently we export from the U.S., which is ironicbecause when you look at San Pedro Sula [Honduras],it has the largest underwear production city in theworld, and yet much of that production is not allowedto be sold in the local marketplace” under the currenttrade preference program known as the CaribbeanTrade Partnership Act.

Wal-Mart has created a successful model throughjoint partnerships in China and is eyeing India as apossible market for store expansion, according toAmy Wyatt, a company spokeswoman.

John B. Menzer, president and chief executive offi-cer of Wal-Mart International, traveled to India lastweek to visit the company’s procurement office. Theretail giant sources apparel and accessories from India.

It is no secret Wal-Mart is hoping to break intoretailing in India, but foreign investment rules havebeen highly prohibitive, Wyatt said.

“We believe there is a bright future for retailing inIndia,” she said. “We would explore it as soon as foreigndirect investment regulations make it more viable. Atthis point they don’t.”

Foreign retailers are currently not allowed to openwholly owned ventures and must set up joint ventureswith local partners in India.

“India is similar to China,” Wyatt said. “When wefirst went into China, we had to have local joint-ven-ture partners. But China has since released thoserestrictions, and we can now own retail operations.That has lifted a lot of restrictions on foreign retailersand broadened the market in China.”

Wal-Mart, which operated 43 stores in China at theend of 2004, plans to continue operating with joint-venture partners in China this year and build an addi-tional 15 to 20 stores.

Foreign barriers affect all aspects of the supplychain, and U.S. textile companies also fight to selltheir fabric and yarn in countries around the world.

The USTR’s report on foreign trade barriers citedthe U.S. textile industry’s ongoing concerns withIndia’s barriers to U.S. exports.

“According to the U.S. textile industry, India con-tinues to maintain numerous textile trade barriers,and India remains one of the most heavily protectedtextile markets in the world,” the report noted.

Cass Johnson, president of the National Council ofTextile Organizations, criticized the U.S. for not tak-ing more aggressive action against countries that con-tinue to maintain high barriers.

“The biggest markets we are locked out of — Indiaand China — hide behind barriers that are either notbeing addressed or will only be addressed in theworld trade talks,” said Johnson.

He said India’s high tariffs on textile imports, aver-aging 30 to 40 percent, are a formidable barrier thatkeeps U.S. producers locked out of the market.

“India still has a long way to go,” Johnson said.“India imports almost nothing from anyone. It is thesecond most populous nation on earth, and it doesn’timport textiles and apparel.”

He said his association has advised the govern-ment in the past to concentrate on a single country,such as India.

“We’ve seen with India that if one barrier isremoved, another one pops up, and until the govern-ment is able to focus India on knocking down multiplebarriers, we are not going to see significant results interms of increased exports of textile and apparelproducts,” Johnson said.

U.S. Firms Face Export BarriersSOURCING HORIZONS

WWD, TUESDAY, MAY 17, 20056

The Great Wall of China is symbolic of

the country’s barriers to foreign trade.

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A New FashionMust HaveEarth Month with Ingeo™ Fibers: A Unique Celebration of a Fashion/Textiles InitiativeThere’s a new item topping the fashion shopping lists this season. It is an absolutemust have due to its unique selling proposition … the proven appeal of a lifestyle thatpromotes respect for the environment and social responsibility. This phenomenon isbeing realized globally, and is embodied in a unique celebration called Earth Monthwith Ingeo™ fibers, a month-long event showcasing how the entire fashion system canbe better and profit at the same time.

Ingeo and the Ingeo logo are trademarks of NatureWorks LLC.

A Fashion Dream That Is Now A Reality

We’re talking, of course, about Ingeo fiber, the new

and only man-made fiber from 100-percent annually

renewable resources.

The new fiber is changing the way the entire fashion

system looks at the concepts of respect for the

environment and social responsibility. What was once

a dream is now a competitive leverage point in the

textile-clothing sector.

Made from a polymer produced by NatureWorks LLC,

Ingeo fiber is derived from fermented plant sugars

and combines the performance of a synthetic with the

advantages of a natural material.

Oil is a finite and precious resource. Clothes don’t

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According to a survey conducted by the Milan

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according to ethical principles. The survey also found

some stunning news. More than 79 percent of the

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Ingeo Fiber Launches Earth Month

In order to support and celebrate the desire for more

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Each year during this period, Earth Month with Ingeo

fibers will be an annual period devoted to celebrating

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From April 22nd to May 31st, clothing designed

especially for the occasion, and produced with Ingeo

fiber, will be sold worldwide in select stores thanks to

the collaboration of 13 international brands: Bagutta,

Belfe, Bio3-zone, Docare, Diesel – presenting clothing

by Leslie Mobo, winner of the Diesel Award at

ITS#THREE, Fortei, Fucci, Gaspard Yurkievich,

Paul Simon, Salewa, Urban Outfitters, Versace Sport,

Wickers. These brands have chosen to participate

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The opening and closing of the inaugural Earth Month

is being marked by two high-profile events, both made

possible through collaboration with Ingeo fiber.

International music star Moby served as the headliner

to kick off Earth Month. V.I.P. guests at the after party

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bag from Ingeo fiber, containing Moby’s personalized

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non-woven textiles sector.

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celebration of Earth

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in May between the Italian

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Clockwise from above: Bio3-Zone,Bagutta, Fucci, Moby and Moby T-shirt, The Italian NationalDesigners' Soccer Team

SECTION II

WINNERS: Countries that have seen the largest dollar increase in textile and apparelimports since quotas were dropped on Jan. 1.

CHINA Up $1.8 billionThe world’s most-populous country heads the list of gainers and has become thebuzzword when it comes to international trade and apparel sourcing because of itsgirth and immense pool of low-cost labor. China joined the World TradeOrganization in 2001, but agreed to a safeguard provision that allows quotas to bereimposed to protect domestic industries. Both the U.S. and the European Unionare reviewing whether to implement the safeguards, which could be renewed until2008. There are persistent calls for China to curtail subsidies to its industry andallow its currency to fluctuate on the open market. The country has also comeunder pressure from the Bush Administration to strengthen its enforcement oflaws that protect intellectual property rights.Population: 1.31 billionLabor Force: 761 millionPer Capita Gross Domestic Product: $5,600Industrial Production Growth Rate: 17.1 percent

INDIA Up $258 millionIf China is the biggest blip on the industry’ssourcing radar, India, right next store andnearly as immense, comes in a close second.India has been a member of the WTO since1995 and is considered a developing nation,meaning it gets special consideration in thecurrent round of global trade talks. As Indianimports rise, the U.S. government has pres-sured the country to be more open to U.S.goods, noting that it has one of the most heavi-ly protected textile markets in the world.Population: 1.08 billionLabor Force: 482 millionPer Capita Gross Domestic Product: $3,100Industrial Production Growth Rate: 7.4 percent

BANGLADESH Up $96 millionConsidered one of the most competitive markets formass market apparel, Bangladesh has a low-costworkforce and increasing productivity, though it stilllags behind China. The government has been workingto improve labor standards, though overall economicreform has been held back by widespread corrup-tion.Population: 144 millionLabor Force: 65 millionPer Capita Gross Domestic Product: $2,000Industrial Production Growth Rate: 6.5 percent

INDONESIA Up $80 millionIndonesia has picked up share with a low-cost labor force that is both large andskilled. The country also has significant manufacturing base for raw materials,particularly synthetic textile goods. Persistent political and social unrest, however,have made investors wary.Population: 242 millionLabor Force: 112 millionPer Capita Gross Domestic Product: $3,500Industrial Production Growth Rate: 10.5 percent

SOURCING HORIZONS

WWD, TUESDAY, MAY 17, 20058

Post-Quota Winners and LosersBy Evan Clark

WASHINGTON — AFTER UNLEASHING GLOBAL TRADE FROM THE RESTRAINTof quotas on Jan. 1, the dust is far from settled, but China has lived up to expecta-tions and emerged as the primary beneficiary of the change.

Imports of Chinese apparel and textiles worth $4.8 billion entered the U.S. in thefirst quarter, a 60.5 percent jump compared with a year earlier, when trade amongWorld Trade Organization countries was under quota constraints.

Among the other winners in the post-quota world are India and Bangladesh, whichhave large, low-cost workforces and significant manufacturing infrastructures.

“It’s too early to draw the definitive conclusion,” said Steve Lamar, senior vicepresident of the American Apparel & Footwear Association. “You’re starting to seesome trends shaping up that might be early indicators of longer-term trends.”

One of these is the movement of production to China, but it will take time forsourcing patterns to adjust to a new trade landscape, he said.

“These shifts are going to take some time,” he said. “It’s not like you’re all of asudden going to see everything go overnight.”

Propped up for years by the quota system, other countries, such as Mexico, lostground in the importing game. Also losing out was Hong Kong, which largely fin-

ished goods produced in China and then shipped them to the U.S.“The fact that they had a lot of quota made them competitive in the market-

place,” said Michael Delaney, chief executive officer of Ralsey, a division of sourc-ing giant Li & Fung. “When that buffer or that barrier isn’t in place, it becomes ap-parent that the underlying economics are not strong enough to support it.”

However, sourcing since January has been a bit of a guessing game for vendors.When it joined the WTO in 2001, China agreed to temporary quotas, which could beapplied to specific goods and renewed through 2008. These restrictions are meantto safeguard the domestic industry and ease it into the transition.

Safeguards quotas were imposed Friday on cotton knit shirts and blouses, cottontrousers and cotton and man-made fiber underwear, valued at $624.5 million annu-ally, and petitions on another $3.35 billion worth of goods are pending. Vendors arevexed over whether those categories of goods will have fresh quotas imposed.

“This has a profound effect on people’s sourcing decisions right now,” said Delaney.“Without knowing what’s going to happen in China, we have to look elsewhere.”

Vendors often need eight or nine months to make sourcing decisions and can illafford to get caught with goods in China that can’t be brought to market.

“The overall hope was that it would be an orderly transition,” said Delaney. “It’sdisheartening that they haven’t figured out a more managed way to deal with this.”

SRI LANKA Up $75 millionWith a relatively small and high-cost laborpool, Sir Lanka has nonetheless managed topick up its share of apparel and textile importsto the U.S. during the first quarter. The countryrelies heavily on imported yarns and fabricsfor its apparel production, which could prove adisadvantage. Late last year, a tsunami killednearly 40,000 in Sri Lanka and destroyed sig-nificant amounts of property, though the appar-el industry was relatively unaffected.Population: 20 millionLabor Force: 7 millionPer Capita Gross Domestic Product: $4,000Industrial Production Growth Rate: 7.1 percent

LOSERS: Countries that have seen the largest dollar decrease in textile and apparelimports since Jan. 1.

HONG KONG Down $148 millionA free-market economy, Hong Kong is highly dependent on international trade,handling many of the goods coming out of China. That has tapered off dramaticallysince quotas were dropped. Tiny geographically — Hong Kong is just six times thesize of Washington, D.C. — it became a special administrative district of China in1997 and operates in tandem with its larger neighbor under the “one country, twosystems” rule.Population: 7 millionLabor Force: 4 millionPer Capita Gross Domestic Product: $34,200Industrial Production Growth Rate: 1 percent

MEXICO Down $130 millionMexico enjoys close proximity to the U.S. market and has tripled its trade with theU.S. and Canada since the implementation of the North American Free TradeAgreement in 1994, but has still lost out in the post-quota world. Fraught with cor-ruption, the country is working on upgrading its infrastructure, modernizing its taxsystem and rejiggering its labor laws.Population: 106 millionLabor Force: 35 millionPer Capita Gross Domestic Product: $9,600Industrial Production Growth Rate: 3.8 percent

SOUTH KOREA Down $96 millionHaving developed aWesternized, service econo-my and a presidential systemof leadership since the closeof the Korean War in 1953,South Korea stands in starkcontrast to its isolated north-ern neighbor. Its relativelyhigh labor costs, however,put the country at a competi-tive disadvantage to Chinasince the end of the quotaregime. Anticipating theincreased importance ofChina in the post-quotaworld, many South Koreantextile firms have turnedtoward increasingly mecha-nized production and novelgoods, such as fabric madefrom bamboo fibers.Population: 48 millionLabor Force: 23 millionPer Capita Gross DomesticProduct: $19,200Industrial Production GrowthRate: 10.1 percent

RUSSIA Down $63 millionRussia weathered afinancial crisis in thelate Nineties and hasgrown its economyfor six straight years,but is still contendingwith a weak bankingsystem, a climate thatdiscourages invest-ment and corruption.The U.S. governmentis also keeping aclose eye on the for-mer Communistnation for its weakenforcement of intellectual property laws.Population: 143 millionLabor Force: 72 millionPer Capita Gross Domestic Product: $9,800Industrial Production Growth Rate: 6.4 percent

CANADADown $62 million

Like Mexico,Canada’s apparelmanufacturing basehas benefited fromclose proximity to theU.S. market andNAFTA, but has lostground this year. TheU.S. consumes thelion’s share, or morethan 85 percent, ofthe country’s exports.Canada, however, hasa relatively high-costworkforce, especiallycompared with Asiancountries, such asChina.Population: 33 millionLabor Force: 17 millionPer Capita Gross Domestic Product: $31,500Industrial Production Growth Rate: 2 percent

9WWD, TUESDAY, MAY 17, 2005

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SECTION II

By Brian Dunn

MONTREAL — WHEN CANADIAN BUTTONS LTD.here recently announced it was ending production ofpolyester buttons after 121 years in business, it blamedthe China syndrome of cheaper clothing flooding thedomestic market.

Since most of the apparel coming into Canada wasbeing made in China, it made sense to outsource produc-tion to suppliers closer to where the apparel was beingmade, so the company opened an office in Hong Kong.

The great maul of China also claimed Tiger BrandKnitting Co. of Cambridge, Ontario, which recentlyclosed its doors after 124 years, resulting in the loss of300 workers. The maker of fleece garments was sold toa company controlled by New York investor Ken Lazar,who will source its branded apparel in China.

Last December, two textile companies inHuntingdon, Quebec, near the Vermont border, an-nounced plans to close six plants, putting close to 800people out of work. Both companies blamed increasedcompetition from China and a strong Canadian dollar.

One of the companies, Cleyn & Tinker, the largestCanadian manufacturer of worsted wool fabric, beganwinding down operations in April and is consolidatingits business in Burlington, N.C. The other, sportswearfabric maker Huntingdon Mills (Canada) Ltd., has al-ready closed, putting 250 people out of work.

Last spring, Gayley & Lord Inc., of Greensboro, N.C.,cut 600 jobs from its Swift denim plant in Drummondville,Quebec, due to competition from Asia, notably China.

In an ironic twist, Synatex, China World Best, one ofthe largest state-owned conglomerates in China,closed its cotton fabric plant last year, also located inDrummondville, after the 90 plant workers signedtheir first collective agreement that would have in-creased wages 15.7 percent over two years. At the time,the company said the plant was having difficulties be-cause of poor market conditions.

China has replaced the U.S. as the major supplier oftextiles and clothing to Canada. Between 1992 and 1999,

the U.S. share of total textile imports into Canada rosefrom 53 to 62 percent, spurred by the North AmericanFree Trade Agreement. But since 1999, the share hasfallen back to 53 percent and continues to decline.

During the same period, the U.S. share of totalCanadian clothing imports declined from 20 to 9 percent,while China’s market share went from 20 to 42 percent.

Employment in Canada’s apparel industry peakedat 100,000 in 2000 and is now hovering around 70,000,according to Bob Kirke, executive director of theOttawa-based Canadian Apparel Federation, whichrepresents manufacturers and suppliers. But he saidthe reality in Canada is different than it is in the U.S.

“We’ve kept more direct employment here becausewe never created an outward processing regime likeCAFTA and provisions under 807,” said Kirke, refer-ring to the pending Central American Free TradeAgreement and the Caribbean Basin preferentialtrade pact, respectively. “In terms of imports, Canadahas been relatively more generous, with China ac-counting for 42 percent of our clothing imports com-pared to about 18 percent in the U.S.”

Kirke said the Canadian government announcedplans in December to eliminate duties on all raw mate-rials, namely textiles that are not available in Canada.A final decision and report is expected by the end ofsummer, with duties refunded retroactive to Jan. 1.

“Unfortunately, Canadian companies going to upcom-ing U.S. trade shows won’t know if the fabric used in theirwomen’s wear will be duty free,” he added. “But it’s thebest shot to maintain a viable domestic production base.”

Canadian Firms Feel China’s Long ReachSOURCING HORIZONS

WWD, TUESDAY, MAY 17, 200510

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Textile and Clothing Industry Employment,

1992-2004 (in thousands)

160

140

120

100

80

60

40

20

0

TEXTILES AND CLOTHING

TEXTILES

CLOTHING

SOURCE: SURVEY OF EMPLOYMENT, PAYROLLS AND HOURS.

1992 1994 1996 1998 2000 2002 2004

11WWD, TUESDAY, MAY 17, 2005

WWD.COM

By John Zarocostas

GENEVA — POOR AFRICAN APPARELexporting nations need to diversifytheir product mix away from commodi-ty-type items, exploit their duty-freeadvantages and expand their supplychains if they are to survive in the high-ly competitive post-quota era, accordingto a report by a trade promotion agency.

The Geneva-based InternationalTrade Center’s report statesthat least-developed countriesin sub-Saharan Africa “will con-tinue to benefit from preferen-tial treatment from World TradeOrganization member countries.”

To best take advantage of theduty-free benefits extended tothem by wealthy countries, theITC reasoned that African mak-ers should focus on fabrics andgarments made of syntheticfibers, which typically carry high-er duty rates than cotton goods.

The study by MatthiasKnappe, senior market adviseron textiles and apparel at theITC, cites as an example that inthe U.S., duties on imports ofcotton-knit shirts average 20percent, but the average dutyfor shirts of man-made fiber is32 percent.

In 2004, sub-Saharan Africa’sshare of the U.S. apparel mar-ket was 2.2 percent, reflectingthe duty-free access providedunder the African Growth &Opportunity Act coupled withmore relaxed rules of origin cri-teria that allowed poor coun-tries to use cheaper fabricsourced from Asia for theirapparel exports.

The president of Rwanda,Paul Kagame, told an AprilWTO symposium that the capa-bilities of African countries totake advantage of opportunitiesprovided by AGOA and theEuropean Union’s “Everythingbut Arms” program, whichoffers trade benefits to the poor-est countries of the world for allproducts except weapons,depends “on our capacity tostimulate the supply side.”

Kagame lauded the tradeopportunities initiatives byWashington and Brussels, andstressed his desire “to seeAGOA renewed beyond 2015.”

The ITC report argued thatAfrican producers must diversi-fy their product mix if they areto be in a position to competewith Asian suppliers in the post-quota environment. It noted thatlast year, 77 percent of apparelexports under AGOA were basedon two product lines — knitshirts and simple trousers.

It noted that Chinese goodsin those categories carried aprice premium of as much as 60percent under the quota regime,which suggests that Chineseprices will drop markedly nowthat the nations of the WTOhave dropped those restrictions.

The ITC report suggestedthat poor African countries

could also explore niche markets forethnic textiles or apparel and urgedmanufacturers to seek innovative solu-tions on how to respond to buyers’requirements, from computer-assisteddesign to electronically managed sup-ply chains.

On the logistics front, the study notedthat sourcing materials such as fibers,fabrics and trims from nearby countriescan provide shorter delivery times.

Moreover, improving trade facilita-tion services by modernizing ports andcustoms clearance procedures couldhelp reduce delivery time to foreignmarkets.

According to World Bank estimatescited in the report, customs clearancefor cargo takes more than 10 days inSouth Asia and Africa, nine days inLatin America and only two days inadvanced industrialized countries.

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SECTION II

CREORA TAPS FORMER DUPONT EXECS: Creora spandex has enlisted two DuPontmarketing alums to spearhead its expansion in North America and Europe.

Creora, a subsidiary of South Korean conglomerate Hyosung Corp., has appoint-ed Ria Stern as director of North American marketing and global brands, andStephanie Ledru as director of European marketing and brands.

Stern most recently served as North American marketing director for Invista, theworld’s largest producer of spandex under the Lycra brand name. Prior to that,Stern spent 15 of her 20 career years with DuPont working in the company’s textilebusinesses. Ledru comes to the company from the DuPont-SA joint venture thatowned the European rights to the Coolmax brand. Ledru served as European mar-keting and communications manager.

Greg Vas Nunes, president of Hyosung’s spandex division for Europe and theAmericas, announced recently that he planned on appointing six to eight senior exec-utives to oversee various regions. Vas Nunes also said he planned to increase advertis-ing efforts and was looking to add production facilities to complement plants in SouthKorea and China. He said in a statement that the additions of Stern and Ledru “willprovide an overnight step-change in Hyosung’s brand and marketing capabilities.”

Creora entered the spandex market in 1992 and has become the second-largestproducer in the world, with a production capacity of about 50 kilotons, or a littlemore than 20 percent of the overall world capacity. Last year, textiles, includingspandex, polyester and nylon, constituted $890 million of Hyosung’s $4.21 billion insales from a diversified assortment of businesses, such as chemicals, industrialmaterials and construction.

— Ross Tucker

U.N. REPORT URGES ASIAN ALLIANCES: A United Nations report last month calledon companies to avoid moving production into China too rapidly and urged Chinaand India to cooperate with their smaller neighbors to ensure that the region’s econ-omy continues to grow.

Although the nations of the World Trade Organization dropped textile and apparelquotas on Jan. 1, the study warned that it is not clear how sourcing strategies will change.

The report said more declines in apparel prices, squeezing industry profit mar-gins, will allow larger producers such as China, India and Pakistan “to be moreprice-competitive through economies of scale.”

The outlook for smaller and more vulnerable producers in the region, such asNepal, Cambodia, Laos, Bangladesh and Sri Lanka, will require the governments toredouble their efforts to strengthen their respective industries and seek niche markets.

Though shifts in trading patterns are not expected to happen overnight, poor tex-tile- and apparel-dependent economies “could lose out” if they fail to act, the surveysaid. It suggested forging alliances with more competitive producers in the region asa means to achieve greater integration and said China and India “have an importantrole to play” through active partnerships with smaller countries.

The strong economic prospects for China and India indicate the challenge for theimpoverished countries is daunting, U.N. economists said.

The report, compiled by the U.N. Economic & Social Commission for Asia and thePacific, projected that China’s economy would grow by 8.5 percent this year, withIndia’s rising 7.2 percent.

— John Zarocostas

GLOBAL COMMERCE TO SLOW: Lower consumption — the result of higher oilprices and interest rates — may slow the growth of the global economy this year,according to a recent World Trade Organization forecast.

The 148-nation body predicted global commerce would grow 6.5 percent this year,compared with a 9 percent increase last year, according to chief WTO economistPatrick Low.

In an interview, senior WTO economist Michael Finger said the Jan. 1 removal oftextile and apparel quotas should give overall trade “a small boost.” For demand to rise,he said, “prices have to fall,” but added, “I don’t expect a big drop in retail prices.”

The report projected that the weakness of the U.S. dollar would put the brakes onU.S. import growth, while encouraging U.S. exports.

It noted that overall last year Germany was the world’s top exporter, with its ship-ments rising 22 percent to $914.8 billion. In second place was the U.S., with a 13 per-cent increase to $819 billion, followed by China, which overtook Japan by posting a35 percent increase to $593.4 billion.

The U.S. retained its ranking as the world’s top importer with a 17 percentincrease to $1.5 trillion; followed by Germany with $717.5 billion, up 17 percent, andChina with $561.4 billion, up 36 percent.

— J.Z.

GILDAN’S PLANT PLANS: Gildan Activewear has decided to defer plans to build atextile plant in Nicaragua and instead will expand its existing facilities in Hondurasand the Dominican Republic.

Expanding the existing two plants should be enough to allow Gildan to reach aprojected annual production of 37 million dozen T-shirts by the end of the year, chiefexecutive officer Glenn Chamandy said on a conference call. The increased pro-duction should also cover the company’s plan to start selling directly to retailers in

addition to its traditional wholesale markets.Chamandy projected sales of 1.5 million dozen T-shirts to the

retail market next year and also said that Gildan is considering anew fleece facility in Honduras, which would include a cogenera-tion electric plant to reduce energy costs.

— Brian Dunn

SOURCING HORIZONS

WWD, TUESDAY, MAY 17, 200512

“For demand to rise prices have to fall, but I don’t expect a big drop in retail prices.”— Michael Finger, WTO economist

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By John Zarocostas

GENEVA — EGYPT IS COUNTINGon investment to improve productiv-ity and a recently completed free-trade agreement with the U.S. tohelp it keep its competitive positionin the post-quota era.

Egyptian Minister of InvestmentMahmoud Mohieldin said in arecent interview that his country’stextiles and apparel industry isshaping up and “can secure a mar-ket for our products.”

As part of the Middle East peaceprocess, in 1996 the U.S. Congressauthorized an agreement to allowEgypt and Jordan to export productsto the U.S. duty-free, as long as prod-ucts contain a specified amount ofinputs from Israel.

The success of Jordan’s QualifiedIndustrial Zone program, which has seen the country’s exports increase to $674 million lastyear from $31 million in 1999, according to U.S. government data, also spurred Egypt to pursuethe QIZ option.

In 2004, Egyptian firms exported $534 million worth of textiles and apparel to the U.S.The government now wants to sharply increase exports to the U.S. market “with the possi-

bility of reaching $4 billion within the next five years,” according to projections by Egypt’s min-istry of foreign trade and industry.

Such a sharp increase would require Egyptian exporters to barrel ahead of the competition.Currently only two countries — China and Mexico — ship more than $5 billion of apparel andtextiles to the U.S. a year.

Increasing investments and productivity to benefit from access to the U.S. market could pro-vide 250,000 jobs in the industry, the Egyptian government estimated.

“We have comparative advantage in textiles and garments,” Mohieldin said. “It’s not justbased on the tradition and history in the sector but as well on the high quality of inputs we areusing, including the international trademarks of cotton and other fabrics used.”

The opening up of the sector during the last 10 years, including many joint ventures withSouth Korean, Chinese and Indian investors, he said, made Egyptian manufacturers better ableto compete.

“We don’t fear anymore the challenges of competition,” said Mohieldin, who projected thatforeign direct investment in Egypt this year will double from $408 million last year.

Recent initiatives launched by the Egyptian government include the reduction of import tar-iffs to 9 percent from 14 percent and slashing the time required to register a company from sixmonths to three days.

Moreover, the government has also proposed to cut the corporate tax rate to 20 percent from42 percent.

By John Zarocostas

GENEVA — THE U.S. RETAINED ITS TOPranking as the world’s most competitive econo-my in 2005, spurred by the vitality of savvy busi-ness talent, abundance of technology, a mobileworkforce and a large capital market, accord-ing to a global business survey published today.

However, the world’s fastest-growing econ-omy — China — which last year expanded by9.5 percent, posted a sharp drop to 31st posi-tion, compared with 24th a year earlier,according to the “World CompetitivenessYearbook 2005” compiled by the Lausanne,Switzerland-based International Institute forManagement Development.

“China’s surprising fall, despite an excel-lent economic performance, is due to anextremely negative opinion survey conductedin the business community in [first quarter]Q1-2005,” said IMD professor StéphaneGarelli. “It sees that the sustainability of sucha rapid expansion is being questioned, whilethe strains on the financial system, infrastruc-ture and weaknesses of corporate governanceare being highlighted.”

On the end of textiles and apparel quotas,Garelli noted that by keeping its currency, theyuan, pegged at a rate of 8.28 to the dollar,China has been able to take advantage of theend of quotas and boost its exports.

The explosion in textile exports, he added,also shows how quickly China can turn a lowexchange rate opportunity “into a huge com-petitive advantage.”

But the survey, which measures the com-petitiveness of 60 economies using 314 crite-ria — with two-thirds based on hard statisticaldata and one-third from data obtained fromthe poll of 4,000 senior executives around theworld — shows concerns are on the increaseover China’s path.

China ranked third for economic perform-ance but polled low in many other business cri-teria essential for enhancing the business envi-ronment. In business efficiency, for instance, itfell to 50th from 35th last year, while havingpoor placement for infrastructure, productivityand efficiency, management practices, busi-ness legislation, financial institutional trans-parency and for bribery and corruption.

Other economies with important textileand apparel export sectors that posted gainsin the competitiveness stakes included HongKong, ranked second, up four slots from a yearearlier, while Taiwan climbed to 11th,Thailand to 27th, South Korea to 29th, Turkeyto 48th and Brazil to 51st.

Among the nations that experienced fallswere India, which fell to 39th from 34th, andIndonesia, which dropped to 59th from 58th.Mexico’s status remained unchanged at 56th.

WWD.COM

Egypt Finds a Place in Post-Quota World

U.S. Still Tops in Global Competitiveness

Egyptian Minister of Investment Mahmoud Mohieldin.

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The world may be constantly changing,but sourcing powerhouse Li & Fung providesunparalleled flexibility, speed and the ultimatesupply chain management

“I think the key to Li & Fung’s success isthat we build custom-made solutions on aclient-by-client basis,” reported Thomas M.Haugen, president, Li & Fung USA. “The successof Li & Fung is based upon not having just one way of doing things. We look at each client and custom build a sourcing group toservice them.”

Li & Fung’s vast global sourcing options maximize the best of theworld’s resources with an emphasis on performance and efficiency,Haugen confirmed. “We make our decision based on performance, andthat’s really what our clients care about: Effectiveness.

“The winning countries or vendors will be those that have raw materialavailability, flexible manufacturing and competitive costs. They are comfortable with smaller production runs and know how to shift from styleA to style B, because in the fashion business, the ability to shift is critical.”

The end of quotas enabled companies to consolidate their orders intofewer vendors, benefiting them in both price and flexibility, he stressed.The expected rush to China has not happened with Li & Fung’s U.S.apparel clients due to uncertainty about import restraints being imposedby the U.S., and most major industry players made few alterations intheir vendor base, he observed. “People are not shifting their sourcing patterns dramatically.

“Vendors who have been reliable, flexible and competitive price-wiseare still receiving business and will continue to receive business as longas they retain those attributes.”

The sourcing map continues to evolve, with countries like Vietnamand Cambodia having “contributed a great deal to the growth of ourSoutheast Asia sourcing, which has expanded pretty rapidly over the pastthree years.”

Li & Fung finds success tapping into regions offering both raw materialsand flexible manufacturing, and depending on needs and circumstances,materials can be shipped across borders to accommodate production orkept and used locally when possible. “We work with our clients to consolidatetheir orders into fewer producers, which is beneficial to them in terms ofprice and flexibility.”

With almost 70 offices, including 18 in China, Li & Fung has globalreach and balance, delivering clients unparalleled results no matterwhere changing business needs or government policies may take them.“We are the flexible answer because of our spread. We’re prepared to copewith whatever regulatory issues come up.”

Headquartered in Hong Kong, Li & Fung, which began in 1906, coordinates production through offices in some 40 countries, with servicesfor clients ranging from product design and development through manufacturing, and even shipping, clearance and delivery to their warehouse, if needed.

Li & Fung recently projected sales should reach $10 billion in 2007,a goal Haugen said is on target and will be largely met “the old fashionedway,” by increasing the core sourcing business.

A new office in Shanghai will focus primarily on non-apparel goods,which now account for 34 percent of the firm’s business, he said. Theincreased presence will enable Li & Fung’s apparel divisions to work closer with Chinese fabric mills “and then move the raw material to themost appropriate area to make the garment.”

Haugen noted the company’s growing licensed, branded businessalso is going well, with future licensing and acquisition activities to focuson “well-known global brands” that appeal to consumers in the U.S. andacross the world.

Recent acquisitions included U.S. knitwear maker Ralsey andEuropean suppliers BMB and Zeeking, he noted. Li & Fung also has majorlicensing agreements with Levi Strauss & Co., Cannon and Royal Velvet.In addition, it recently added apparel sourcing operations of Mervyn’sand Marc Ecko Enterprises.

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SECTION II

By Scott Malone

NEW YORK — THE CHORUS OF VOICES COMPLAIN-ing about China’s trade practices has grown in recentmonths to include a diverse range of labor activists,Southern mill owners and U.S. senators.

The criticism has focused on two aspects of China’scommercial policies: the fixed exchange rate for theyuan to the dollar, which experts assert gives Chinesegoods a 10 to 40 percent price advantage, and the ex-plosive growth of its textile and apparel exports fol-lowing the dropping of quotas, which shot up 60.5 per-cent on a dollar basis through the first three months ofthe year and has contributed to the growing tradedeficit of the U.S.

But for all the talk surrounding Beijing’s approachto business, even domestic manufacturing executivesacknowledge it’s easy to understand China’s motives.

“China is pursuing a strategy that is in its nationalinterest,” said Wilbur Ross, chair-man of International TextileGroup, based in Greensboro, N.C.“They have a great need for jobcreation because you have hugenumbers of people each monthemigrating from the extremelyimpoverished countryside intothe cities. They have to create alot of jobs every month to avoidsocial disorder.”

Many economists see nothingunusual in China’s approach.

“China is going through thesame cycles of industry that othercountries, especially in Asia,have gone through,” said AndrewBernard, professor of interna-tional economics at Dartmouth’sTuck School of Business, locatedin Hanover, N.H. “It’s trying to dothe same thing that governmentsin Japan and [South] Korea havedone, which is moving their in-dustry up into higher-value goodsand employing as many people aspossible.”

The comparison with Japan isapt, in that much of the currenttalk about China in U.S. businesscircles evokes memories of theEighties, when “Japan Inc.” wasthe bugbear that kept executivesup at night. While Japan remainsan economic powerhouse — per-capita gross domestic productthere is $29,400, makingJapanese consumers among thewealthiest in the world — it hasbeen mired in recession overmuch of the past decade, andAmerican workers now view low-wage competitors in China and India as more threat-ening than the Japanese.

Many economists argue that over the comingdecades, China will follow Japan’s path, becomingwealthier and producing a formidable consumer class.Experts see many similarities between the currentoutcry over China and the past focus on Japan.

“There are some similarities in that there’s a lot ofsymbolism,” said ITG’s Ross. “While all the complaintswere going on about Japan, the fact is that we had atrade deficit not just with Japan, but with the rest ofthe world in total. China has become a big symbol. Ifyou notice, even though our trade deficit with Japanhas continued, nobody really says anything about atrade deficit with Japan.”

According to Commerce Department data, the totalU.S. trade deficit last year came to $651.73 billion. TheU.S. ran a $75.19 billion deficit with Japan and a

$161.98 billion deficit with China.Consultant Ira Kalish, Deloitte Research’s Los

Angeles-based global director of consumer business,noted there are also important differences betweenthe current Chinese and past Japanese economies.

“Back in the Eighties, Japan was criticized for clos-ing itself to foreign penetration, to foreign goods, for-eign investment, foreign companies,” he said. “That’snot the case with China. China has had huge growth inimports over the last couple of years. They’ve dramati-cally reduced trade barriers as part of their commit-ment to the World Trade Organization.”

While China’s government remains a one-party sys-tem controlled by a nominally Communist party, lead-ership in Beijing has demonstrated a clear enthusiasmfor capitalism and economic liberalization, joining theWTO in 2001. A recent United Nations report notedthat in 2003 and 2004, foreign-funded companies ac-counted for 57 percent of China’s total exports, adding,

“China continues to attract a large volume of foreigndirect investment to expand its productive capacity inthe export sector.”

By way of contrast, Japanese firms in the Eightieslargely rejected foreign efforts to buy stakes inJapanese enterprises. When they needed capital, theytook on debt instead of seeking foreign investors. Thatleft many firms burdened with heavy interest pay-ments, a factor that contributed to the nation’s pro-longed economic slowdown.

Another more obvious difference between Chinaand Japan is size. China’s current population of 1.3 bil-lion people is more than 10 times the size of Japan’s.

“China has a tremendously large unemployed laborpool,” said Bernard of Dartmouth.

To meet its obligations to the WTO, China is priva-tizing the state-owned corporations that were thebackbone of its economy for the latter half of the 20th

century. As those companies switch from a manage-ment model geared at maximum employment to thecapitalist model of maximizing profit, each year hun-dreds of thousands of people are being laid off.

Western executives tend to look at China’s popula-tion in one of two lights. For many, particularly thosein manufacturing, it amounts to a veritable army ofcheap laborers ready to compete.

“Japan was very limited in terms of available peo-ple and I think part of the reason their costs went upso much was that you essentially had a full-employ-ment economy, and that put pressure on wages,” Rosssaid. “I don’t think that is at all likely to happen inChina. There’s this huge, huge mass of population thatwould be absolutely thrilled to get this kind of manu-facturing job.”

Textile executives see a threat in China’s focus onexporting.

“For someone to develop a strength on their own,

they need to develop a consuming middle class,” saidKeith Hull, president and chief operating officer ofAvondale Mills Inc., based in Graniteville, S.C. “Youcan’t always export your way to national wealth. That’swhere Japan was going, the export way. And they did itto a point, but past the point, there was stagnation. Ofcourse, their consumers weren’t quite as willing to gointo debt as the U.S. consumer was.”

For other industry executives, China’s populationrepresents an awe-inspiring pool of potential shoppers.

Joe McConnell, vice president of strategic sourcingat Kellwood Co., who is based in New York, said he be-lieves there is “a lot of opportunity for American com-panies over there.”

“Traditional American companies have not been inthe export mind-set,” he said. “The American compa-nies that will succeed will be the ones that grasp thatopportunity to export and grow in foreign markets.”

SOURCING HORIZONS

WWD, TUESDAY, MAY 17, 200514

Banging the Drum on China

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Chinese factories, such as this one in

Hanhzhou in Zheijiang province, are boosting

capacity now that quotas have been lifted.

15WWD, TUESDAY, MAY 17, 2005

WWD.COM

The U.S. last year exported $34.7 billion worth ofgoods to China, primarily things like heavy equipmentto fuel the country’s industrial growth, a number that’sdwarfed by the $196.7 billion in goods the U.S. import-ed from China.

But Chinese consumers are also interested inspending.

“The consumer market is growing very rapidly,”said Deloitte’s Kalish. “China is already the largestmarket for many consumer products. It’s the largestmarket for cell phones in the world, it’s a sizable mar-ket for consumer electronics….It’s a very good poten-tial market for American companies.”

While China’s economy is growing — GDP rose 9.1percent last year, according to Chinese governmentstatistics — it remains on shaky footing. The country’sbanking system is seen as weak, as is its energy infra-structure. Today, companies that build major appareland textile factories in China tend to construct theirown electrical plants on site to ensure they’ll be ableto operate a normal schedule.

Given that uncertainty, many experts assert that thedrive in the Senate to force China to stop managing itscurrency to maintain a fixed exchange rate of about8.28 yuan to the dollar is misguided.

“To hold down the value of their currency, they arefunding our current account deficit,” said Deloitte’sKalish. “If they let their currency go up in value, theywill stop buying U.S. Treasury securities. We will haveto sell those bonds to the [U.S.] public, who will de-mand a higher return, interest rates will go up and wewill have a recession.”

Dartmouth’s Bernard added, “China would like

nothing better than to have a financial system that waswell developed, an exchange rate that floats freely andopen capital markets….If they were to do that beforethey were ready, an economy that includes a quarter ofthe world’s population would be heading south fast.”

He offered an example of the shortcomings ofChina’s financial system: Chinese citizens, who arelimited in their ability to invest outside the country,lack places to put their money where they can expectto earn a rate of return that exceeds inflation. So formany Chinese, saving for retirement means puttingback half their income.

However, most experts say it’s unlikely that Chinawill respond to U.S. requests to float its currency any-time soon and almost certainly not before the 2008Summer Olympics in Beijing.

But even as they dismiss the likelihood of action oncurrency, trade experts regard it as all but certain thatChina’s apparel and textile exports will face restraintsby the end of the year. Domestic manufacturers andimporters both expect the U.S. and European Union toimpose safeguard quotas on at least some categories ofChinese goods.

Tom Haugen, executive director of Li & Fung Ltd.,the $6.06 billion Hong Kong-based sourcing power-house, described the current surge in Chinese apparelexports as “just a natural correction.”

“The key thing to remember is that China has beenvery suppressed by quotas,” he said. “In a free market,China’s share of apparel…would be significant.”

Haugen also noted that placing safeguards on

China will mostly result in those orders being shiftedto other Asian countries, particularly India andIndonesia, rather than back to the U.S.

ITG’s Ross concurred: “I don’t believe that, whatev-er is done by way of safeguards, is going to create anyincremental jobs in the U.S.”

In addition to its manufacturing operations in theU.S., where it employs more than 5,500 workers, ITGhas been expanding its presence overseas and recentlyestablished its first manufacturing operation in China.

“China is going to be the world’s next big player intextiles,” Ross said. “Therefore, if we wish to be amajor player globally, we’re going to have to be there.”

While the pragmatic approach is increasingly com-mon in the industry, some textile executives continueto ask whether the U.S. is allowing China to take ad-vantage of free-trade rules.

“The potential for unfair disruption is definitely inour future,” said Avondale’s Hull. “If anybody believesthat China is not trying to manage their trade position,they’re very naive.”

However flawed the relationship, most experts con-clude that the economies of the U.S. and China havebecome so interdependent that both sides must treadcarefully on trade.

“To blame China for our trade imbalance is incor-rect,” said Deloitte’s Kalish. “To criticize their curren-cy policy is to misunderstand the fact that they arecheaply funding out deficit.”

— With contributions from John Zarocostas, Geneva

By Betsy Lowther

BEIJING — FIVE MONTHS INTO A YEAR THEYhad hoped would present a huge opportunityto grow their businesses, Chinese textilemanufacturers instead find themselves apawn in a high-stakes trade showdown.

While importers and manufacturers in theU.S. and European Union have gone to theramparts, aggressively lobbying their govern-ments to defend their interests, Chinesecompetitors have kept a low public profile onthe issue of safeguard quotas. Rather thantrying to overtly influence Beijing’s responseto the threat of restraints, this country’s mak-ers instead are focusing on what they cancontrol — like staying a step ahead of theircompetitors.

“It’s become a political issue,” said StevenZhao, a representative of the ShenzhenYangtze Development Industries Ltd., whichexports cotton garments for use in the medicalindustry in the U.S. and Europe. “A lot ofcompanies think our government should pro-tect us. [If restrictions against Chinese compa-nies were to happen], it wouldn’t be fair. Wehave a competitive product, and peopleshould be allowed to have it.”

Commerce officials from the Chinese gov-ernment in Beijing have become increasinglyvocal in recent weeks about the threat of leg-islation against Chinese textiles.

Chinese Premier Wen Jiabao told EU foreignministers, who were on their first official visit toChina, that China and Europe have a good rela-tionship and should work to resolve the textile

trade disputes. Wen said the two sides need towork together to settle the trade disputes.

“We should start from the general situationof maintaining the comprehensive strategicpartnership relations between China and theEU, strengthen dialogue and exchanges on anequal footing and seek an appropriate way toresolve the trade issues,” Wen said during ameeting with Luxembourg Foreign MinisterJean Asselborn, EU External RelationsCommissioner Benita Ferrero-Waldner andBritish Ambassador to China Christopher Hum.

Many Chinese manufacturers said theyfeel that they are unable to influence thedebate happening abroad on the future oftheir industry, and are instead concentratingon domestic issues, including a dramaticpost-quota increase in competition, whichhas been driving prices and profits down,and the subsequent strain on resources suchas skilled workers.

“There is not much else we are doing rightnow except focusing on the quality of our prod-ucts and our prices,” said Sabrina Wang, salesdirector for Shanghai Hengying Trade Co.

The Beijing-headquartered companyexports apparel accessories, including liningsand buttons, to the U.S., Italy and India.

Others say that, even if restrictions areimposed from overseas, they are certain theywill find a way around them. Now that Chinesemanufacturers have had a taste of the post-quota success, they are unwilling to give it up.

“It’s clear that the need in the market isthere,” said Fair Lu, manager of the SunlongTextile Co., a synthetic-fiber fabric manufac-turer with locations in Changzhou andKunshan, who is expecting sales to increaseby 50 percent this year if no restrictions areimposed. “If we have to, we will find otherways to supply it, like going through HongKong or another country.”

Chinese Firms Focus on Product

“China is pursuing a strategy that is

in its national interest,” said Wilbur

Ross of International Textile Group.

Li & Fung’s Tom Haugen said,

“The key thing to remember is

that China has been very

suppressed by quotas….In a free

market, China’s share of

apparel…would be significant.”

Li & Fung’s Tom Haugen said,

“The key thing to remember is

that China has been very

suppressed by quotas….In a free

market, China’s share of

apparel…would be significant.”

“China is pursuing a strategy that is

in its national interest,” said Wilbur

Ross of International Textile Group.

RROS

S PH

OTO

BY A

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OTO/

STEV

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By Evan Clark

WASHINGTON — WHILE THE CURRENT CONTROVERSY OVER IMPOSINGfresh restrictions on China’s apparel and textile exports to the U.S. plays out, fig-uring out what will happen after 2008 presents an even greater conundrum.

The Committee for the Implementation of Textile Agreements, an interagencyfederal panel led by the Commerce Department, said Friday it would impose safe-guard quotas on cotton knit skirts and blouses, cotton trousers, and cotton and man-made fiber underwear, valued at $624.5 million. Many expect more categories tohave quotas slapped on them.

For most, limits to China’s imports were and are an inevitability, though domes-tic producers generally see them as vital breathing room and importers see themas expensive supply-chain complications.

China’s entry agreement into the World Trade Organization in 2001 allowed forcountries to slap safeguard quotas on Chinese goods if they caused market dis-ruption in those nations. When the member countries of the World TradeOrganization dropped the quota system Jan. 1, the use of the safeguard mechanismgained greater importance, as China’s and other country’s large pools of inexpen-sive labor attracted importers to place orders without restraints.

“We anticipate some type of safeguards will be put in place through 2008,” saidJoe McConnell, vice president of strategic sourcing at Kellwood Co. “The exactcategories — it’s anybody’s guess. The most likely ones are the ones identified fornow and probably they will be hammered until 2008.”

Without a specific recourse to deal directly with safeguards, Kellwood, likeother vendors, is working to reduce its lead times by using fewer but larger sup-pliers and getting them to do more of the basic design functions. A shorter leadtime will help the firm better react to quickly changing dynamics.

In theory, trade with China would be less restricted and more normalized in2009 when safeguards expire. But with its huge economic impact at home and itsimportance to international relations, global trade is never quite that simple.

Last year, Chinese imports of apparel and textiles to the U.S. were valued at $14.6billion, a 25.4 percent jump over 2003. For the first four months of the year, Chineseapparel and textile imports shot up 63.7 percent to 3.8 billion square meters equivalent.

The same groups representing domestic textile manufacturers that havepushed for the new quotas are most likely to lead a push to retain some sort ofrestraints against China. However, its tools to do so are limited and the goals arebroader than just curtailing the country’s imports.

“It’s not simply the fact that they are growing in terms of the volume of exports,it’s the enormous decompressing in the pricing scheme of things,” said AuggieTantillo, executive director of the American Manufacturing Trade Action Coalition.

China is widely criticized for maintaining an unfair advantage through sub-sides to its manufacturers, monetary polices that some experts claim keep its cur-rency undervalued and lack of proper protections for workers.

“That’s like giving the New York Yankees five outs every time they come to theplate,” said Tantillo. “Safeguards inject a little more rationality in the market-place. They keep the biggest player at bay.”

Tantillo said his group would push for further restrictions on China in 2009when the safeguards expire if the country doesn’t significantly reform its policies.

“Hopefully the U.S. government would use this three and a half years to recti-fy this enormous, unfair situation,” he said.

The political will to address China’s policies is strengthening, he said.“Members of Congress from every region have now been impacted,” he said.

“There is a growing groundswell. Where this is gong to lead is anybody’s guess. Atleast now there is a view that there is a problem that has to be addressed.”

Cass Johnson, president of the National Council of Textile Organizations, said,“Textiles is different from other sectors in that we cannot use dumping or coun-tervailing duty trade remedies against China on the products that matter most tous and that’s apparel imports. We don’t have the standing to bring cases. The Chinasafeguard clause is the only case where we do have standing.”

Johnson said creating some mechanism through the WTO so a single country

could not control too much trade would be one of the major goals of the GlobalAlliance for Fair Textile Trade, of which the NCTO is a member.

Importers anticipate a fight.“The domestic industry’s going to try to keep safeguards on as long as it can,” said

Jonathan Gold, vice president of global supply chain policy for the Retail IndustryLeaders of America, which counts Wal-Mart and Gap among its 600 members.

Importers, with their long lead times, abhor uncertainty, which the loomingpossibility of safeguard quotas has brought in spades.

“Our members can’t do proper planning,” said Gold. “It’s like 2005 [and thedropping of quotas] never happened. It makes it very difficult for us.”

“The industry in the U.S. has been shrinking for decades,” said Nicholas Lardy,a senior fellow at the Institute for International Economics. “Obviously there’smore to come.”

Parts of the domestic industry will survive indefinitely, though not those focus-ing on commodity goods, he said. In April, U.S. apparel and textile producersemployed 666,500, a drop of 44,100 from a year earlier.

“Once all the restrictions are gone, whether it’s now or 2008, China’s clearlygoing to increase its share substantially,” said Lardy.

That isn’t all due to low-cost labor, either. Last year, he said, China imported$4.5 billion worth of textile equipment, up from $1.2 billion in 1998.

“China’s going to be very tough to beat, with the combination of low labor andthis kind of modernization,” said Lardy.

U.S. job losses and plant closures, which in some cases have left whole townsstruggling to find a new way of life, have helped elevate interest and the politicalstakes in the safeguard fight.

“It’s getting pretty ugly,” said Erik Autor, vice president and international tradecounsel at the National Retail Federation. “Common sense, good economics andgood public policy play very little roll in the debate. It’s just run by sheer emotion andpolitics. Everybody who has a beef with China is jumping on these bandwagons.”

However, the U.S. has a limited amount of leverage over the country, said Autor.“There’s only so far we can push China before it starts pushing back,” he said.

“We’re playing with a two-edged sword here. China’s not without its own pressurepoints, as well, on U.S. policy makers.”

Among these pressure points are foreign policy problem areas such as NorthKorea and economic concerns such as China’s growing importance as an exportmarket for U.S. goods and services.

Stephen Lamar, senior vice president of the American Apparel & FootwearAssociation, said, “There’s an awful lot of dynamics that can change. China is thedominate discussion in trade politics. Three-and-a-half-years ago, China was notthe story. Last year, we were talking about India.”

WWD.COMSECTION II

Figuring Out the Safeguard Shelf LifeSOURCING HORIZONS

WWD, TUESDAY, MAY 17, 200516

Auggie Tantillo,

AMTAC.

Eric Autor,

National Retail

Federation.