Bursting At The Seams! Fashion Insider Reports Industry Profits
The fashion industry is a utopia where money rains down on streets paved with gold; where the citizens are bedecked in the finest fabrics and jewelry known to man. They live in extravagant homes surrounded by diamonds that grow from trees. This utopia is such an amazing place that words cannot describe it. Well, okay maybe I'm exaggerating a bit. But when you see the staggering amounts of money that is made in the fashion industry annually, it is hard to not compare the industry to a fairytale.
The fashion industry seems to attract money like iron filings to a magnet. Clothing lines make millions of dollars each year, some well-established lines and designers even make billions of dollars. Now the fourth largest industry in the world, the fashion industry brings in $4 billion a year and includes the revenues from old established companies and a host of new clothing lines introduced by the urban market.
Contemporary Fashion History at a Glance
Initially Contemporary fashion report as we know it was run by such top couture companies and designers as Channel, Calvin Klein, Karl Lagerfeld Gloria Vanderbilt, Dianne VonFurstenberg, Ralph Lauren, and Liz Claiborne to name a few. These and others such as Donna Karen, Guess? and Tommy Hilfiger bought couture style to the ready-to-wear market. Today, new clothing lines have made their mark upon the fashion industry, and include the wave of urban clothiers like Phat Farm, Sean John, Rocawear, and at one-time the mega clothing company FUBU.
Given the laundry list of clothing companies and fashion designers, one would think the market is over saturated. But quite the contrary is true. Like an elastic waistband, the market has simply expanded to accommodate each new clothing line, many of which have been able to capture a significant portion of market share to be rewarded with millions of dollars for their creativity, fashion sense and work efforts. Simply put, if you are the owner of a hot clothing line, chances are, you're rich!
Marketing Genius
Tommy Hilfiger should be considered the poster child for marketing innovations. He was the first traditional clothing designer to capitalize on the Hip Hop world. From 1990 to 1993 Tommy Hilfiger was only bringing in $25 million a year. But that all changed in 1994 after a performance by Hilfiger-clad Snoop Doggy Dog performed on NBC's Saturday Night Live. After the performance Tommy's sales quickly jumped to $67 million. Since then, Hilfiger's sales have continued to claim nearly $900 million. In 2002 Tommy Hilfiger reported sales of up to $1.9 billion. The company has remained around the billion-dollar mark. In 2006 Apax Partners, a global private equity investment group bought Tommy Hilfiger, Corp. for a reported $1.6 billion along with the agreement that Hilfiger would stay on to run the company.
Ralph Lauren, designer of the POLO brand is synonymous with the word fashion. Since the 1980s Ralph Lauren has been a dominating force in the fashion industry. His sales consistently hit record numbers and in 2006 for the U.S. market reached $3.75 billion. Projections for fiscal year 2007 are anticipated to reach $4.5 billion.
The company Guess?, by designer Maurice Marciano is yet another example of clothing line that has remained on top. Since 1981, the brand has dressed infants to senior citizens. A crossover brand, it has earned sales from both the urban and suburban markets, and in 2006 the company reported profits of $1.2 billion. Both Chairman Maurice Marciano, and co-chairman and CEO Paul Marciano command million-dollar salaries in their leadership positions in the company.
The men of fashion are not the only ones commanding high salaries and huge profits. In 2006 Liz Claiborne Inc, reported sales of $5 billion. While Liz Claiborne unfortunately died on June 27, 2007, her legacy lives on as does the testament to the longevity of the Liz Claiborne brand.
A self-taught fashion designer, Claiborne founded her company with her husband Art Ortenberg, Leonard Boxer, Jerome Chazen in 1976. Within a decade, the clothing company became a billion-dollar business. That type of growth is a testament to just how great and rewarding the world of fashion can be.
Another of the many top women in fashion is Donna Karen, founder of DKNY (Dona Karen New York). The DKNY name commands great respect in the fashion world and in 2006, the privately owned company reported earnings of $1.2 billion. The company's 2007 sale projections are expected to stay steady at around the 1.2 billion-dollar mark. It should be noted that some companies partner with others to achieve their high financial earnings. For example, DKNY Jeans and DKNY Active are partnered brands of Liz Clairborne, Inc.
In 1967, fashion icon Calvin Klein graced the industry with his presence. Since then, Calvin Klein has become a household name. Another designer to use apt marketing strategy the Calvin Klein Company has also hit the billion-dollar mark. In 1980, Klein pushed the envelope with his Jeans ad where a young Brooke Shields stated, "Nothing comes between me and my Calvins." Since then, the sentiment has been true for many. By 1996 Calvin Klein company surpassed $3 billion in sales worldwide, and by fiscal-year 2006, its subsidiary, Calvin Klein Jeans Wear Co., hit $90 million in sales. Just as Hilfiger sold his company to Apex, Calvin Klein sold his brand to the Phillips-Van Heusen Corporation, the largest shirt maker in the United States. According to industry financial reports, the Calvin Klein Company was sold for $400 million dollars in cash and $30 million in stocks.
The fashion industry is not limited to clothing. It also includes accessories and shoes. The cosmetics industry is different yet closely related market that cannot be overlooked when discussing fashion. Many designers, such as Chanel for example, branch their brands out to include cosmetic and fragrance lines, and for many consumers, cosmetics are just as important to their overall sense of fashion and style as clothing, shoes and accessories. The Estée Lauder Company has held on to its market share for quite some time. Estée Lauder sales for fiscal year 2007 were reported at $7 billion dollars. For the year, that figure breaks down to approximately $19.2 million per day. The company's sales were up 9 percent from its recorded 2006 earnings of $6.46 billion, which shows just how much the cosmetics industry parallels the fashion industry.
"The fashion industry is a best-kept secret. There is so much money to be made is this business that it's unreal! If you have a good name and some really hot fashion designs along with the knowledge to bring it to the market and keep it there, chances are good you will do quite well for yourself! In the fashion industry the potential is always present for a clothing line to make millions or even hundreds of millions of dollars. This business is unreal and that's why it is a best-kept secret!"
-Jay Arrington co-owner of www.startingaclothingline.com
New Kids on the Block take the Industry by Storm
Talented, new urban designers have imposed their will on the fashion industry with the same force, if not a greater one, as their fashion predecessors did. They have opened new doors to an industry that was difficult to break into. This phenomenon started in the early 1990s with the former companies Cross Color clothing and fashion designer Karl Kani. While they are no longer active companies, they were the trailblazers for FUBU, Phat Farm and many other clothing designers.
Trail Blazers
Cross Colors was founded by Carl Jones in the early '90s. Cross Colors. Upon its arrival on the market, the company was so hot, that they had major problems filling orders. With $130 million in pre-paid orders, they could only ship $89 million. The company grew at an uncontrollable rate. In its first year of business, Cross Colors made $15 million, and by 1992 it made $89 million. These figures are staggering and show the kind of market share that the new, urban market was able to capture easily.
Designer Karl Kani started his career with Cross Colors (Threads 4 Life), but left the company in 1994 to start his own label. In its first year the Karl Kani label had $22 million in sales, ranking him No. 38 on the Black Enterprise Industrial/Service 100 list. In the following year, Kani had $59 million in sales-a 37 percent increase over the previous year. The 1995 numbers earned him a leap from No. 38 to No. 25 on the Black Enterprise Industrial/Service 100 list. After such an impressive first two years, the line lost its market share, but Kani managed to reinvent himself and the company. Often called "the godfather of urban fashion," in 2002, Kani returned with the introduction of "Life" a new clothing line that made $25 million in its first year. Achieving success where Hilfiger failed, Kani partnered directly with Hip Hop artists, rather than just having them wear his product.
For Us By Us, (FUBU) was an inspiring slogan that motivated four friends from Queens, New York to follow their dream. According to legend the guys from FUBU went to the Magic Show in Las Vegas. Magic is the biggest clothing convention in America, and at the convention, buyers were so impressed with their designs that FUBU took $1 million in orders from stores across the country. Lacking the capital to fill the orders, they placed an ad in the newspaper for investors. It read: "One million dollars in orders. Need investors." The ad attracted the attention of the conglomerate Korean company Samsung, which made an investment in the company and helped FUBU fill the orders. Since then, FUBU has been a household name.
FUBU went on to take the fashion industry by storm. They went from selling hats on the street corners of New York to selling full collections in stores all over the world. Their operation moved from a basement in Queens to the entire 66th floor of the Empire State Building. In 1997 FUBU made $75 million, in 1998 they made $200 million; in 1999, $ 350 million and by 2001 their sales reached $380 million. Overall, the company's worth grew to $450 million.
While FUBU does not currently have the same market strength that they had a few years ago, last year, they still managed to make $12.1 million from international sales. It is this ability to capture both domestic and international markets that shows the versatility of the fashion industry.
"With respect to the urban market, Carl Jones of Cross Colors invented it, Karl Kani solidified it and FUBU refined it!"(EzineArticle.com)
Find out the other guide on Plus Size Fashions.
