Forever 21 expands in China with support from L.A. mayor

Los Angeles-based fashion retailer Forever 21 signed an agreement Tuesday to open a flagship store in Beijing, part of a greater plan by the company to expand into the world’s largest emerging consumer market.

In a ceremony attended by Los Angeles Mayor Antonio Villaraigosa, the clothing maker committed to a 24,000-square-foot retail space in a multi-story mall located in the Chinese capital's central shopping district, Wangfujing.

Additional stores are set to open in Shanghai and Hong Kong. The brand briefly operated a store in Changshu, a city 70 miles from downtown Shanghai, but it closed two years ago because of poor sales.

Famous for churning out staggering numbers of new styles in record time, Forever 21 follows other mid-market fashion brands from abroad -- such as H&M, Zara, Uniqlo and the Gap -- into the Chinese market.

"The action and money is here," said Sung Won Sohn, the company's vice chairman. "China is the only locomotive left in the world."

China's retail sales grew 17.2% in October from a year ago, to $262.6 billion.

Sohn, who is also an oft-cited economist at Cal State Channel Islands, acknowledged the company's investment comes at a time when China could see a considerable economic slowdown. Exports are declining, and the property market has been stung by government restrictions.

"There's growing potential for a real estate bust," said Sohn, whose dark suit and white shirt contrasted with the brand's lively casual wear, known for wild prints and revealing cuts. (The person at the ceremony who appeared to be making the most effort to look fashionable was Villaraigosa's girlfriend, Lu Parker, who paired black knee-high boots with faux snakeskin pants and a black blazer).

But Sohn remained bullish on Chinese consumers, explaining that affordable brands such as Forever 21 tend to do well during recessions.

However, Sohn said, like most foreign retailers, Forever 21 clothing will be priced slightly higher in China than in the U.S. This comes despite lower Chinese household incomes and the fact that 60% of the brand's clothing is manufactured in the country.

But some things will remain the same. Sohn said the family-owned company had no plans to scrap printing Bible verses on its yellow shopping bags just for China, a country where religious worship remains muted and generally under the purview of the government.

"We have them in Birmingham, England, too, where there's a huge Muslim community," Sohn said of the biblical references. "I don't think that will change."

Speaking on stage at the event, Villaraigosa said Forever 21's Korean-immigrant roots embodied the story of L.A.

"Forever 21 is an L.A. fashion company we are very proud of," he said.

The mayor is on an 11-day Asian trade mission that is also scheduled to take him to Japan and South Korea.

On Monday, he met with the head of China's sovereign wealth fund, Lou Jiwei, who expressed interest in investing in L.A.'s public infrastructure -- possibly through the Metropolitan Transit Authority, Villaraigosa said.

The mayor didn't elaborate. He was in a hurry to remove specks of glittery confetti that had rained on attendees at the end of the ceremony –- lest he look too festive in his meetings that afternoon with Chinese Vice Premier Wang Qishan and Vice President Xi Jinping, a man pegged to become the next president of China. 

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-- David Pierson in Beijing
Twitter.com/dhpierson

Photo: Los Angeles Mayor Antonio Villaraigosa, center, raises a glass marking an agreement Tuesday to open a Forever 21 store in a Beijing shopping mall. Sung Won Sohn, the fashion retailer's vice chairman, stands to the mayor's left. Credit: David Pierson / Los Angeles Times

Chinese factories hit by strikes amid manufacturing slowdown

Already facing a sharp slowdown, factories in China's manufacturing heartland are now experiencing a rash of labor strikes reminiscent of the worker unrest that swept the country last year.

Thousands of workers at a massive shoe factory in the southern city of Dongguan last week clashed with police as they marched to a local government office to protest the loss of overtime.

The strike at the plant owned by the Taiwanese Pou Chen Group came shortly after 18 managers were laid off because of declining orders, according to the Economic Observer, a Chinese newspaper.

Earlier in the week, 1,000 workers walked out of a plant in nearby Shenzhen that manufactured computer keyboards for leading brands such as Apple and IBM. Employees said they were being forced to work excessive hours on weekdays so that owners didn't have to pay overtime on Saturdays, as required by law. The company acquiesced after three days.

"People had to work so late, they couldn't concentrate any longer," said Zhao Xiaobing, 38, a former employee. "They will have more strikes."

A day before in Shenzhen, 400 workers went on strike in a pay dispute at an underwear factory.  Employees reportedly were denied fair wages and forced to meet unachievable production quotas, according to China Labor Watch, a New York-based workers advocacy group.

Two other strikes took place in October, one at a Shenzhen factory owned by Japanese watchmaker Citizen Holdings Co., and one at a furniture plant in Dongguan where employees were left unpaid after their boss disappeared.

"There are more protests because of the economy," said Li Qiang, director of China Labor Watch. "The management systems in factories are not suitable."

Official data to be released Thursday could show manufacturing contracting in November. The so-called purchasing managers index barely broke even in October.

Annual export growth rose 15.9% in October, down from 17.1% in September, largely because of diminishing orders from financially-troubled Europe.

Labor unrest spread across China during the summer of 2010 as workers were galvanized by strikes at plants operated by Toyota, Honda and Foxconn, the world's largest electronic components manufacturer.

Workers then were protesting low pay as inflation was driving up the cost of living. Many provinces responded by boosting minimum wages. Independent unions, however, are still illegal.

It remains to be seen if the recent demonstrations will inspire others. Unlike in 2010, local governments and factory bosses may not be as willing to increase pay now that growth prospects appear grim in many foreign markets. China's economy is also expected to taper off, because of declining exports and continued restrictions on the property market and limited options for fiscal stimulus.

"One difference between the recent strikes and last summer's is that, as far as I can see, this time workers are not winning big victories" such as 50% wage increases, said Geoffrey Crothall, a spokesman for China Labor Bulletin, a Hong Kong-based workers rights group. "This means the domino effect of one successful strike inspiring another is not happening this time. There is a lot going on now, and I think we might have to wait a while to see what kind of picture emerges."

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-- David Pierson in Beijing
Twitter.com/dhpierson

Photo: Workers at a Shenzhen, China, underwear factory take part in a strike to demand higher wages earlier this month. Credit: STR / AFP/Getty Images

Consumer Confidential: The skinny on Black Friday; Keds recall

Here's your feelin'-stronger-every-day Friday roundup of cosnumer news from around the Web:

-- Getting all excited about Black Friday? Maybe you'll want to rethink things. Here are a few reasons why the Black Friday hoopla is overblown: Most "door busters" are second-tier products offered by less-prominent brands. Many of the same deals you'll find in the store can be found online. Layaway may not be available until after Black Friday ends. Return policies are often stricter for discounted goods. And more importantly, you're likely to overspend after lining up in the middle of the night to get a shot at some bargain-basement product. The stores know this, which is why they go through all this fuss in the first place. Just saying. (MoneyWatch)

-- Heinz wants to make a little ketchup go a long way. The world's biggest ketchup maker's second-quarter profit fell as it focused on fast-growing emerging markets. But in struggling developed markets such as the U.S. and Europe, the company is shrinking product sizes and selling lower-priced products such as ketchup for 99 cents and beans for around a dollar to appeal to budget-stretched shoppers. Many people are living paycheck to paycheck, buying only what they can afford rather than bigger bottles or cans of food that might be more cost-effective. Heinz says that to meet consumers' needs, it is selling pouches instead of bottles of some of its condiments, reintroducing bean products to the U.S. and selling a bag of french fries for family dinners at $1.99. (Associated Press)

-- Heads up: Keds is recalling about 45,000 Know It All girls' shoes. Ornamental stars on the heel of the shoe may loosen, posing a laceration hazard. The company has received 27 reports of cuts and scratches resulting from metal stars that loosened from the heel of the shoe. This recall involves Keds girls' rubber-soled shoes. The shoes are black and pink, with white trim and a pink loop on the heel. The Chinese-made shoes were sold in girls' sizes 12 to 5 at various department stores and online retailers. Consumers should take them away from children immediately and contact Collective Brands to receive a gift card for $30 redeemable at Stride Rite stores or striderite.com. (ConsumerAffairs.com)

-- David Lazarus

Photo: Black Friday may be more hassle than it's worth. Credit: Al Seib / Los Angeles Times

 

American Apparel executive Marty Staff steps down

The troubled American Apparel clothing chain, known for its colorful basics and its flamboyant chief executive, Dov Charney, announced that its chief business development officer would be stepping down.

Marty Staff, who has spent much of his career at fashion companies, joined the Los Angeles clothing maker and retailer a little more than half a year ago in March. The company did not give a reason for Staff's departure.

In a statement Wednesday, American Apparel's Chief Executive Dov Charney said Staff was "one of the most experienced and capable professionals in our business."

"His contributions to American Apparel have been very substantial," Charney said.

American Apparel faced a liquidity crisis in the spring but obtained new financing. The retailer also has appointed several new executives and directors, cut expenses and shut underperforming stores.

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-- Shan Li

Photo: An American Apparel store in Los Angeles. Credit: Lawrence K. Ho / Los Angeles Times

Urban Outfitters drops 'Navajo' from online product names

Urban Outfitters Inc. has removed the word "Navajo" from its products online after an outcry from the Navajo Nation government, which accused the retailer of violating its trademark and using the word in poor taste.

The trendy retailer used the word in more than 20 product names online, including the $8 Navajo Hipster Panty and $18 Navajo Print Fabric Wrapped Flask, according to the Associated Press. The tribe holds at least 10 trademarks on the Navajo name, which covers clothing, household products and other items.

On Wednesday afternoon, Urban Outfitters' website showed that the clothing chain was instead using the less-controversial "printed" to describe the products.

The company's removal of the word from its products online was first reported by Indian Country Today, which said the Navajo Nation sent a cease-and-desist letter to Urban Outfitters this year.

A company spokeswoman did not respond to a request for comment.

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-- Andrea Chang

Photo: Urban Outfitters' Navajo Print Fabric Wrapped Flask is now the Printed Fabric Wrapped Flask. Credit: Urban Outfitters

Consumer Confidential: Store prices, student loans, bank fees

Here's your walk-on-by Wednesday roundup of consumer news from around the Web:

--You're paying a little more food and clothes and stuff -- and that's probably not such a bad thing. The consumer price index rose 0.3% in September, less than the 0.4% increase in August, according to the Labor Department. Excluding food and energy, so-called core prices increased 0.1%, the smallest increase since March. Food prices rose 0.4% in September, pushed up by big increases in dairy, cereals and fruits and vegetables. Gas prices rose 2.9%. Costs of medical care, airline fares and tobacco also increased. But economists say a little bit of inflation is a good thing because it shows the economy is relatively stable. A deflationary spiral is something to be feared because it can lead to more jobs being lost and more pistol whippings for stocks.

--Speaking of inflation, let's talk about student loans. The amount of student loans taken out last year crossed the $100-billion mark for the first time, and total loans outstanding will exceed $1 trillion for the first time this year. Americans now owe more on student loans than on credit cards, according to the Federal Reserve Bank of New York. Students are borrowing twice what they did a decade ago after adjusting for inflation. Total outstanding debt has doubled in the last five years -- a sharp contrast to consumers reducing what's owed on home loans and credit cards. Full-time undergraduate students borrowed an average $4,963 in 2010, up 63% from a decade earlier after adjusting for inflation. And down the road, of course, those bills will have to be paid.

--Looks like many consumers won't take higher bank fees on the chin. About 30% of U.S. consumers say they'd leave their banks over fees for using their debit cards, according to a survey by the Research Intelligence Group. About 43% say they'd switch to paying with cash or credit cards if their bank implemented charges, while 13% say they'd pay the fee if it was "reasonable." The survey comes as the largest banks, including Bank of America, are testing or planning to start charging fees of as much as $5 a month for consumers who have a debit card or use one for purchases.

-- David Lazarus

Photo: You might have to look harder for bargains amid rising prices. Credit: Rahoul Ghose / We TV

 

Consumer Confidential: Sales up, Chris Tucker in trouble

Here's your not-fade-away Friday roundup of consumer news from around the Web:

--Nothing like a little retail therapy to make the economic blues go away. Consumers stepped up their spending on a variety of retail goods in September, according to the Commerce Department. They spent more on autos, clothing and furniture last month to boost retail sales 1.1% -- the largest gain in seven months. Auto sales rose 3.6% to drive the overall September increase. Still, excluding that category, sales increased a solid 0.6%. The government also revised the August figures up to show a 0.3% increase after initially reporting no gain. Not a great showing, but not so bad either.

--You're not the only one feeling a pinch. Court records show comedian Chris Tucker is facing foreclosure on his multimillion-dollar mansion in central Florida. Records show SunTrust Banks filed papers against the California resident with Lake County courts earlier this week. According to documents, Tucker bought the 10,000-square-foot lakefront home for $6 million in 2007 -- before the housing market crashed. The bank claims he still owes more than $4.4 million, but the county property appraiser has the home currently assessed at $1.6 million. Tucker is best known for starring alongside Jackie Chan in three "Rush Hour" films.

-- David Lazarus

Photo: Court records say "Rush Hour" star Chris Tucker, right, with Jackie Chan, faces foreclosure on his Florida home. Credit: Glen Wilson / New Line Cinema

 

Gap to close 34% of namesake U.S. stores by end of 2013

Gap Inc. is closing stores and downsizing others in the U.S. as it focuses on international expansion, the San Francisco company said Thursday.

The long-struggling apparel giant plans to reduce the number of Gap brand stores in North America to 700 by the end of 2013, a 34% decrease in the number of those stores when compared to the end of 2007. It didn't specify which stores would close.

The company's Old Navy brand will have roughly the same number of stores in North America, but the locations will continue to downsize in terms of square footage. By the end of fiscal year 2013, Old Navy "expects to potentially remove" another 1 million square feet.

"In North America, sales are expected to grow modestly on its smaller, healthier specialty store fleet supplemented by sales growth in its online and outlet channels," the company said in a statement.

Gap Inc. has suffered from weak sales for years as shoppers have turned to trendier rivals to shop. Although it has had some success in turning things around -- namely a line of so-called premium denim that launched at Gap stores two years ago -- analysts say many of its fashions, such as women's tops, have underperformed.

Gap shares rose as high as $18.12 earlier but were off 8 cents to $17.77 shortly before 10 a.m. PDT. The stock is down 20% year to date, while the average retail stock in the Standard & Poor's 500 index is up 3.8%.

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Photo: A Gap store in San Francisco. Credit: Bloomberg

American Apparel reports improved third-quarter results

Sales are slowly rebounding at Los Angeles clothing maker American Apparel.

For the three months ended Sept. 30, the company reported that third-quarter sales rose 5% to $141 million compared with the same quarter a year ago. At stores open at least a year -- an important measure of a retailer's health because it excludes store openings and closings -- sales were up 3%.

"Comparable-store sales were positive in both our store and online channels and we saw a return to solid sales growth in our wholesale channel," Chief Executive Dov Charney said in a statement. "As we enter what is historically our strongest quarter of the year, we are optimistic that if current sales trends continue, we will continue to see substantial improvement in our overall financial performance."

American Apparel did not release its profit or other financial results. At 8:15 a.m. Pacific time Thursday, American Apparel's stock was unchanged at 75 cents.

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Photo: American Apparel CEO Dov Charney. Credit: Bloomberg

September retail sales rise a solid 5.1%, beating expectations

Putting worries about the economy aside, shoppers responded to deep discounts and the final weeks of back-to-school shopping by spending heavily at major chain stores last month.

The retail industry posted a 5.1% year-over-year rise in September sales, according to Thomson Reuters' tally of 23 large retailers released Thursday. That was better than the 4.6% uptick expected by Wall Street analysts and reflected a healthy shopping mindset among consumers despite an otherwise sluggish economic outlook.

"The general disconnect between U.S. retailers ... and broader weakness in the global economy continued in September," said Ken Perkins, president of research firm Retail Metrics Inc.

Sales rose 8.6% at discounters, 3.7% at department stores, 2.9% at apparel sellers and 6.2% at teen apparel chains.

Results are based on sales at stores open at least a year, known as same-store sales and considered an important measure of a retailer's health because it excludes store openings and closings.

All told, 60% of chains beat expectations.

The month's top performers reflected a mix of retail sectors. Leading the pack was Costco, which reported a 12% rise. Apparel seller Limited, parent to the Victoria's Secret and Bath & Body Works chains, said sales rose 11%. Upscale department store Nordstrom posted a 10.7% rise and teen retailer Zumiez saw sales increase 10.1%.

The worst results came from struggling apparel giant Gap Inc., which posted a 4% decline.

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-- Andrea Chang

Photo: A shopper at Westfield West Covina. Credit: Irfan Khan / Los Angeles Times

American Apparel launches its first men's jeans

American Apparel is launching its first men's jeans this week, the latest addition to the denim line that the Los Angeles clothing maker debuted this year.

The "Men's Jeans: Regular Fit 100" will hit stores worldwide this week, the company said Monday, which like many retailers touted the line for its authenticity.

"We've come up with a truly authentic pair of jeans -- something the market has lacked for a long time," said Georges Atlan, director of denim at American Apparel, who called the product "the perfect men's jeans."

The jeans are designed and made at the company's downtown Los Angeles manufacturing facilities, which "will re-establish California's rich history of denim manufacturing." Another major retail chain, Gap, recently moved its denim design offices to L.A. to be closer to the heart of the denim industry, which is home to many premium players including True Religion Brand Jeans and 7 for All Mankind.

The American Apparel men's jeans have a dark resin denim with a classic 1950s cut, the company said. Unlike many of its unisex products, the Regular Fit 100s are designed specifically for men and have a relaxed fit and a tapered leg "intended to hit right above the shoe."

American Apparel's Chief Executive Dov Charney said in a statement that it took more than 40 fair-wage workers to produce each pair of jeans. "American Apparel doesn't take expanding into new products lightly, and for our men's and women's denim we've not only come up with a great, fashionable product but we've utilized our full factory capabilities to do it right," he said.

The men's jeans are in sizes 27 to 36 and will be sold in stores and on the company's website. The product's online price is $85.

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-- Andrea Chang

Photo: American Apparel's new men's jeans. Credit: American Apparel