$300 Jean Market About to Crash?
Eva Rubenov — July 12, 2006 — Fashion
References: slate
Is $300 a reasonable price to bay for faded and torn jeans? For the last few years, the fashion industry would suggest that the answer to that question is, 'YES'. However, many trend experts aren't so sure, predicting a pop in the $300 denim market. Like all good bubbles, the crash has been predicted for more than a year. Will it pop?
"Last summer, when spending $200 or more on a single pair of jeans still seemed crazy, the stock of a small company called True Religion traded at less than a dollar. But over the past year, as True Religion jeans started hugging the butts of celebrities—the company's Web site lists Jessica Simpson, Angelina Jolie, J. Lo, and the cast of Desperate Housewives as enthusiasts—the rest of us began snapping up pairs. True Religion's stock soared to over $17. If you looked at sales growth without knowing anything else about the company—$22 million in the second quarter, a fivefold increase from a year earlier—it would be easy to think that True Religion had come up with a cure for cancer instead of a more expensive pair of jeans.
Jeff and Kymberly Lubell, the husband-and-wife team who run True Religion and own more than 40 percent of the company's stock, should enjoy this while they can, because there is a denim bubble, and it looks like it's about to burst. The $110 million "premium denim" market is beset by signs of excess. Consider the $128 jeans—for toddlers. Or the 400 percent markup: A pair that costs $60 to make retails for $300. Or the race to rush new brands into the stores: Seven for All Mankind, followed by Citizens of Humanity, followed by Stitch's :" - Slate.com
"Last summer, when spending $200 or more on a single pair of jeans still seemed crazy, the stock of a small company called True Religion traded at less than a dollar. But over the past year, as True Religion jeans started hugging the butts of celebrities—the company's Web site lists Jessica Simpson, Angelina Jolie, J. Lo, and the cast of Desperate Housewives as enthusiasts—the rest of us began snapping up pairs. True Religion's stock soared to over $17. If you looked at sales growth without knowing anything else about the company—$22 million in the second quarter, a fivefold increase from a year earlier—it would be easy to think that True Religion had come up with a cure for cancer instead of a more expensive pair of jeans.
Jeff and Kymberly Lubell, the husband-and-wife team who run True Religion and own more than 40 percent of the company's stock, should enjoy this while they can, because there is a denim bubble, and it looks like it's about to burst. The $110 million "premium denim" market is beset by signs of excess. Consider the $128 jeans—for toddlers. Or the 400 percent markup: A pair that costs $60 to make retails for $300. Or the race to rush new brands into the stores: Seven for All Mankind, followed by Citizens of Humanity, followed by Stitch's :" - Slate.com
Trend Themes
1. Decline in Premium Denim Market - The $300 jean market is predicted to crash due to signs of excess and a looming denim bubble.
2. Increasing Price Consciousness - Consumers are becoming less willing to spend $200 or more on a single pair of jeans.
3. Shift Towards Value-based Brands - There is a growing demand for affordable and high-quality jeans, causing a surge in value-based brands.
Industry Implications
1. Fashion Retail - The fashion retail industry needs to adapt to the decline in the premium denim market by offering more affordable options.
2. Textile Manufacturing - Textile manufacturers should explore producing high-quality jeans at a lower cost to cater to the increasing price consciousness of consumers.
3. E-commerce - As consumers shift towards value-based brands, e-commerce platforms have an opportunity to offer a wide range of affordable jeans options.
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