WWDMILESTONES

BUILDING A BILLION-DOLLAR BRAND MARKETING THE BULLY PULPIT DENIM TRIMS DOWN KGROUP LTD. USING MAC COSMETICS; STYLED BY KIM FRIDAY USING MAC COSMETICS; STYLED BY KGROUP LTD. Southpole at

A TWO-DECADE20 JOURNEY THROUGH THE URBAN LANDSCAPE.

Polyester twill bomber jacket with cotton and spandex denim jeans and leather sneakers. PHOTO BY GEORGE CHINSEE; MODEL: MARINA/FORD; HAIR BY KAYLA MICHELE AT ATELIER MANAGEMENT FOR REDKEN; MAKEUP BY JEN MYLES AT WOR JEN MYLES AT MANAGEMENT FOR REDKEN; MAKEUP BY ATELIER MICHELE AT KAYLA GEORGE CHINSEE; MODEL: MARINA/FORD; HAIR BY PHOTO BY 2 WWD MONDAY, AUGUST 22, 2011

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WWD MILESTONES The Southpole Journey The route to a $1 billion retail business. By David Lipke

1899: David and Kenny Khym’s bags, footwear, headwear and cold grandfather, Ki-sun Khym, is one of weather accessories. A 2007 look Research shows the first Korean immigrants to the from Wckd. Southpole as U.S., moving here with the help of 2007: As part of its marketing ef- the fifth-largest Christian missionaries. forts, Southpole sponsors an out- denim brand in field billboard at Shea Stadium, the the U.S. 1926: Ki-sun Khym moves back to former home of the New York Mets. Korea after earning a degree from the University of Nebraska. 2008: The White Tag brand is launched. 1977: Ogden Khym, son of Ki-sun, and father of David and Kenny 2008: The A. Prodigee brand is Khym, moves from Korea to the launched. Riverdale section of the Bronx. 2008: Southpole inks a license for 1981: David Khym takes the fam- infant and toddler apparel. ily savings of $10,000, plus a $5,000 line of bank credit, and opens L&L 2008: Against All Odds opens Menswear in the Brownsville sec- stores in California, just before the tion of Brooklyn. financial crisis.

1989: The Khym brothers move the 2009: Against All Odds files for store to Jamaica, Queens, and re- Chapter 11 bankruptcy in January name it Metropolitan Total Fashion. and emerges in December. The company now operates 24 stores on 1991: David and Kenny Khym start the East Coast. their own line as Wicked Fashions Inc. White Tag Sears 1995: The Southpole began in picked up brand is founded, under 2008. Southpole the Wicked Fashions in 2002. parent company.

1995: Kenny Khym founds the Against All Odds retail chain as a mall-based streetwear store, eventually grow- ing it to almost 80 stores.

2001: Southpole transi- tions from a premium brand to a midtier brand and enters J.C. Penney for the first time.

2002: Southpole is picked up by Sears.

2002: Southpole is awarded the J.C. Penney Divisional Award for Men’s Apparel.

2002: The Lot29 brand is launched using licensed cartoon characters. The A. Prodigee brand is now on hiatus but the com- 2009: The RS by Ryan Sheckler was launched pany will relaunch it in coming sea- brand is launched. in 2008. sons under a different concept. 2010: The RS by Ryan Sheckler 2003: Southpole launches a juniors brand is shuttered. line. The brand is awarded the J.C. Penney Divisional Award for 2010: The WT02 brand launches. Women’s Apparel. 2010: Southpole is the fifth-largest 2003: Southpole inks a Japanese denim brand in the U.S., behind distribution license with Wise Levi’s Wrangler, Lee and Calvin Harvest. Klein, according to NPD Group figures. 2004: David Khym is selected as Ernst & Young’s Entrepreneur of 2011: Southpole launches its the Year. “Speak up, Step up” anti-bullying campaign. 2005: Pop star Ciara is featured in Southpole juniors advertising. 2011: Southpole relaunches its Web site from a business-to-busi- 2006: Southpole launches acces- ness format to a consumer-oriented sories with the addition of hand- branding site. 20th anniversary ® on their Southpole congrats to 4 WWD MONDAY, AUGUST 22, 2011

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WWD MILESTONES Pole Position Two Korean brothers start an apparel company that emerges as one of the biggest players in urbanwear. By David Lipke

ANYONE LOOKING for a tale of the base with lower-priced product. The mythic American dream realized may Kenny Khym following year, Southpole was picked find a classic example in the story of up by Sears. David and Kenny Khym, brothers and “Going into the midtier was the most founders of Southpole, which this year important milestone for the company be- marks its 20th anniversary in business. cause it opened the brand up to such a Their family came to the U.S. in wider audience,” said Khym. “Southpole 1977 when their father moved to the was the pioneer in making…[urban] Riverdale section of the Bronx from trend-right apparel accessible to Middle South Korea. In 1991, the duo founded America ahead of others.” the young men’s and juniors brand and Today, the sweet spot for Southpole its parent company, Wicked Fashions denim runs from $24.99 to $29.99. In Inc. The Southpole brand now rings up fleece, it’s $19.99 to $29.99, and in $1 billion at retail and is sold in more T-shirts, it’s $12.99 to $14.99. Denim than 5,000 department and specialty now accounts for 32 to 35 percent of store doors. total sales; fleece for 20 to 22 percent; Since taking a sales hit following T-shirts for 30 percent, and non-denim the 2008 financial crisis and making fashion from 10 to 15 percent. a round of layoffs, Southpole’s sales “Our biggest strengths are fashion, have been growing at a steady 8 to 12 quality and our competitive prices, percent clip annually, on the strength which I don’t think a lot of people can of its robust sourcing operations, sharp do in the way we can,” said Art Matura, focus on competitive pricing and fast- Southpole’s senior vice president of evolving designs that appeal to its core sales, who is among about 500 employ- customer base in the midtier channel. ees of the brand. “In the fashion business, passion is Describing the company’s partner- the number-one most important thing, ship strategy with retailers, Khym but then comes market research and explained, “Our foremost objective

understanding what the trends are,” is maximizing customer satisfaction said Kenny Khym, who is president of and [retailers’] profitability. In other Wicked, which began as a single dis- words, we aim to become a ‘solution count men’s wear store in the inner-city provider,’ delivering what they need Brownsville neighborhood of Brooklyn. when they need it. There are various Today, Khym oversees the day-to- programs we provide, from replenish-

day operations of the company out ment to retail sales analysis providing of its Fort Lee, N.J., headquarters, a merchandising solutions. All efforts seven-story building emblazoned with are aimed at creating a win-win sce- a prominent Southpole logo just off nario for all parties involved.” the George Washington Bridge. In ear- While Southpole is an urban-ori- lier years, Kenny directed strategy and ented brand, its appeal crosses a wide product development planning while ·· swath of the youth demographic, ac- older brother David ran the company. cording to company research. That’s es- David now holds the chairman title and pecially true in today’s market, where focuses on long-term growth strategies. there’s been a wide-scale blurring of The elder Khym also oversees the {Continued on page 6} Southpole Foundation, which provides scholarships to community college stu- dents in the New York and New Jersey area and provides grants to health and social-services organizations. Southpole today is sold in more than 1,000 doors of J.C. Penney, 600 units of Sears, 480 doors of Stage stores, STEPHEN SULLIVAN PHOTO BY 300 Peebles stores and 70 doors of Gordmans. Department stores account for 80 percent of sales and independent specialty retailers for 20 percent. In our definition, the term About 50 percent of Southpole sales are in young men’s, 25 percent in ju- ‘urban’ does not equal niors and 25 percent in kids. Unlike its current incarnation as a midtier brand, Southpole started life ‘hip-hop.’ Urban is a much as a premium urban brand, selling jeans for $60 at a time when Levi’s cost larger realm that may about $35, noted Kenny Khym. The big- gest category for it back then was the encompass hip-hop. puffy “bubble” jacket. “It was a big trend, and we were competing with brands like Bear USA, It’s a widely accepted The North Face and Triple Fat Goose. But I remember The New York Times misconception to correlate did a trend story, and maybe six of the 12 photos were of people wearing urban fashion with hip-hop, Southpole jackets on the street,” said Khym, recalling that symbolic moment for the brand. but we think otherwise. In 2001, Southpole decided to enter — KENNY KHYM the midtier market via J.C. Penney’s David Khym and target a much larger customer ··

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{Continued from page 4} recalled Khym. “Back then, if you sold lines between the urban, skate, street Merry-Go-Round, you were the toast and progressive sportswear sectors, of the town. Our product was unique where diverse brands like LRG, Stüssy, — we came up with denim sets with Levi’s, Rocawear and WeSC all com- velvet patches. This was something pete for a broad range of young cus- nobody had seen.” tomers. In fact, according to an NPD Fast-forward 20 years, and study commissioned by Southpole, the today among the key challenges for brand’s customer base is equal parts Southpole and the industry in general white, African-American and Hispanic, are rising costs for sourcing and pro- with each accounting for about a third duction, particularly the skyrocketing of sales. price of cotton. “In our defi nition, the term ‘urban’ “We’ve been faced with extreme dif- does not equal ‘hip-hop.’ Urban is a fi culties in pricing, and this has been much larger realm that may encom- unprecedented,” said Khym. “However, pass hip-hop. It’s a widely accepted one of our advantages is our estab- misconception to correlate urban fash- lished global production base. China ion with hip-hop, but we think other- still serves as a prominent sourcing wise,” said Khym. base. In the long term, our infrastruc- Key branded competitors for ture will play a critical role in setting Southpole include Rusty, Zoo York, ourselves apart from other players in Tapout, Ecko and Rocawear, added the market. Our unparalleled sourcing Matura, while private label brands capability and supply chain manage- like Arizona and St. John’s Bay com- ment will provide a fi rm foundation for pete with it on the lower end of the any type of fashion business.” price spectrum. (Interestingly, though, The company maintains sourcing Wicked’s retail division, Against All and production offi ces in Shanghai Odds, sells those brands alongside and Guangzhou, China; Karachi, Southpole in its chain of stores. For Pakistan, and Dhaka, Bangladesh. The more on Against All Odds, see page 8.) company operates a 400,000-square- However, Khym — who originally foot distribution center in South studied to be an electrical engineer Brunswick, N.J., as well as another at CCNY before switching to a busi- distribution facility operated by a ness major at Baruch College — sees third party in California. his competition in even larger terms. Due to increased raw materials and “Anyone who is able to address the production costs, Southpole has raised needs of our target consumer lifestyles prices by 8 to 12 percent, depending and divert consumption from the cur- on category, over the past year. “The rent market is a potential threat. We reaction so far has been steady, with even see iPhones and video games no big negative responses,” as competition,” he explained. “They said Matura about the have created a new lifestyle that youth increases. “We were previously were not as immersed in, able to get ahead of but now are taking away disposable in- some of the cost in- come that otherwise might have been creases by taking spent on our products. Ultimately, our some big positions competitiveness depends on how we on certain categories, can deliver to our wearers the cool- like plaid shorts, and ness and freshness they [want] to ex- we’ve passed some of press themselves.” those internal savings on For spring, key men’s trends at to customers.” Southpole include cleaner and slim- The overall business mer silhouettes, brighter colors, climate since the reces- stripes, utility themes and non-denim Spring 2010 sion of 2008 has also forced bottoms. In juniors, the company is fo- Southpole to rethink its cused on more fast-fashion deliveries business practices. that hit of-the-moment styles. opening their men’s clothing store in “It turned “Retailers’ open-to- “Department stores lack the ca- Brownsville, called L&L Menswear, out that our abil- buys have tightened up pacity to deliver fast-fashion rela- with $10,000 in family savings and ity to identify hit and they want to shift tive to specialty stores,” noted Khym. a $5,000 line of credit. Their father, items was often far liability to the whole- “Southpole is working to provide the Ogden Khym, was born in Ogden, Utah, ahead of the curve saler’s end,” Matura solution to that challenge.” after his father, Ki-sun Khym, moved and local suppliers pointed out. “We have The Khyms have been besting to the U.S. in 1899 with the help of could not produce suffi - to maximize our own challenges ever since they got their Christian missionaries. Ki-sun Khym cient quantities in a timely capabilities in terms start in the apparel business in 1981, was one of the earliest Korean immi- manner. This eventually led of allocation by grants to this country and he earned a us to work directly with ven- door, stock analysis degree at the University of Nebraska dors abroad, where there was and replenish- before moving his family back to Korea a greater variety of offerings and ment systems. in 1926. Ogden returned to the U.S. where we often had direct input So, if I have a with his own family in 1977. into what was created,” said Khym. store that is “Brownsville was a tough area but “Instead of waiting for the right prod- doing 20 per- the key money was low and the rent ucts to be developed, we decided to de- cent of sales was cheap. It was a good opportu- velop those products ourselves. Leather sneakers. on 10 percent nity,” recalled Kenny Khym, who was “We called it Wicked because when of stock, I should still fairly new to America and in high our customers would come into the increase that allocation to 30 percent of school at the time his brother David store and see something they liked, sales on 20 percent of stock. Allocation opened that fi rst store. The younger they would say, ‘Wow, wicked!’ — as in planning is key. Everyone on my team is Khym worked after school, transport- wicked good, not wicked bad.” not just an account executive, but really ing merchandise on the subway from The brand name was changed they are mini business managers. It’s not wholesale dealers in the Garment to Southpole in 1995, after a South just about selling in product anymore.” District to the store in Brownsville. Korean expeditionary team reached On the licensing front, key current “Lee colored denim was big at the the South Pole. “The term Southpole partners for Southpole include Vida time,” Khym remembered. refers to the spirit of challenge and International for shoes, Concept One In 1989, after the store’s landlord adventure,” noted John Um, executive for headwear and cold weather acces- decided to jack up the rent by several- vice president. “It’s also not tied to a sories, Colors in Optics for eyewear hundred percent, the Khyms moved particular country, so it can be used ef- and Adjmi Apparel Group for infant their retail business to Jamaica, fectively in different markets.” and toddler apparel. Other categories Queens, and founded a new store, Among the fi rst important custom- include bags, small leather goods, ju- called Metropolitan Total Fashion, ers of Wicked Fashions and Southpole niors intimates, sleepwear and hosiery. which remains in business. Two years was the now-defunct Merry-Go-Round (For more on licensing, see page 18.) after moving the store, the Khyms young men’s chain, which was then The company has plans to seek li- A. Prodigee founded Wicked Fashions to develop omnipresent in malls across America. censees for underwear, watches and was aimed and wholesale their own line of urban “I drove to the headquarters in accessories, and international markets. at suburban men’s wear. Maryland by myself with the samples,” {Continued on page 8} shoppers. STILL LIFE PHOTOS BY GEORGE CHINSEE STILL LIFE PHOTOS BY KPMG LLP congratulates Wicked Fashions on 20 great years. kpmg.com

© 2011 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in the U.S.A. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International. 24510NSS 8 WWD MONDAY, AUGUST 22, 2011 ··

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WWD MILESTONES {Continued from page 6} However, the brand was shuttered in Currently, Southpole has one licensee 2010 after just a few seasons. in Japan and another covering the en- Going forward, a key initiative is tire European market. the new WT:02 brand, which launched “Our key focus right now is on China last year as an upscale, modern, young and Latin America, and we are actively men’s line, primarily for specialty seeking partners in stores. The collec- those regions,” said tion features clean Jean Luc Rim, direc- silhouettes, utility- tor of marketing and li- We are a brand inspired outerwear, censing for the brand. resin-coated fabrics While Southpole is and slim-fit denim the fl agship brand of developer. meant to compete Wicked Fashions, the with brands like company has a num- We translate G-Star and Diesel. ber of other brands “The brand con- in its portfolio, while lifestyles into cept targets metro- several others have politan young men been launched and who are in their discontinued over the brands. early 20s and are years. Lot29, which — KENNY KHYM intelligent, inde- was launched in 2002 pendent and mas- and focused on ap- culine,” said Khym, parel and outerwear adding the brand adorned with licensed cartoon charac- will makes it debut in mezzanine-tier ters, is currently on hiatus but is set for department stores soon. a relaunch under a new concept based “There’s a product design and de- on social media and digital platforms velopment team that we internally call in the near future, said Khym. The Kitchen, toiling every day to bring Other brands in the Wicked sta- fresh concepts to introduce to the ble that are winding down in- market. We are a brand de- clude White Tag, which tar- veloper. We translate life- gets midtier shoppers with styles into brands. We a denim-focused line heavy ·· create new brands on mixed martial arts and businesses that elements and graphic our retail partners prints, and A. Prodigee, may also reap the which is aimed at sub- benefi t from.” urban shoppers with Looking back surf and outdoors on the past 20 looks reminiscent of years, Khym said Abercrombie & Fitch the most signifi cant or Hollister. lesson he’s learned One of the com- is the importance of pany’s more ambi- communication — as tious launches was in well as having the right 2009 when it introduced people in the right jobs. the RS by Ryan Sheckler “We have to make sure brand focused on the A Canvas fedora. that the company has the street and skate market. right people on the bus,” he Sheckler was a high-profile profes- said, “the wrong people off the bus, and WT:02 is a key new brand sional skater with his own MTV reality the right people in the key seats before that launched last year. show at the time, called “Life of Ryan.” we fi gure out where to drive the bus.” Against All Odds Living Up to Its Name ON A LOWER LEVEL of the Southpole head- “I thought we’d end up having 1,000 stores,” quarters building in Fort Lee, N.J., is the retail said Khym. team for the Against All Odds chain of urban However, the company’s growth trajectory streetwear stores. was abruptly reversed by the fi nancial crisis The company is a separate corporate entity of 2008 and the resulting retail implosion. The from Southpole, but is owned by the Khym fam- timing of the economic downturn couldn’t have ily. David Khym is chairman of both companies been worse for Against All Odds, as it had just and Kenny Khym is president, overseeing the opened a string of stores on the West Coast, day-to-day operations of both Southpole and where the subprime mortgage mess was espe- Against All Odds. cially acute. The company operates 24 stores currently, “The expansion to the West Coast was a di- including eight units in New Jersey, nine in saster,” said John Um, executive vice president New York, three in Pennsylvania, and one at Wicked Fashions Inc., Southpole’s parent. store each in Connecticut, Massachusetts, On Jan. 5, 2009, Against All Odds fi led for Maryland and Virginia. Chapter 11 bankruptcy protection. At the time, Apart from selling Southpole merchandise, it had shrunk to 64 stores — but the Khyms Against All Odds offers brands like Rocawear, worked with creditors and the court for a year Ecko, Zoo York, Levi’s, Ed Hardy, Jordan, The to devise a plan to keep the chain open, rather North Face, LRG, New Era, G-shock and D.C. than liquidating. The company emerged from Kenny Khym started Against All Odds in Chapter 11 on Dec. 27, 2009, paying off unse- 1995 as a mall retailer catering to the burgeon- cured creditors a 14 percent return. ing urban streetwear category. It was an early “Kenny really wanted to be able to keep em- player in the game — Rocawear was founded ployees who had worked for many years with the that same year and Sean John wouldn’t launch company,” said Um. “Even though we shut down until 1998 — and by 2000 the chain had rev- most of the stores, we retained the majority of enues of $15.5 million in about half a dozen employees. That really impressed the bankrupt- stores. cy judge and also the credit committee, after “It worked as a great antenna for our whole- they heard about our people retention strategy.” sale operations,” said Kenny Khym of using the Khym said the company is carefully consid- chain as a laboratory and testing ground for its ering expansion opportunities again, as there own Southpole brand. are good real estate deals available in some The company added stores throughout markets because of the still-fragile economy. the Aughts, growing to almost 80 stores in 15 As for the business itself, which trimmed states on both the East and West Coasts and in another 40 stores in the past two years, he Florida. Sales reached $78.7 million by 2005 summed up: “It’s not setting the world on fi re, A display at Against All Odds. and grew to $121.1 million by 2007. but it’s doing nicely now.” — DAVID LIPKE PHOTO BYJOHN AQUINO PHOTO BYJOHN

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We

the ’90’s With everything Nineties having a fashion comeback, Southpole’s urban aesthetic, mixed with a lifestyle sensibility, looks and feels perfectly on trend. — Alex Badia

Vest, shirt and denim jeans, all in cotton.

Nylon vest, polyester T-shirt and cotton denim jeans.

Polyester sweater and shorts and cotton denim jeans.

Cotton sweater and T-shirt and polyester shorts.

Hats and belts by Southpole. WWD MONDAY, AUGUST 22, 2011 11 WWD.COM NT: MERCEDES PSL BASS MERCEDES NT: :QUEST; HAIR BY ANNA BERNABE FOR HAIRGUM USA; FASHION ASSISTA ANNA BERNABE FOR HAIRGUM USA; FASHION HAIR BY :QUEST;

PHOTO BY JEFFREY COHEN MODELS: ELIJAH AND SALIEU @ RED, CHRIS WILHELMINA JANOS RE 12 WWD MONDAY, AUGUST 22, 2011

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Cotton and polyester tracksuit and leather sneakers. ▼

Turn S AT WORKGROUP LTD. USING NARS; FASHION ASSISTANT: ANNIE AUCHINCLOSS ASSISTANT: USING NARS; FASHION WORKGROUP LTD. S AT IThe Southpolet girlOn works a wearable mix of comfortable favorites, such as the polo shirt and tracksuit with on-trend styles for a look that is uniquely hers. — Kim Friday YLA MICHELE AT ATELIER MANAGEMENT FOR REDKEN; MAKEUP BY JEN MYLE MANAGEMENT FOR REDKEN; MAKEUP BY ATELIER YLA MICHELE AT ▼ Cotton and polyester polo shirt and cotton, polyester and spandex denim shorts worn with a signature newsboy cap.

PU and canvas sandals. ▼ PHOTOS BY GEORGE CHINSEE; MODEL: MARINA/FORD MODELS; HAIR BY KA GEORGE CHINSEE; MODEL: MARINA/FORD MODELS; HAIR BY PHOTOS BY

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WWD MILESTONES ▼ Acrylic knit dress and PU sandals.

Cotton and rayon romper accented with

sunglasses and leather sneakers. ▼ ▼ Studded denim thongs.

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company’s founding fabric. A key player in outer- Baggy looks from 2006 worn by R&B wear, one of Southpole’s fi rst big hits was the puffy artists Marques Houston and Omarion. jacket. But, as happens to so many companies seek- ing a foothold in the young men’s business, jeans were practically a prerequisite to be taken seriously in the marketplace. Southpole answered the call early on but it wasn’t until about 10 years ago that it began to grow into the staple it’s become today. “We’re a young men’s-driven brand, and it took off fi rst in young men’s, then in ju- niors and fi nally in children’s,” Kim said. The timing was right. Not only had Southpole built up the fi scal, merchandising and marketing muscle to meet — and to a degree anticipate — de- mand, but the baggy silhouette, especially in the young men’s market, translated into an opportunity to give teen and young adult consumers something they didn’t already have in their closets — a loose- fi tting silhouette easily lending itself to design modi- fi cations, as well as occasional parental disapproval. The emergence of the silhouette and maturing of the company helped make it an important denim- based “urban lifestyle” brand for stores ranging from midtier giants like J.C. Penney and Sears to fashion specialty stores like Dr. Jays, and even a smatter- ing of sporting goods chains, which liked the way it worked with their footwear assortments. By 2010, Southpole’s denim business had bal- looned into one of the top men’s jeans brands, com- ing in at fi fth — behind only Levi’s, Wrangler, Lee and Calvin Klein — in sales that year, according to research by The NPD Group of Port Washington, N.Y. The success of denim hasn’t always translated into success above the waist. “We have introduced a denim jacket every season, but it is a fashion item based on seasonal trends,” said Kim. “Likewise, denim woven shirts are fashion items. Top pieces are more trend- driven and don’t drive as much volume as bottoms.” However commercially viable they might or might not be, the merchandising of the tops is always co- ordinated with that of the bottoms, the executive pointed out. Denim accounts for about 40 percent of the com- pany’s young men’s business, plus or minus 5 per- cent, depending on the season. Figures in the kids’ portion of the business are similar although, with a wider range of items from which to choose, denim’s share of the juniors business is about 30 percent. Kim allows that the market is moving to- ward “cleaner” denim fi nishes and less fi nishing in general. Yet, demand

for sandblasted denim is “still strong.” He noted that the trend toward colored denim has been apparent in both young men’s and juniors. “Many of our customers, such as Denim on a Diet Penney’s and Sears, have enjoyed success with our colored denim. It’s Trimmer styles are moving in where superbaggy very much on trend now,” he said. Even with the persistent de- looks once ruled. By Arnold J. Karr mand for sandblast, Southpole is initiating moves to embrace a more eco-friendly approach SOUTHPOLE’S DENIM business might be slimming A trimmer look to denim, in its embrace of both down, but it’s hardly getting smaller. from 2011. cleaner fi nishes and raw denim. Denim remains the biggest single contributor to Southpole continues to rely the company’s sales, accounting for about 40 percent on overseas suppliers for its of the total of about $1 billion, and shows no signs of denim and jeans, with Pakistan, diminishing. But the look of the line, which was total- Bangladesh and China cited ly dominated by baggy silhouettes in the early years as the three most important of its existence, has slimmed down considerably. markets. Many of its pro- The company introduced slim and skinny fi ts into ducers have been affili- its young men’s mix in 2008. The styles have become ated with the company increasingly important, even as the brand has been for more than a decade. working to come up with the appropriate successor While trends with- to the ultrabaggy silhouette that was integral to the in the jeans category growth of the business — especially in young men’s are certain to change — and the overall enterprise. with the passage of “Our original young men’s baggy fi t was one of the time, denim’s im- most important items in the history of our business,” The “slim straight fi t” has become portance has been said John Kim, head merchandiser for Southpole’s a staple in the line, while Kim and his consistent. young men’s division. “Before 2008, the baggy fi t was merchandising colleagues “keep work- “Denim is always the 100 percent of our denim business. It’s downtrending ing to make the ‘right baggy fi t’ by trim- most important and biggest category in street- now, but it’s still running at about 40 percent of total ming down our original specs.” and sportswear,” said Kim. “Of course, denim fl uc- denim business, and we expect it to constitute 20 to Although a key component of the tuates from season to season, but it is a core ele- 25 percent in the future.” business today, denim was hardly the ment of the business.”

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WWD MILESTONES Hook Me Up Licensing has been a steady element for the brand. By Vicki M. Young

SOUTHPOLE’S LICENSING MACHINE might the brand is also sold at independent specialty re- not be the biggest engine in the ’hood, but it’s a tailers, like Dr. Jays. key revenue driver because the brand’s partners “Even after 20 years, this is still a great brand. have remained true to its aesthetic, even as it has It has stood the test of time, whereas others have evolved over time. come and gone,” Hafif concluded. With eight licenses currently in operation, Eyewear is licensed to Colors in Optics Ltd. Southpole executives continue to scout for more Founded in 1978, the firm is known for its use of vi- opportunities, according to Jean Luc Rim, director brant colors in its frames, especially cherry red, co- of licensing, but he acknowledged that connecting balt blue and violet. with the right licensee can be difficult in these tur- The Southpole Sun Collection for men and bulent economic times. women features embellishments in rhinestones, a That’s because licensing agreements require prominent Southpole logo placement and intricate certain minimum guarantees, and given the con- detail work. The collection is sold in department cerns over consumer spending, companies are less stores and specialty retailers. willing to make those commitments, he explained. Rhona Hutton, vice president and head of de- “We want partners who are capable of develop- sign for the eyewear maker, said, “The Southpole ing the business and pushing the category, rather customer loves identification. They like bling and than riding our coattails,” Rim said. they like color.”

About 10 percent of Southpole’s wholesale vol- The collections — one each for men and ume is generated through licensing, he said. women — feature 24 pairs of sunglasses and coor- Concept One Accessories, founded in 1999 by dinate with the Southpole color scheme and theme brothers Sam and Bernie Hafif, produces headwear for each season. and cold-weather items for young men and boys “Southpole is different from the other brands under the Southpole brand. Concept One holds that we have. This is a fun brand that has taken more than 60 licenses for such brands as Batman, off,” Hutton said. Budweiser, Disney, Ecko Unltd., Enyce, Levi’s Red The brand’s biggest (and longest-running) li- Tab, Rocawear, Sean John and Zoo York. censed category is in footwear, which is produced Sam Hafif, chief executive officer, said, “What’s by Vida Shoes International Inc. and covers young really genius about Southpole and the Khym fam- men’s, juniors and kids’. An array ily is that they went after what was at the time Southpole is searching for a new licensee for ju- of licensed the hottest segment of the apparel market — nior intimates. Because it never has had a deal for merchandise. streetwear — but at a [value] price point. While young men’s and boys’ underwear, it could either most brands such as Rocawear, Phat Farm and enter a licensing agreement just for junior innerwear Sean Jean focused on the upper-tier distribution, or sign on with a manufacturer that can also produce the Khyms went after the midtier, but they did it underwear for young men and boys, Rim said. without taking anything out of the product.” The company also recently ended its handbag Hafif explained that the product still fea- license for the junior category, although it is in tured embellishments that in some ways were discussions with a potential new licensee. “better than that found in the top-tier prod- In hosiery, Berkshire Hosiery had held the li- ucts.” He said Southpole is a big performer at cense for juniors, but that has now been expanded J.C. Penney and Sears. to include young men’s and kids’ as well, said Rim. “This is still a very aspirational brand for Other categories are leather accessories, in- [some] kids to buy,” Hafif said. cluding small leather goods like wallets and belts Over the years, the licensed product for head- with RGA Leatherworks, and infants’ and toddlers’ wear and cold- weather items has changed as the are manufactured by Adjmi Apparel Group. Southpole brand has evolved. The brand’s apparel is sold in Europe through “When we signed the license, the brand was Jungbold & Moreno-Stolz Distribution, in special- big on the oversize T with big graphics, so we had ty stores in Germany, the U.K., France and Spain, the big baseball cap. The product line has evolved according to Rim. JMSD markets the regular line from Ts to woven tops, and for [hats] we now have and the basic athletic program under the SP Pure more fedoras and bombers. The headwear has Collection moniker. evolved into fashion pieces. We work very closely The company also has had a distribution license with their product development team from a color, with Wise Harvest since 2003 to market apparel and graphic and fabrics perspective,” Hafif said. accessories throughout Japan, and Rim said the Besides midtier stores like Penney’s and Sears, company is also eyeing expansion in Latin America.

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WWD MILESTONES Staying True Retailers point to a key-item focus and value pricing as critical to the brand’s success in stores. By Jean E. Palmieri

THERE AREN’T MANY BRANDS in the urban space that can boast a 20-year history and $1 billion in an- nual retail sales. But that’s just what Southpole has built by maintaining a laser-focus on its target cus- tomers and seamlessly evolving with them over the past two decades. As a result, the brand has become a pervasive pres- ence around the U.S., counting over 5,000 department and specialty stores as customers, including more than 1,000 J.C. Penney units, 480 Stage Stores, 300 Peebles and 70 Gordmans as well as countless independents. The secret to the brand’s success, retailers report, is its ability to home in on key fashion items each season at prices that are not out of reach of the young shopper. “J.C. Penney has been a retail partner with Southpole since the fall of 2000,” said Steve Lawrence, executive vice president and senior general merchan- dise manager of men’s, home and children’s for the Texas-based retailer. “We launched in 200 stores and Southpole is currently in all Penney stores.” Lawrence said that over the past five years, the urban market has changed dramatically and Southpole has been nimble enough to keep up. “The urban landscape has gone through a sig- nificant change in the last five years,” he said. “No longer do urban customers dress head to toe in their The Southpole shop favorite brand. Today, they may combine a shirt from at J.C. Penney. their favorite brand with a pair of jeans [from an- JOHN AQUINO PHOTOS BY other brand]. Here again, Southpole has succeeded by offering a tremendous value relative to other within its young men’s department: action sports, var- stores in 39 states under the Stage, Peebles, Goody’s, urban brands. Also, the aesthetic of urban brands has sity prep and urban. And within the urban part of the Palais Royal and Bealls names, Southpole is the evolved, driven less by all-over logo looks. Southpole business, Southpole remains a top performer. “number-one resource in young men’s collections,” has moved with the market and today, many of the “We merchandise it as a collection, but at the end according to Jack Matzer, senior vice president and tops reflect a clean, modern aesthetic.” of the day, they’re more of a key-item brand business,” general merchandise manager of men’s, young men’s, That aesthetic, according to Lawrence, appeals Schettino said. “They’re really good at that.” children’s, juniors and shoes. “It’s a very important to a broad range of customers. “One of the keys to Within Sears stores, Schettino said the company resource for us. We’ve carried it for almost nine Southpole’s success has been that the brand appeals uses “visual amplification presentations” on the floor years. It’s been successful as a brand because it fo- to a wide consumer base,” he said. “We’ve enjoyed to call out the Southpole brand to customers. And as cuses on its core competencies.” a strong boys’ business up through young men’s. The a “highly promotional” business, Sears spotlights its Matzer said that “starting in 2008, the whole urban Southpole customer has proven to be very loyal and value-oriented specials as well. For instance, “We do a landscape changed but Southpole stayed true to the updates his wardrobe with the latest styles, season hat and T-shirt combo that is very successful,” he said. customer. They also keep their costs in line and offer over season.” Historically, among the great value.” And Southpole has proven to most popular items have been So while other brands in the urban market “come be up to that task, updating its T-shirts, polos and fleece, and go, Southpole has stuck to its roots, offering offerings to keep the mix — and Schettino said. “Those have urban fashion at a great price. They didn’t try to be customers’ closets — fresh. been the big drivers.” The com- too young.” “Southpole’s formula has pany’s denim, which is a cat- Within the Stage stores, Southpole is merchan- been to continuously update egory “in transformation,” has dised as a “key-item fashion brand,” he said, with the line with the most current morphed significantly over the emphasis on T-shirts, polos, denim, fleece or shorts, urban fashion trends, at mar- past few years to stay on-trend. depending upon the season. It’s carried in all stores, ket-leading prices,” Lawrence Southpole was important when although the presentation is larger in more-urban said. “Southpole also approach- the “oversize, baggy” look was skewed doors. es the business with a hybrid key, but in recent years has Like Schettino, Matzer is confident that Southpole classification/collection ap- “trimmed down” in response to will continue to be a key resource moving forward. proach. Within the collections, the market, he said. The same “The landscape changes every day, but the fact they build large volume key holds true with tops. Polos were that they’re still a prominent brand shows their item programs with solid polos, bulky a few years ago, but have adaptability,” he said. thermals and basic denim.” become tighter. He also pointed to the company’s strong sourc- Gary Schettino, vice presi- “Those are minor changes ing structure, which allows it to “keep prices in dent and general merchandise in the big picture, but it has line.” Additionally, “they’ve reduced sku’s, which manager of men’s for Sears, has kept them alive,” Schettino has helped them streamline the brand. They’re been a customer of Southpole’s said. “As a company, they have nimble, they deliver well and on time — that’s big. since his days at Mervyns. really transformed over the They also have good management in place and “We had a huge Southpole years from street to urban and they’re good partners.” business at Mervyns up until then young men’s contempo- Jeff Gordman, president and chief executive offi- the end,” he said of the now-de- The brand is a key rary,” Schettino said. “They’re cer of the Omaha, Neb.-based Gordmans, which oper- funct West Coast-based depart- resource at Sears. trying to diversify and create ates 72 stores around the Midwest, said Southpole is ment store. subbrands. The urban element the “leading opening-price brand in our young men’s Now at Sears, the brand is is still a factor, but the mix department,” and in fact, is one of the top brands in the linchpin of the retailer’s young men’s department. now speaks more to a contemporary guy.” the entire store. “We are focused on the young men’s business — He continued: “The beauty, and what we love The retailer started carrying the line in 2003 and it’s a really important strategy for us,” he said. about young men’s, is that it’s the fastest element over the years has watched as Southpole “increased Sears has traditionally appealed to older men, within the men’s business. The lifestyle and trends its key item offering, diversified its lifestyle op- who visit the stores for its well-respected hard-goods change frequently and not a lot of brands have last- tions,” and evolved into a monthly delivery program. brands, but the new merchant team is spotlighting ed. Southpole has proven to be adept and a market- Although items such as denim, hoodies and T-shirts the younger businesses. segment leader.” And Schettino expects the brand are historically among the best sellers, Gordman said “The older core customer is so important to us,” to continue to have a strong position at Sears in the the stores are successful in merchandising the line as Schettino said. “But the younger customer shops future. “As long as they keep their finger on the pulse a lifestyle brand. more frequently and reacts to trends more quickly. of the customer, retain the Southpole DNA and keep Calling Southpole management “dynamic,” and Young men’s is critical to the transformation of Sears up with the market, [I’m sure it will continue to be a “very smart” businesspeople, Gordman said that and we want to develop it.” growth brand for us.]” based on the store’s “long and robust history, we’re As a result, Sears is focusing on three distinct areas At Stage Stores, which operates more than 800 confident that the partnership will continue to grow.”

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WWD MILESTONES ’Net Work The brand has revamped its Internet efforts and focus. By Jean E. Palmieri

WANT TO REACH A YOUNG CONSUMER? Send a The new site is Facebook open-graph enabled, al- text or Facebook message. lowing users to “like” certain items on the site. Users It’s no secret that Southpole’s target customers can also customize their experience by selecting are attached to their computers and smartphones from three backgrounds — young men’s, young wom- 24/7. So it makes perfect sense to use those devices en’s or summer 2011. to build a brand message. That’s just what Southpole There’s a Mix ’N’ Match fashion moodboard tab, did last month when it relaunched and revamped its an interactive feature where visitors can select dif- Web site, southpole-usa.com. ferent pieces from the Southpole collection to create Before 2009, the company’s Internet effort was their own look. Those looks can then be shared with more of an electronic brochure geared toward its friends on Facebook. corporate clients. And as recently as this spring, the The Southpole Style community board allows users site was still very corporate-driven. Seasonal prod- to share photos of themselves in their favorite Southpole Southpole’s revamped Web site. ucts were barely showcased — only updated when looks. “We love seeing how consumers pair our pieces look-books were uploaded. On top of that, the site de- and integrate them into their wardrobes,” Rim said. relationship and dialogue we have with our custom- pended on flash technology while other companies Polls allow visitors to weigh in with their opinions ers,” Rim said. “This is a forum for us to share pieces were converting to a more html-friendly format. on different questions — a recent query asked cus- of culture that inspire our creative process and give But that all changed this summer when the new tomers to select their favorite season — and can be customers a deeper understanding of who we are.” site went live. linked to social networks. There’s a “Featured Looks” section, which replac- “The Web site is an increasingly important tool for The company also employs blogs on the site to serve es the electronic look book and allows the company us to communicate who we are as a brand to consumers as a “platform for us to communicate our marketing to post a variety of product images and styled shots as opposed to just our corporate partners,” said Jodi Ju, campaigns, including our current ‘Speak Up, Step Up’ from its ad campaigns. senior creative designer for Web and print at Southpole. multiplatform anti-bullying initiative as well as our Other features on the site include a store locator, a The upgrade stemmed from the company’s desire partnership with the World of Dance competition,” Rim special section for the press, and corporate informa- to have “a more active dialogue with consumers, es- said. (For more on these initiatives, see pages 24 to 26.) tion, all of which are updated frequently. pecially as Facebook and Twitter have become in- The blogs fall into two separate categories: “Yes, One thing the site doesn’t do, however, is sell prod- dispensable points of contact,” said Jean Luc Rim, That’s Fresh,” a spot to feature the latest Southpole prod- uct. “As a wholesaler we do not have e-commerce,” Southpole’s director of licensing and interim direc- ucts and trends that are generating buzz internally, and Rim said. “With the Web site, we can now feature tor of marketing. Flash technology became outdat- “Extra, Extra!” This blog is where the company posts sto- product images from our seasonal collections. ed as the iPad surged onto the scene, and the com- ries relating to the news, entertainment or the arts. Southpole’s product offering is greatly regionalized pany sought to provide a “better representation of “This gives us a platform to articulate our brand — the Web site allows us to show our entire selection Southpole as a lifestyle brand.” identity outside of just clothing and strengthen the of available items that we curate ourselves.”

Southpole On 20 years in the fashion world. We look forward to another 20 years!

Financial Strength and Exceptional Claim Service

David G. Sayles Insurance Services Chubb Group of Insurance Companies 899 Lincoln Avenue, Glen Rock, NJ 07452 Warren, New Jersey 07059 • www.chubb.com Recognizing 20 years of cutting-edge style Staying ahead of the fashion curve is what has allowed Southpole to create urban streetwear that people have loved to wear for 20 years.

Everyone on the Trade Capital team at Wells Fargo Capital Finance heartily congratulates Southpole on its lasting success.

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of Success Story 24 WWD MONDAY, AUGUST 22, 2011

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Southpole had a prominent billboard at Shea Stadium during the 2007 baseball season.

The Bully Celebs like Ciara and Nick Cannon helped build the brand, but now Southpole is making an anti-bullying message the focus of its marketing. Pulpit By David Lipke

ON A JULY NIGHT IN 2007, Southpole chairman David That grand gesture is emblematic of Southpole’s heavy Khym strode out to the mound of Shea Stadium, the former investment in advertising and marketing over the years. home of the New York Mets, and threw out the ceremonial Numerous hip-hop, R&B and pop stars have appeared in first pitch. Southpole was the sponsor of the team’s first “hip- its advertising campaigns, including Ciara, Nick Cannon, hop night” and 12,000 kids at the game were gifted branded Omarion, B2K, Mario, 3LW and “America’s Next Top T-shirts for the occasion. During that year, an imposing Model” winner Jaslene Gonzalez. Southpole billboard loomed over the outfield at Shea, as well. {Continued on page 26} BROOKVALE INTERNATIONAL WOULD LIKE TO CONGRATULATE SOUTHPOLE ON ITS FIRST TWENTY YEARS AND WISHES IT CONTINUED SUCCESS LONG INTO THE FUTURE.

Maersk Line congratulates Southpole on their 20th Anniversary

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Visit maerskline.com for more information, or call 973.514.5000. 26 WWD MONDAY, AUGUST 22, 2011

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A frame from the current anti-bullying video campaign.

▲ Mario in a 2007 ad.

A 2009 {Continued from page 24} campaign. Southpole’s celebrity endorsers contributed signifi cantly to its brand awareness and growth, said Kenny Khym, president of Southpole and its parent, Wicked Fashions Inc. However, as the brand’s consumers have become more diverse — and the urban market overall has evolved into a multicultural demographic — Southpole has ad- justed its reliance on musicians and actors, tak- ing a different approach to marketing. “Our consumers today come from every walk of life across America,” said Khym. “There are Southpole fans who not only listen to hip-hop, but also to rock ’n’ roll and other music. We feel that one particular celebrity might not correctly represent what Southpole means today. “Over the course of our evolution as a brand, we’ve realized that Southpole encompasses much more than hip-hop music. We still focus on music as an essential part of our marketing strategy, as ▲ A 2009 it is an essential factor of American youth, but sponsorship. A 2003 ad with greater scope beyond music as well.” featuring Southpole has reduced its print spending B2K. over the past couple of years, as the economy has slowed. The company spent $2.3 million on print in 2009 and $469,000 in 2010, according to Kantar Media fi gures. The brand is currently focused on events, pro- motions and online initiatives, said Jean Luc Rim, director of marketing and licensing. This year, Southpole is sponsoring the World of Dance, a traveling dance competition and exhibition with upcoming dates in San Francisco, Seattle, Toronto, London, San Diego, Boston, Chicago and Hawaii. As part of that sponsorship, Southpole has launched an anti-bullying public service cam- paign called “Speak up, step up.” Dancers and hosts will call attention to the campaign during World of Dance events, said Rim. Southpole has also created YouTube videos featuring dancers from the tour. In one spot, dancers named Bones Hill and Havoc explain A 2007 billboard. to two young girls: “Bullying is so played out. So speak up, step up.” The videos are featured on Southpole’s Facebook page, where viewers can win tickets to World of Dance performances. The campaign will also be highlighted in a radio initiative this fall, with partner stations Hot 97 in New York and Power 106 in Los Angeles. “We want to stand for greater causes than just fashion, and would like our consumers to partici- pate in them and feel good as well,” said Rim. “As even President Obama has said, bullying is a serious social problem among youth in America. We may not be able to provide a cure or solution to this problem, but want to raise awareness and contribute to seeking the remedy.”

Congratulations to Southpole on 20 years of success

From small beginnings to international success, HSBC is proud to have supported Southpole’s growth.

HSBC has an experienced team of dedicated apparel banking specialists with a deep knowledge of the industry. We help our customers in an increasingly complex international marketplace offering tailored solutions involving working capital financing, international trade services, cash management and foreign exchange.

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