NEWSPAPER 2ND CLASS $2.99 VOLUME 72, NUMBER 1 JANUARY 1–7, 2016 THE VOICE OF THE INDUSTRY FOR 71 YEARS New California Laws Change Workplace Rules in 2016 By Deborah Belgum Senior Editor California politicians were busy in 2015 passing a bevy of employment laws that will take effect on Jan. 1. Some laws apply only to specific industries, but every- one will be affected by the new minimum-wage law, which mandates that hourly pay goes from $9 an hour to $10 start- ing Jan. 1. This is the first change in the hourly wage since mid- 2014, when it rose to $9, which was the first minimum-wage hike in six years. And those who pay their workers a piece-rate wage will have to take into consideration paying their employees for rest breaks. Other laws protect workers from discrimination, let them take time off to find schools or daycare for their children, and helps them seek equal pay for equal work. ➥ New Laws page 3 ANDREW ASCH HOLIDAY OPENING: There’s a new athleisure store on Abbot Kinney in LA’s Venice neighborhood. Los Angeles–based and LA–made Avocado opened its doors on Dec. 22. For more on the store, see page 8. Holiday’s Mixed Review: NEW RESOURCES Contenders: Clothing Line MasterCard Reports Increased Sales, Others Looking for Bigger Forum Call It a Tough Season By Andrew Asch Retail Editor Co. boutique in Seal Beach, Calif. The brothers hoped to develop the brand’s direct-to-consumer business. In the sum- By Andrew Asch Retail Editor Skateboarding and surfing have launched hundreds of brands, mer of 2015, a new group of financial and marketing partners but for John Anderson, the inspiration for the new Contenders joined the Contenders team to develop the underwear brand The reports for the 2016 holiday retail season are in, and clothing line came from one of the oldest of sports: boxing. into a clothing collection and bring it to a bigger ring, said the news is mixed. In 2014, Anderson teamed up with his brother, Mike Jonathan Snyder, one of the new partners. According to a statement released on Dec. 29 by Anderson, and Rick Robles to start Contenders, a collection of For one of its first acts, the new team unveiled a license. It MasterCard Spending Pulse, the market-research group men’s underwear inspired by the trunks worn by professional is from one of the only media properties that could have made that tracks spending in the MasterCard payments network, boxers. The Anderson brothers were fight fans. That year they sense for a line of boxer briefs inspired by boxers. the season ended well for apparel retailers. had designed swim trunks that looked like boxing trunks.A It was the “Rocky” series of films, which follow the life of Apparel saw high single-digit growth during the season, little brainstorming led them to think the look would make a underdog boxer Rocky Balboa, played by Sylvester Stallone. The which began on Black Friday, the day after Thanksgiving, great-looking pair of underwear, something between fashion seven-movie series launched in 1976 and made Stallone a star and lasted until Christmas Eve, according to MasterCard. underwear and a plain pair of boxers. and an Academy Award nominee for best actor and best screen- Sales for women’s apparel rose by double digits. But Contenders kept a low profile. It was sold at 20 physi- writer. (The original film won the Oscar for best picture of the Excluding auto and gas, retail sales grew 7.9 percent cal boutiques, including the Andersons’ own Tankfarm & ➥ Contenders page 6 between Black Friday and Christmas Eve in a year-over- year comparison to last year. The MasterCard Spending Pulse report was one of the American Apparel Gets Deadline Extension on Reorganization Plan ➥ Holiday page 8 By Deborah Belgum Senior Editor file multiple competing plans at this stage of the case would increase the costs to the debtors’ estate, unduly burden the INSIDE: American Apparel has been on a fast track to reorganize court and quite likely impede—rather than facilitate— Where fashion gets down to business SM after it filed for Chapter 11 bankruptcy protection on Oct. 5. meaningful progress toward the debtors’ exit from It is hoping to be out of bankruptcy by early February but bankruptcy,” the company wrote in documents filed with the on Dec. 28 filed a request to extend from Feb. 2 to May 2 U.S. Bankruptcy Court in Delaware. its exclusive right to file a bankruptcy plan. The request was A hearing on the confirmation plan is scheduled to be granted by U.S. Bankruptcy Judge Brendan L. Shannon. heard in Bankruptcy Court on Jan. 20. American Apparel American Apparel also was granted an extension from is hoping to emerge from bankruptcy soon after Jan. 20 and Feb. 2 to May 2 to reject store leases for its 125 stores in the before Feb. 2. It will go from a publicly traded company United States. whose stock was sold on the New York Stock Exchange to a 2 6 American Apparel has already filed a joint plan of privately held entity. reorganization, noting it will close 17 stores. Under the bankruptcy reorganization plan, the company With the deadline extension, the company is hoping to struck a deal with its secured lenders to reduce American Surf Report ... p. 2 avoid other acquisition plans being filed, particularly any Apparel’s debt through a process called debt-for-equity Fashion Resources ... p. 10 proposals being undertaken by American Apparel founder conversion, which means the company’s bondholders swap Dov Charney, who was suspended as the Los Angeles their debt for shares in the company. clothing company’s chief executive and president in June These secured lenders will convert $200 million in bonds 2014 for alleged misconduct and fired one year ago. He was into equity in the reorganized company. They have already replaced by Paula Schneider at the beginning of 2015. provided $90 million in debtor-in-possession financing as “To allow exclusivity to lapse and for parties to potentially well as $70 million in new liquidity. ● www.apparelnews.net 01,3,6,8.cover.indd 1 12/30/15 6:20 PM NEWS Indian Garment Company Fined Iconix Being Investigated by SEC Iconix Brand Group, which owns to restate historical financial statements for for Stealing Software a number of labels started in California, fiscal years 2013 and 2014 and the first half announced on Dec. 28 it received a formal of 2015. California’s attorney general has won a settlement from a clothing factory in India accused order of investigation from the Securities and Iconix doesn’t believe the adjustments will of stealing intellectual property from U.S. software companies. Exchange Commission. affect fiscal 2013 but that operating income Pratibha Syntex Ltd., founded in 1997 in the Indian city of Indore, was accused of not The SEC is investigating the accounting for fiscal 2014 will be reduced by $6 million. paying licensing fees for software from companies including Microsoft Corp. and Adobe done for forming certain joint ventures in In addition, the company’s operating income Systems Inc. China and Latin America. Iconix, based in for the first half of 2015 should increase by California Attorney General Kamala Harris sued Pratibha in Los Angeles County Superior New York, said it planned to fully cooperate approximately $1.5 million. Court in 2013 for IP theft, charging the company with not paying for software that helped with the SEC. News of the SEC investigation Cooperating with the SEC has been run the manufacturer’s enormous apparel facility in India, which has more than 3,500 sewing caused the company’s stock to plunge by 20 expensive. The company said that during the machines and can make up to 56 million garments a year. Much of its clothing is exported percent on Dec. 29. third quarter of 2015 it spent $7.1 million to the United States. The brand-management company has had on professional fees to pay for continuing The complaint alleged that Pratibha obtained an unfair advantage because it was able to a difficult year as revenues and profits have correspondence with the SEC staff. redirect money saved by using pirated software to hire employees and invest in research- tumbled. Longtime Chief Executive Neil Iconix also revised its guidance for 2015. and-development efforts. Cole, who founded the company in 2005, It now believes licensing revenue in 2015 To end the lawsuit, Pratibha agreed to pay a $100,000 settlement and finish four audits of left on Aug. 7, months after the departure will range from $370 million to $380 million its software and fix any violations in 45 days. Under the settlement, Pratibha did not admit of Iconix’s chief financial officer, Jeff instead of $410 million to $425 million. to violating the state’s unfair-competition laws. Lupinacci, and its chief operating officer, Iconix’s brands include Ocean Pacific, “Pratibha Syntex engaged in illegal business practices that placed California garment Seth Horowitz. Mossimo, Ed Hardy, Bongo, Badgley companies at a disadvantage while hurting American software companies’ ability to develop After a special committee of the company’s Mischka, Joe Boxer, Modern Amusement, new and innovative products,” Harris said in a statement. “Businesses around the globe board conducted a review in November of Rampage, London Fog, Candie’s, should be on notice that the state of California will hold them accountable for stealing the accounting treatment related to certain Danskin, Fieldcrest, Waverly and Sharper intellectual property to unfairly undercut their competition.” transactions, the company said it planned Image.—D.B.