United Kingdom’s The Observer reports that during the current hard times, a new term is in the making. “Recession chic” is a trend that top designers have created in which low-cost clothing is fashionable and widely available. Fashion designers are teaming up with discount retailers like never before in an attempt to increase profits.
Not only American designers are feeling the sting of a suffering economy. The German-based, upscale fashion company Escada is launching a financial restructuring package in order to remain in business. According to Forbes.com, the company will need to meet liquidity needs of around 30 million EUR to reduce the company’s current debt. The plan will be completed in July.
Saks, Inc. announced today that the company’s CEO Stephen Sadove will be taking a large pay cut. All of the company’s top executives have seen a decline in their compensation over the past year as a result of the economy. As the markets continue to suffer, people are simply no longer shopping for the luxury goods offered at the company’s store, Saks Fifth Avenue.
As more and more companies are losing traffic in their stores, many are facing the possibility of closing their doors. Accessories chain Claire’s lost $570 million in the fourth quarter. Women’s Wear Daily assumes the drop in sales is due to the fact that the brand has lost its value and is no longer trendy.
CEO of Claire’s, Inc. Gene Kahn blames the tough economy. “The economic turmoil definitely impacted sales as traffic softened and the customers stayed away from nearly any shopping experience,” Kahn said.
Claire’s closed 120 stores in the fourth quarter and possibly could be forced to close more.
The New York Times is following other publications in redesigning the newspaper’s layout. After announcing salary cuts, plans were made to eliminate and combine weekly sections, downsizing fashion reports. The redesigned paper will be go into effect May 10. The Wall Street Journal made a similar action in February due to a tightened budget, eliminating the paper’s fashion bureau.
The 25-store off-price retail chain, Filene’s Basement, is up for sale after over a century in business. The Boston-based company closed 11 stores in January because of financial problems and has not been able to improve sales since. Filene’s Basement is famous worldwide for its annual “Running of the Brides” wedding gown sale.
Most companies are taking actions of change during the current state of the economy, however not all designers. Giorgio Armani ignores the recession and recently opened a new flagship store on New York’s Fifth Avenue. Armani is persistent in believing that the “super rich” will still purchase the extravagant clothing. The designer told ABC News referring to the super wealthy, “what else will they spend their money on?”