Retail Sales Results
1995 started off on a difficult note. Record warm temperatures (it was the third warmest winter in 100 years) throughout the winter of 1994 dealt a serious blow to U.S. outerwear sales during that calendar year. Retail fur sales declined 9% to $1.1 billion after two consecutive years of 10% sales increases.
"These are not pleasant numbers for furriers to hear, but it could have been worse," said Alan Millstein of Fashion Network Inc., New York City, a fashion industry market analyst. "This was the worst year for outerwear sales since the second world war. Cold weather is the single most important reason people buy outerwear."
The fur business actually outpaced sales of other outerwear apparel, but that was no consolation. Furriers heeded the survey by Southwick Associates, an independent resource economics consulting firm based in Arlington, VA, which noted that, "What made the biggest difference to retailers was fashion items. It is clear that those furriers who can keep up with the fashion demands of the public will perform better."
By the end of 1995, the sales picture had turned around considerably, with retailers reporting same-store-sales up 20-35% for November and the beginning of December.
Evans Shakeup
"Our main goal is to return Evans to the black as quickly as possible and get manufacturers paid. This was one of numerous ways we're cutting expenses," responded Sam Garber, vice president/corporate secretary and general counsel to Evans Inc., after Evans closed its New York office in March. Evans undertook those measures in order to obtain new financing. Because of poor sales, especially in the third quarter (sales fell by nearly $6.2 million in that quarter ended Nov. 26, 1994), Evans was unable to make its normal bank payment by Feb. 24. The bank extended funds to Evans to partially pay vendors but also gave the company a Mar. 31 deadline to pay its loan. In the spring, David Meltzer stepped down as chief executive officer. The company's five-member board of directors elected chief operating officer Patrick Regan to the position of president and ceo effective July 1 and appointed him as a director. Meltzer continued to be chairman of the board of directors.
Meltzer said at the time, "While this past year was not a great one, that, in my opinion, was certainly not the fault of the management team, who had no control over an abnormally warm winter season. As a matter of fact, it is a great credit to the high esteem in which that team is held, and of which Evans as a company is held, that Mr. Regan was able to secure for us a $23.5 million three-year loan from Transamerica, one of the premiere lenders in the United States." Later, William Koziel was appointed chief financial officer, and the company announced it had narrowed its pre-tax loss for the second quarter.
Canadian Exports
Montreal -- Canadian fur exports continued to climb. They registered strong gains for the second consecutive year in 1994, continuing the recovery trend which began in 1993. Total fur and fur-garment exports reached $194.5 million in 1994, up 22% over 1993 figures. Canadian fur-garment exports totalled $38.5 million, a 19% increase over '93. This follows the 24% gain in '93 over 1992 sales. The leading export market for Canadian fur garments was the United States. Fur-garment exports to key U.S. markets were valued at $75.5 million in 1994, a 27% gain over 1993 sales.
Revillon Leaves Saks
The first Fur Fashion Week in New York proved to be a prolific breeding ground for gossip, so at first it was easy to dismiss rumors about Revillon losing its lease to operate fur salons at Saks Fifth Avenue when it comes up for renewal in 1996, and that Birger Christensen -- formerly a strictly wholesale/manufacturing operation in the States -- would step in. Eventually, however, so much information was filtering through the rows of buyers and fashion editors that it was impossible to ignore. David Wolfe turned up at the shows with a suspiciously large contingent of Birger Christensen buyers for its Holt Renfrew salons in Canada, and the same week he was appointed BC executive vice president.
Fur Age incensed the companies by reporting this news on May 22. Revillon said negotiations were ongoing, while Saks and BC were mum. Finally, after months of speculation, Revillon and Saks announced at the end of October that the story was true.
EU Wild Fur Ban
The US fur trade thought it would have to resort to filing a 301 Petition in early July in response to the European Union's decision to ban the importation of many wild furs beginning Jan. 1, 1996, but tense diplomatic negotiations proved successful in the eleventh hour. The petition would have meant asking the President to challenge the wild fur ban through Section 301 of the US Trade Act, which enables private parties to request the government to challenge foreign trade practices that violate US rights under trade agreements.
On Nov. 22, the European Commission decided to delay the implementation of the ban, and the trade declared victory, at least for now. Regulation 3254/91 would have prevented European Union countries from importing pelts or garments made from 13 species of wild furs, unless their countries of origin had either outlawed the leghold trap or implemented internationally accepted humane trap standards. Such standards had not yet been developed, however, and even when they are, they could take a great deal of time to be implemented.
EU countries are the largest consumers of North American wild furs, taking about 80% of those coming from the United States.
Fur As Outerwear
Retooling businesses to meet the needs of '90s consumers continued in 1995. Responding to lifestyles that were less ostentatious yet still demanded personal luxury proved to be a major challenge, which fur designers met with nothing short of a renaissance, rejuvenating merchandise with an injection of sportswear energy and form-follows-function fashions for today's casual attitudes. "Luxury outerwear" became the buzzword, as categories blurred between fur, leather and fabric in lined and reversible goods, shearling furs, fur trims and even montages of each medium. The implications surpassed style. An equally important marketing revolution was underway. The channels of distribution for fur products blurred between traditional fur retailers, independent specialty stores and coat departments of upscale chain stores.
Insurance Bankruptcy
The State of New York Insurance Department began an investigation of one of the largest suppliers of insurance to the fur trade, broker Underwriters Financial Group Inc., New York City, after receiving several complaints about the company. UFG closed its doors and filed for bankruptcy protection amid allegations of fraud and financial difficulties. Since it served 130 to 140 fur companies, this left a large segment of the trade frantic. UFG was accused of not paying premiums to insurance companies, so many retailers and manufacturers didn't know if they have insurance coverage or not. Most sought coverage elsewhere.
The situation also led to questions about the legality of retailers selling insurance policies to consumers covering their coats for theft or loss off the furrier's premises. At least one retail company told Fur Age that it was instructed by its state insurance department to stop selling the policies immediately, that it didn't matter whether or not the company had obtained the policies from UFG; selling them was illegal. Some retailers stopped the practice but didn't want to talk about it.
Mink Promotion $$
In 1995, the United States Congress approved an amendment to the 1996 Agriculture Appropriations Bill which cut from the Market Promotion Program funding the entire budget for promoting mink pelt exports. Observers saw the vote as part of a budget-cutting frenzy rather than anything directed specifically at mink farmers.
The United States Mink Export Development Council, which received the funds and distributed them to producers or their selling agents, argued that the mink export promotion funding is actually one of the best examples of what the $110-million budgeted Market Promotion Program is intended to accomplish. It assists on a priority basis small ranchers who market their goods overseas, especially where they are faced with unfair trade practices such as foreign subsidies.
The US Mink Export Program Promotion Funding made marketing funds available on a matching basis to agricultural groups that market their product overseas. Ninety-five percent of mink produced in the United States is exported, worth $100 million annually.
Cyber Furs
Talk about traffic! Fur fashions hit the World Wide Web at cyberspeed. After only two and a half months up and running, Fur Online, the single comprehensive source for fur fashions, shopping and news (including Fur Age and the Fur Age Folio) on the World Wide Web, logged a shocking 150,000 hits, according to statistical analysis provided by an outside source. It now averages about 5,000 hits per day. In comparison, Time magazine online received about 17,000 hits per day, and Newsweek got 13,000, according to reports at the time.
A glance at Fur Online's demographics showed that, after mainly U.S.-based commercial users, the following countries were among those represented in major numbers: the Netherlands, Canada (3,548 hits as of Dec. 12), the United Kingdom, Germany, Australia, Austria, Japan (1,609 hits), Sweden, France, Switzerland, Belgium, Italy, Hong Kong and Greece. Fur Online also received more than 2,000 hits from the U.S. government and several hundred from the U.S. military. Web surfers also hailed from a number of exotic and unexpected lands, such as Malaysia, United Arab Emirates, South Korea, the former USSR, Estonia, Latvia, Indonesia, Thailand, Brazil and even one from China.
These results widely expanded the scope of Fur Age's subscriber base. Not only did this secure Fur Age's position as the most-read fur publication in the world, a majority of readers of Fur Age online were consumers, not trade members.
Activism
1995 most certainly went down as the year when animal rights protests lost credibility, and women got sick of listening to them. Seemingly frustrated, activists predictably became more violent in their attacks.
For the first time in U.S. history, an animal rights extremist was sent to prison for terrorist activities related to the Animal Liberation Front (ALF). Rodney Coronado was sentenced to serve 4 3/4 years in federal prison for a 1992 firebombing, which destroyed millions of dollars worth of research facilities and data at Michigan State University. He was also ordered to pay more than $2.5 million in restitution to Michigan State and five other institutions and businesses terrorized by ALF.
The Coalition to Abolish the Fur Trade (CAFT), based in Memphis, TN, held four national demonstrations in 1995 after declaring war on Federated Department Stores Inc. in attempt to convince the parent company of several department stores to stop selling fur garments. By the end of the year, CAFT boasted that more than 100 of its members had been arrested while protesting furs. CAFT called itself "a coalition of anti-fur advocates" led by 22-year-old director John P. Goodwin of Memphis. Its members appeared to be young, in their 20s and sometimes teens, and appeared to show a reckless disregard for the law.
The North American Animal Liberation Front Support Group (ALFSG) established a presence in Memphis, Tennessee, the same city where the Coalition to Abolish the Fur trade (CAFT) is headquartered. According to an ALFSG mailing obtained by Fur Commission USA, merchandise and literature distribution for the organization "has been taken over by a crew in Memphis."
Fed up with animal activist violence against the fur trade and the fur farm community in particular, the fur industry offered a reward of $50,000 for information leading to the arrest and conviction of the person or persons responsible for two criminal acts against farms in Canada. On Nov. 14, several thousand mink were released unlawfully from their cages at the farm of F. Rippin in Aldergrove, British Columbia. On Oct. 24, over 2,400 mink were released at the farm of R. Dargatz of Chilliwack, BC. The Animal Liberation Front (ALF) claimed responsibility for both attacks.
Protests on the traditional "Fur Free Friday" were a total wash-out. Media coverage was down drastically. The total number of instances of radio or television reports decreased almost by half from last year. A professional monitoring service hired by FICA picked up 90 reports across the United States, down from 172 last year. And the depth of coverage was far less; many tv and radio outlets who last year devoted minutes of air time to the event only gave it a few quick seconds this year.
Talk show host Ricki Lake was sentenced to four days of community service as part of a plea bargain arrangement to settle her involvement in a 1994 PeTA invasion of designer Karl Lagerfeld's New York office, but she squabbled with the Manhattan District Attorney over how she'd do her time. She reportedly refused to clean subway cars and platforms, and preferred to deliver meals to AIDS patients. The D.A. eventually gave in, but not until after a spokesperson said, "People who deface property usually are given public property to clean up. They don't get to pick and chose what they will do."
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