Washington - Blame the
leggings and the yoga pants. Americans are buying fewer pairs of jeans these
days - and when they are, they're not spending as much as they once did.
True Religion, which after
years of declining sales, filed for bankruptcy protection this week and
announced it would be closing at least 27 stores. A decade ago, the brand was
riding high, commanding hundreds of dollars a pair for jeans with the company's
signature horseshoes embroidered onto the back pockets. Business nearly tripled
between 2007 and 2012, and by 2013, True Religion had annual revenue of $490
million.
But that growth has reversed
in recent years. Sales of super premium jeans - brands like 7 for All Mankind,
True Religion, Joe's Jeans and Hudson - fell 8 percent last year, according to
market research firm Euromonitor International. Overall, jeans sales grew
slightly in 2016 after two years of declines, as Americans traded down to
lower-priced brands like Levi's, H&M and Forever 21.
"The premium denim
market has been in decline over the last several years," Dalibor Snyder,
True Religion's chief financial officer, wrote in a document filed Wednesday
with the US Bankruptcy Court in Delaware.
"Competition has also increased from emerging and established fast fashion
and low-priced apparel retailers."
Instead, Americans are
increasingly filling their closets with yoga pants and leggings, which they're
wearing not just to the gym, but also to run errands and meet up with friends.
True Religion's $319 skinny jeans have been replaced by Lululemon's $98 yoga
pants.
Designer denim took off in
the early 2000s, during an era marked by large, flashy logos. True Religion,
founded in 2002 in Manhattan Beach,
Calif., was among the first to
cash in on the wave of premium jeans, with its lineup of funky designs and
washes. (Rock & Republic, which filed for bankruptcy in 2010, and Hudson
Jeans were founded the same year.)
"Back then, $100 for a
pair of jeans seemed exorbitant," said Camilo Lyon, a retail analyst for
Canaccord Genuity. "But all of a sudden people were paying $150, then $250
and $350. There was a rapid escalation in pricing, and consumers were willing
to pay."
True Religion continued to
grow during the recession, thanks in part to celebrities like Britney Spears,
Kanye West and Mariah Carey, who were routinely photographed wearing the
brand's jeans.
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But by late 2012, the
outlook had begun to sour. Competition was up and demand was down. True
Religion put itself up for sale, and found a buyer in TowerBrook Capital
Partners, a private-equity firm that paid $835 million for the company. Sales
have continued to slip. Last year, True Religion reported revenue of $370
million, a 25 percent drop from 2013, and a loss of $78.5 million.
Today, shoppers are more
likely to favour low- or moderately-priced jeans without large logos and
decals, according to Euromonitor. A move away from obvious logos also means
it's becoming more difficult to distinguish between the high-end jeans and
inexpensive ones.
Levi's - where jeans
generally range from about $45 to $90 - continues to be the most popular jeans
brand among male consumers, while women tend to favour denim from
"economy" brands like H&M, Old Navy and Forever 21, as well as
private label brands from Walmart and Target, according to Euromonitor.
(Economy jeans made up 39 percent of womens' denim purchases last year,
compared to 9 percent for super premium jeans, Euromonitor found.)
"I don't think this one
is rocket science: The luxury jeans market is getting smaller and will continue
to do so," said Paula Rosenblum, managing partner of Retail Systems
Research in Miami.
"Why would you spend $300 on ripped jeans, especially if you can get the
same thing for $60?".