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Once-Hot Jeans Maker's Challenge: Staying Cool While Expanding

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Apparel: Revatex of Los Angeles seeks to bring the urban look popularized by its wide-legged denims to mainstream retailers.

October 18, 2000|DENISE GELLENE | TIMES STAFF WRITER

As MeriGoRound sold JNCO at fire-sale discounts, boutiques snatched them up and resold them at regular prices. Soon, such trend-conscious chains as Gadzooks and Pacific Sunwear ordered the company's suddenly hot wide-leg jeans. The company posted earnings of $9.1 million on sales of $66 million in 1996 and profit of $39.3 million on revenue of $136.1 million in 1997.

To Revah, his company's success fulfilled a youthful dream fed by reruns and newscasts showing powerful Americans.

"It was destiny," said Morocco-born Revah, who started the company with $200,000 in savings. "It is not something you can program. It is not a strategy that you can create."

It wasn't fashion alone that endeared Revatex to its new retail customers. Because its production was concentrated in Los Angeles, Revatex filled orders in two months, half the time needed by competitors that made garments overseas.

A shorter lead time allowed retailers to fine-tune orders, canceling weak sellers and stocking up on popular styles that sold at full price, Rounick said.

But by late 1998, Revatex had become so overwhelmed with orders from new retail customers that it couldn't meet shipping deadlines. Its back-to-school order arrived in stores late, leading to markdowns.

Meanwhile, demand for wide-legged jeans slumped, hurting JNCO sales even more. To maintain Revatex's relationship with irate retailers, the company in many cases took back unsold inventory or compensated chains for losses on JNCO garments.

"I wrote some very big checks," Revah said. Revatex, which had a profit of $30 million in 1998, saw earnings dwindle. "It was tight."

Though it closed its only factory, the company uses local contractors to produce about 70% of its goods. Revatex placed some of its former employees at those contractors, Milo Revah said.

The company is introducing a revamped juniors denim line after a false start last year and expanding its Flamehead boys' line, sold through department stores such as Dillard's. The children's show based on the character is under development with a Canadian production company and Fox.

And, in a homecoming of sorts, Revatex has opened a JNCO store in Paris, where its chief attribute is the label's American origins.

"You cannot believe the marketing impact we have over there because we are an American company," Revah said. "It is our claim to fame."

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