Afloat in the Jean Pool
A label stitched to the fly of every pair of Lucky jeans says, “Lucky You”--an apropos slogan for Gene Montesano, the apparel industry veteran who runs Vernon-based Lucky Brand Dungarees.
Thanks in part to his knack for gimmickry, Montesano is making strides in a business where such long-established giants as Levi Strauss are struggling. Despite their $70 price tag, Lucky jeans have developed a following among teenagers and young adults who like its cheeky red-ribbon fly--inspired by the slips of paper in fortune cookies--and roomier fit.
Tonya Hughes of Houston, a teenager who visited the company’s Web site, thinks that flashing “the tag in the fly is a cool way to meet people.”
Equally important is Montesano’s decision to limit distribution. Rather than sell to just anyone, he patiently courted upscale specialty retailers and department stores such as Nordstrom to keep the brand exclusive. The jeans are sold at just 500 stores nationally.
“We think the more of it that’s out there, the less people want it,” Montesano said.
His customers agree. “People like the fit and they like that they’re not seeing it everywhere. We’ve carried it for two years, and it’s still one of our best-selling brands,” said Karen Meena, a men’s sportswear buyer for Fred Segal-Melrose.
However, as Montesano has learned, the fickle fashion business can embrace you one day and turn its back on you the next. His other jeans company, Bongo, faded like acid-wash denim after being briefly hot among teenagers a decade ago.
Bongo’s flashy denim clothing--double-zippered miniskirts, splashy T-shirts and striped jeans--fell from favor in the early 1990s. Analysts say it was a victim of overexposure, price slashing and changing tastes. While Bongo stuck with tight-fitting jeans with big labels, teens were demanding looser fit, lower waistlines and a street-smart look.
Bongo, now sold as a discount label, is profitable and had 1997 sales of $70 million. But Montesano believes the brand might have kept its cachet if he and partner Michael Caruso hadn’t been blinded by their initial success.
“There was very little evolution of fit” at Bongo, Montesano said, acknowledging that the brand failed to keep up with trends.
He said he’s doing things differently with Lucky. “Lucky is a place of constant tweaking and tightening of bolts. We never just sit back and say, ‘There, we did it.’ We’re always thinking of new washes for our jeans.”
But Montesano knows not to tinker with the cut of Lucky’s basic jeans, the mainstay of the line. Change could alienate his more conservative customers, who expect a consistent style and fit.
“He’s kept a clean, basic style without going into fads,” said Barbara Fields, a Los Angeles-based clothing buyer for junior chains around the country.
Lucky’s sales rose 13% in 1997, to about $44 million from $39 million in 1996. Montesano expects sales to hit $55 million this year, a 25% gain but still a tiny fraction of Levi’s $4.6 billion in North and South America.
Montesano started Lucky--he spotted the word on a soy sauce packet--with partner Barry Perlman as a men’s line catering to specialty stores.
After racking up $3 million in sales the first year for three basic styles of jeans, Montesano felt encouraged. During the next few years, he rolled out colored jeans, T-shirts, button-down-collar shirts and women’s jeans. More recently, he introduced dresses, underwear, sleepwear and Lucky Brand fragrance, packaged in a tin can printed with Lucky’s cloverleaf logo.
“He has the ability to see beyond the horizon in terms of fashion,” Caruso said. “He’s an idea machine.”
But not all ideas have been successful. Candie’s discontinued a Lucky brand sneaker it marketed under a licensing agreement. And most department stores stock little more than Lucky jeans and T-shirts.
In part to convince department store buyers that there is a demand for Lucky accessories, Montesano sells them in his small but growing chain of Lucky stores. He plans to open nine this year, bringing the total to 13, including four in Los Angeles.
“What we are trying to do is create a lifestyle brand,” Montesano said.
Dressed in Lucky jeans and a white T-shirt, the 48-year-old Montesano isn’t the formal type. The office he shares with Perlman looks like a Sharper Image showroom, with its leather couches, guitars, vibrating massage chair and several televisions.
Montesano’s demeanor at work is irreverent, sometimes bordering on the raunchy. One former employee has filed a lawsuit accusing him of sexual harassment, an allegation Montesano denies. Christina Fernandez, formerly a production coordinator, listed among her complaints a picture showing cut-out heads of Montesano and Perlman atop bodies of bikini-clad females gathered around a jet ski. Montesano acknowledges that the photo, which has since been removed from the corporate lobby, was tasteless. But it had been on display for years without drawing complaints, he said.
“I think she’s just a disgruntled employee,” he said.
He also brushes off Fernandez’s allegations that the company overstated its inventory to auditors. Fernandez contends she was fired after drawing attention to the company’s alleged inventory problems.
“I have no idea what she’s talking about,” Montesano said. So far neither Lucky nor Montesano has responded to the suit, and no court date has been set.
No longer thinking small, Montesano believes Lucky has the potential to become a household name like Ralph Lauren, which is on everything from jeans to linen to paints.
But analysts don’t buy the comparison to Lauren, a recognized top fashion designer.
“When I think of a Lucky ad, it’s just a jean ad,” says Tom Julian of New York-based ad firm Fallon McElligott. “I don’t think of it as high fashion, but it’s a consistent, quality style.”
