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

As a teenager growing up in France, Milo Revah became infatuated with American culture watching reruns of “Starsky and Hutch” and “Charlie’s Angels.” Away from the tube, classic American brands such as Levi Strauss & Co. influenced his father’s denim sales business.

Today Revah, 41, is exploiting the culture he once admired from afar as president of Los Angeles men’s clothing manufacturer Revatex Inc. With his brother and co-founder, Jacques, 36, Revah is making inroads against jeans-wear icon Levi and other slow-moving denim industry giants.

The brothers made a huge splash in the late 1990s with wide-legged denim pants inspired by the street look Milo Revah observed on walks through East Los Angeles, where he often ventured to absorb the urban scene. The pants, with legs up to 35 inches wide, caught on with the trend-setting raver crowd eager for an alternative to traditional five-pocket jeans.

Revatex recruited graffiti artists--including some with arrest records--to design print advertising and deployed crews to paint murals wherever teenagers congregate, such as outside the South Gate High School cafeteria. Joseph Montalvo, a graffiti artist known as Nuke who has risen in the art world, designed JNCO’s logo, a four-pronged crown. The underground promotional tactics helped push Revatex sales to $186.9 million in 1998, up from $36 million in 1995, according to court documents.

What Revah couldn’t learn from TV action series is how rapidly trends evolve. Shortly before the 1998 holiday season, the wide-leg fad dimmed as quickly as it had ignited 18 months earlier.

Caught off guard, Revatex saw its sales plunge by almost half in 1999 to $100 million. The company, which expects flat sales this year, underwent a painful restructuring that included the shutdown of its downtown Los Angeles garment factory, which employed 250. Revatex, focusing on design, marketing and sales, now has 150 employees.

Revatex hasn’t abandoned the wide leg, though it has purged poor-selling ultra-baggy pants from the JNCO line. Nor has it given up street-level marketing that served it so well a few years ago.

With an eye on new markets, it has stepped up its sponsorships of BMX riders and skateboarders to make inroads with the growing numbers of extreme sports fans. Besides the graffiti crews, it uses break-dancing teams to promote JNCO at underground raves.

And to plug Revatex’s boys’ clothing line, Revah is turning to television with help from the law firm that represents TV’s Olsen twins. With any luck, an animated children’s show featuring an extreme sports hero created by JNCO’s graffiti artists will air next fall.

Despite its stumble two years ago, JNCO remains popular with young men. A closely watched survey from Teenage Research Unlimited ranks it among the top 20 teen brands.

In a recent survey produced by Orange County-based Ponzi Group, skateboarders between ages 12 to 16 ranked JNCO first among jeans brands. Levi, which ranked third in the same survey, was the only big brand in the top 10.

The brothers hope to exploit that popularity as they push JNCO into new retail outlets, including specialty and department stores. JNCO, which stands for Jeans Co., already is sold at chains ranging from fashion-forward Gadzooks Inc. to middle-market stalwart J.C. Penney Co.

Experts say it is difficult for a brand to remain cool as it expands. Take the case of Levi, whose bland image contributed to a years-long sales decline. Cindy Levitt, merchandise manager for Hot Topic, thinks JNCO has already lost its edge among the trend-setters the 266-store chain caters to.

“You still see JNCO at raves,” she said. “But it’s a little uncool for our customer. It’s at too many doors in the mall.”

Brian Rounick, merchandise manager for Philadelphia-based Tops & Bottoms, sees a place for a label that straddles urban and skating lifestyles. JNCO is the third-best-selling men’s pants brand in his chain, he said.

“They brought the underground culture to suburban shopping malls,” said Alex That, whose New York company manufactures Caffeine wide-legged jeans.

Founded in 1985, Revatex at first produced mostly private-label goods for retail chains. The brothers learned the business by day, building on what they knew from their father, a sales representative in France. They studied English with a tutor at night.

By 1994, about 75% of Revatex’s sales were to MeriGoRound, which sold JNCO clothes at its DJ’s men’s fashion chain.

New York-based MeriGoRound sought bankruptcy protection from its creditors in 1995. Faced with the loss of their biggest customer, the Revah brothers considered cutting their losses and returning to France, Milo Revah said.

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.”