These are tough times for premium denim manufacturers as retailers shrink the number of brands they carry because consumers aren't spending.
But for designer denim maker AG Adriano Goldschmied, the crisis came seven years ago when the Italian designer decamped. Even though the parting was civil, key customers began dropping the company's products as a series of design chiefs came and went.
Now, as some other jeans makers struggle, AG appears to be back on track.
Through July, sales of the company's jeans are up more than 30% from the same period last year and sales for the year are expected to reach $80 million to $90 million, AG executives say. At a time of high unemployment, the parking lot outside its 900-worker factory in South Gate doesn't even have room for visitor vehicles; employee cars have spilled out onto the sidewalk outside the gates.
"I think it was about getting our products right," said Samuel Ku, AG's 32-year-old vice president and creative director. "We didn't have the right people designing it. We are back to creating a product that the public is thirsty for."
AG Adriano Goldschmied was founded in 2000, just in time for the latest iteration of the premium-denim craze. It was a collaboration between Goldschmied, the design guru behind such famous European brands as Diesel and Replay, and Koos Manufacturing, headed by Ku's father, Yul.
Koos Manufacturing was a respected producer of quality jeans for Abercrombie & Fitch, Gap, Banana Republic, J. Crew, Lucky Brand and others.
Goldschmied was ready for a U.S. brand, telling a forum of USC business students: "Nothing more than jeans represent the spirit of America."
For Yul Ku, it was time to step out of the shadows.
"My father realized that all we had been doing before was helping other companies grow their business," Samuel Ku said.
From the start, there were challenges. AG ventured into the marketplace in September 2001, when terrorists attacked New York and Washington.
"People had stopped spending money, but we were able to survive," Ku said.
In 2004, Yul Ku and Goldschmied parted ways. Goldschmied and the brand were bought out in an expensive transaction, and the designer moved on to other clothing ventures. What followed tested the company severely.
From 2004 to 2008, "we were in a little bit of a tough period. We had a handful of design directors we hired to replace Adriano, but we just were not able to find the right fit with them," Samuel Ku said. "We had used to have a great Nordstrom business with women customers, but they stopped buying us. Anthropologie stopped buying us."
The answer turned out to be Samuel, who became creative director at the end of 2008 despite his lack of formal training in clothing design. Ku had graduated from UC Irvine with a degree in economics. But Ku had absorbed much from Goldschmied and his father.
Khanh T.L. Tran, Los Angeles-based sportswear denim and textile editor for Women's Wear Daily, remembers an illuminating moment during a factory visit.
"His dad was a constant teacher, very calmly explaining how they could change things like the stitching on a pocket lining to make it better. Sam got a very good foundation," Tran said.
The brand's rebound began in earnest in 2009 as the younger Ku rolled out the company's "boyfriend" style of jeans, so named because they were supposed to mimic the idea of a woman wearing her male companion's jeans.
"We were not the first to create the look or the concept. But we did it differently. We wanted a better silhouette, a sexier fit in the hip, but still maintain that overall loose look and feel. It became a home run for us," Ku said. "Two of our boyfriend brands very quickly became our No. 1 and No. 2 sellers."
Dru Hammer of Los Angeles said she owns about 15 pairs of AG jeans. At 5 feet 8 with a 35-inch inseam, Hammer could never find a pair of jeans long enough until she saw a friend in Montecito wearing a pair of AGs.
"They fit really well, not high and dorky like many mom jeans but not so low that too much is showing," said Hammer, 49. "They let you feel kind of hip but without looking like you're trying to dress like your daughter."
Unlike some other premium denim brands, AG is a start-to-finish factory.
"We design them here. We do all of the cutting and the sewing here, all of the washing is done right here," Ku said. "We think it gives us a competitive advantage to have everything done in one factory.
"When you are using four different factories, for example, there is a loss of control. When something goes wrong, there's finger-pointing. Having it all under one roof keeps it more fluid and more efficient."
AG also emphasizes its made-in-the-U.S. credentials because, like many other premium jeans makers, AG has found that is a selling point. Several makers are based in the Los Angeles area to take advantage of decades of jeans-making experience. Plus, if you're charging more than $200 for a garment, you don't need to scour the globe for the least expensive labor pool; attention is paid to saving money in other parts of the process.
The only thing about AG that isn't Californian is the cotton fabric, which most often comes from Japan or Italy.
"We only use the best brands of cotton, longer stable yarn fibers that have more durability and a softer feel," Ku said.
In a typical week, AG will go through about 25.5 miles of fabric rolls with an average width of 55 to 60 inches to produce about 30,000 pairs of jeans. During the 1990s, when it was making jeans for several other brands, the factory had twice as many workers and was turning out 150,000 to 180,000 pairs a week.
Rolls of denim are first laid out flat using a Gerber GGT fabric-spreading machine in what might seem like a less-than-economical scheme -- laying out only a few layers of fabric at a time rather than the much thicker amount the machine can handle. But it's by design.
"The more layers you cut at once may save time and expense, but you are risking inconsistencies," Ku said. "We could be cutting twice as much fabric at a time, but we are sure not to stack them too high. You compromise quality and stretch the material through pulling and tugging when you use too much."
A Gerber cutting machine follows, but first, a thin layer of plastic covers the fabric while a vacuum is applied from below to keep the denim from moving.
With carefully designed cuts, all but 3% to 5% of the fabric is used.
From there, the denim heads to the sewing process, which requires 35 to 40 steps, Ku said.
To achieve a vintage look, AG employs techniques that look more like special effects from the movie industry than a manufacturing process.
Lasers sizzle their way across the knee section of a pair of jeans in a clear enclosure that draws away fumes before they can reach workers.
Another series of machines adds an "Invasion of the Body Snatchers" flavor: Jeans are stretched over inflated legs heated to simulate extended wear patterns.
Next the jeans are hand-sanded, then stone-washed using small pumice stones, again to simulate wear. AG also uses a relatively new process with ozone to whiten jeans, which enables the company to save on costs and reduce harmful effects on the environment -- another selling point.
"We used to use a whitening chemical with water. That's not needed now with the ozone," Ku said. "We wound up saving on energy, chemicals and water. It gives us jeans that are a little more eco-conscious."
The results are 15 to 20 styles of jeans, costing $150 to $240. They're worn by such celebrities as Mila Kunis, Anne Hathaway, Natalie Portman, Matthew McConaughey, Jake Gyllenhaal and Gavin Rossdale.
The jeans can be purchased at 11 company-owned stores, including two discount outlets, as well as online, in boutiques and from larger retailers such as Nordstrom and Anthropologie.
"We now have over 700 sales accounts," Ku said. "Internationally, we are popular in Japan, Germany, the U.K., France, Italy and Austria. We are in the Benelux countries. We are popular with the Aussies, Canada, Russia. We are becoming popular in the Middle East. We are selling in about 15 different countries now."
The current denim climate resembles the recessionary 1990s, a period that followed the first designer craze in the late 1970s that favored brands like Jordache, Calvin Klein, Sergio Valente and Gloria Vanderbilt. But the craze cooled.
Some brands have been finding the going tough. Rock & Republic filed for Chapter 11 bankruptcy protection in April 2010 and was acquired by V.F. Corp. this year.
Joe's Jeans Inc. just released third-quarter financial results with sales of $24.2 million, down 5% from the same period last year.
Retailers are being cautious about their inventories, a trend that also favors AG jeans, which has a reputation for reliability and professionalism in meeting orders on time, and in reading the tea leaves on styles that will sell, said Tran of Women's Wear Daily.
"Once the economy started slowing down, the big brands like AG really benefited," he said. "Retailers knew that they could depend on them."
One big fan of the brand is E Street Denim, a Highland Park, Ill., chain of eight stores with locations in the northern suburbs of Chicago. At the height of the pre-recession denim boom, the chain's founder, Thomas George, was carrying 85 brands. Today, he carries 30 brands, with AG his favorite.
"AG has always meant quality to me," George said. "They are always in the top three of our bestsellers."
About this series
This is one in a series of occasional articles about California manufacturers.