Supply chain issues in fashion are evolving, Natori president explains

Ken Natori, President of The Natori Company, discusses his luxury lingerie brand's supply chain challenges as well as the outlook for holiday shopping this year.

Video Transcript

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ALEXIS CHRISTOFOROUS: We are smack in the middle of the most important time of the year for most retailers. But a tight labor market and supply chain problems are creating some hurdles to say the least. Here to talk about how they're navigating through these challenges is Ken Natori, President of the luxury lingerie brand the, Natori Company.

Ken, welcome to the show. It's good to have you here. I know that you recently expanded beyond lingerie. And I want to talk about that a little later on. But first, just tell us what this past weekend was like for your company, Black Friday, Cyber Monday. We know that the numbers weren't great overall for Cyber Monday compared to last year. What was it like for your company?

KEN NATORI: You know, I know some of the broader numbers may have been kind of soft. But we were very pleased with our performance on natori.com, as many websites did certainly, we saw a huge surge after COVID, even as our department store business slumped. We were worried about some of the comps, you know, as we sort of had more of the year over year comps. We were very pleased. We were up 32% on Cyber Monday. And certainly, you know, very optimistic about the rest of the holiday season.

- And I want to ask you, what is your outlook for you moving forward past the holiday season into the next quarter? Because there are supply chain issues that have plagued a lot of retailers. Wondering how you've been impacted by that, and labor participation. Has it been easy or hard to find people to work for you?

KEN NATORI: Yeah, absolutely. You know, supply chain, it's been a huge story for the last couple of months. A lot of the headlines now talk about how some of the port issues are easing up outside of LA. But I think what's being kind of under-reported, particularly in our fashion space, is the fact that you know, the beginning part of the supply chain might see pressure that it hasn't seen over the last couple of months.

We're seeing as we place our spring and early fall orders for next year that you know, a lot of the raw materials, a lot of the fabrics, the lead times on those are getting much longer. And we didn't really have that issue at all over the previous months. So while some people out there were reporting that you know, a lot of the supply chain issue might ease up, I think specifically in fashion, we might continue to see this throughout the vast majority of 2022.

ALEXIS CHRISTOFOROUS: And what does that do to your products, and what you're able to offer? Are you already you sort of changing it up and offering different timelines to some of your you know-- you're in some of the biggest department stores in the world globally. What are you communicating to them right now about sort of managing their expectations?

KEN NATORI: Right. It is really difficult. The one thing that does make it a little bit easier is that all of our competitors are in the same boat, right? I mean, everybody-- you know, there is no fashion company in the world that isn't being hit by these supply chain issues. So that to some degree makes it a little bit easier.

But you know, as we do plan ahead for 2022, we know this is going to continue to be an issue. We're not concerned about the state of the consumer. The consumer remains strong. We continue to believe that if we put great product out there, and convey our story, and the value proposition, that the customer will in fact be there, and will want to buy it.

The bigger concern is, A, how do we get this product to the consumer, and B, you know, how do we do it profitably, given you know the inflation we're seeing throughout the supply chain? And as you mentioned, you know, the major supply chain transportation issues, not just in terms of time, but also in terms of cost as well. So not much concern about the consumer here. That's positive. But you know, we do see these supply chain issues continuing to be a major drag for most of next year.

- And I'm going to talk to you a little bit about your brand expansion plans. Because you are known of course, for ladies lingerie, high-end material, but also transforming into a lifestyle brand as well.

KEN NATORI: Yeah, you know, as you mentioned, we're really most known in the marketplace for our high-end women's sleepwear, and bras, and underwear. Our mission as a company and as a brand over the last 10 years, and particularly in the last year, we're really trying to take the brand equity that we've earned in those key categories, and really become a lifestyle brand, an east meets west lifestyle brand across all categories.

So just in the last couple of months here, you see we have launched Natori men's loungewear. I almost dared to wear some of it today. But I felt like I had to keep my jacket on. But we've launched men's loungewear. We've launched Natori footwear. We have now a scrubs partnership. And we have a new launch in that with our great partner, Care and Wear, launching Arm Access shirts tomorrow. And then we also even have like a dog apparel collection.

So you know, we've really built what we feel is a great consistent aesthetic. And our mission now is really to expand that away from beyond our core categories, and really, become a true lifestyle brand. So that when people think of Natori, they think of east meets west design across all products.

ALEXIS CHRISTOFOROUS: And what about inflation, and how it's working its way through your business? What does that mean for your core customer? I mean, I would imagine that your customers are some of the most well-heeled folks. You are a luxury brand. So are you concerned at all that you might have to pass those costs along to the consumer at some point?

KEN NATORI: Yeah, you know, we have been dealing with slightly increasing costs on our end for years. And many retailers, high-end retailers, haven't been able to pass on those costs to the consumer just based on dynamics with department stores, and you know, the fact that there are a lot of brands out there. COVID, really, in a lot of ways has been a big reset. You know, obviously, I'm sure you're talking a lot about inflation that you're seeing.

And for now, for the first time, brands are forced, are really are forced to be passing those costs on to wholesalers, and to the end retailers as well. I'm not necessarily as concerned about the consumer side, as I mentioned. We continue to see strong consumer strength, and really believe that as long as we're showing great value, and design aesthetic in our product, that the demand will be there on the consumer side.

You know, what keeps me up more at night is really the rapidly increasing costs that we're seeing on the supply side, whether that's raw materials, whether that's transportation costs, whether it's labor costs. Those are the things where you know, we're really more concerned. But I think the consumer, you know, as long as you're putting out great product, we have seen that he or she is willing to take on those costs more so than they have been in past years. But I think you know the costs-- the issue of rising inflation on the cost side for us and other fashion brands will continue to be a big story for years ahead.