WEBVTT - A US Clothing Brand On the Existential Threat From the Tariffs 0:00:02.480 --> 0:00:14.000 Bloomberg Audio Studios, Podcasts, Radio News. 0:00:18.160 --> 0:00:21.200 Hello and welcome to another episode of the All Thoughts podcast. 0:00:21.320 --> 0:00:22.720 I'm Tracy Alloway. 0:00:22.440 --> 0:00:23.599 And I'm Joe Wisenthal. 0:00:24.000 --> 0:00:28.800 Joe, we've been inadvertently doing a tariff series basically on 0:00:28.840 --> 0:00:31.720 what the trade restrictions mean for a bunch of different industries. 0:00:32.600 --> 0:00:35.440 So funny that I've read your mind. Yes, it's like 0:00:35.520 --> 0:00:38.680 we have to go down the list. There's actually it's impossible. 0:00:38.920 --> 0:00:41.000 You know, every industry is going to be affected by 0:00:41.000 --> 0:00:44.280 tariffs a different way, and there's this temptation like, Okay, 0:00:44.320 --> 0:00:46.880 let's just talk to someone from literally every single industry. 0:00:47.320 --> 0:00:47.640 Today. 0:00:47.680 --> 0:00:50.199 On May seventh, we released an episode talking about the 0:00:50.280 --> 0:00:54.120 video game industry. But yes, we could go down the 0:00:54.160 --> 0:00:57.840 line of every category within GDP and learn something. 0:00:57.720 --> 0:01:02.480 Video games, len tols, yes, the important stuff. No, So 0:01:02.880 --> 0:01:05.160 when we're talking about tariffs, I think one of the 0:01:05.200 --> 0:01:08.280 really big industries that is obviously going to get impacted 0:01:08.440 --> 0:01:10.920 has to be clothing and textiles. Right, So we know 0:01:11.000 --> 0:01:16.000 places like China, Vietnam, Sri Lanka, Bangladesh are huge textile exporters, 0:01:16.360 --> 0:01:18.320 and so we should talk about that and what it 0:01:18.360 --> 0:01:22.039 actually is like if you're running a clothing business in 0:01:22.080 --> 0:01:25.120 the US to source textiles from abroad. 0:01:25.360 --> 0:01:27.920 You know, it's funny. I was at some event for 0:01:28.040 --> 0:01:31.959 my school and I ran into a fellow dad, or 0:01:31.959 --> 0:01:33.759 for my kids school, and I ran into a fellow 0:01:33.800 --> 0:01:36.640 dad with a clothing company. Like the two days after 0:01:36.680 --> 0:01:40.240 the initial tariffs were revealed in early April, he was 0:01:40.240 --> 0:01:42.880 talking about he was going to add a button on 0:01:42.920 --> 0:01:45.679 his website and made some sort of athletic gear, talking 0:01:45.720 --> 0:01:48.080 about like this is the pre and post tariff prize. 0:01:48.120 --> 0:01:50.200 He was talking about how it might make sense in 0:01:50.680 --> 0:01:54.800 certain circumstances to move some of his manufacturing outside the US, 0:01:54.920 --> 0:01:58.360 especially what he sells to non US customers so much 0:01:58.440 --> 0:02:01.440 in textiles specifically. The other I think about textiles, of course, 0:02:01.960 --> 0:02:05.080 is when people think about the China shock. You know, 0:02:05.120 --> 0:02:07.360 that's one of the first categories that comes to mind, 0:02:07.400 --> 0:02:09.080 the fact that the US used to have a booming 0:02:09.120 --> 0:02:12.520 textile industry, particularly in the Southeast, as we know. 0:02:12.760 --> 0:02:16.600 Yeah, we visited the remnants of the American textile industry 0:02:16.639 --> 0:02:17.880 in North Carolina. 0:02:17.680 --> 0:02:18.480 So there's a lot there. 0:02:18.639 --> 0:02:21.079 Yeah, all right, Well, I am very pleased to say 0:02:21.160 --> 0:02:23.320 we do, in fact have the perfect guest. I have 0:02:23.400 --> 0:02:26.560 to do a disclaimer up top because this guest is 0:02:26.600 --> 0:02:28.639 a longtime friend of mine. We actually went to high 0:02:28.639 --> 0:02:32.799 school together in Tokyo, and she started her own clothing 0:02:32.880 --> 0:02:36.160 company and I was involved at the very beginning doing 0:02:36.240 --> 0:02:40.840 product testing and caveat. I have a lot of their clothes. 0:02:41.000 --> 0:02:43.760 I have dresses that are I think at this point 0:02:43.800 --> 0:02:46.120 are like ten years old, but they still look amazing. 0:02:46.160 --> 0:02:48.320 So I am a big fan of this company. That 0:02:48.480 --> 0:02:49.240 is my disclaimer. 0:02:49.440 --> 0:02:50.920 Tracy, did you ever do any modeling? 0:02:51.520 --> 0:02:51.880 Yes? 0:02:52.000 --> 0:02:54.240 I thought, did you ever do any modeling for this company? 0:02:54.440 --> 0:02:54.600 No? 0:02:54.720 --> 0:02:58.520 Okay, no, no, no, we can talk about that later. 0:02:58.639 --> 0:03:02.160 I did modeling when I was like seventeen in Tokyo, 0:03:02.200 --> 0:03:06.760 where the standards are arguably a lot lower. Anyway, I'm 0:03:06.840 --> 0:03:08.560 very pleased to say we're going to be speaking with 0:03:08.600 --> 0:03:11.919 Sarah Lafleur. She is the founder and CEO of M M. 0:03:12.120 --> 0:03:14.560 Lafleur. So, Sarah, thank you so much for coming on 0:03:14.560 --> 0:03:17.600 off us. Thank you for having me. It's a true honor, sir. 0:03:17.680 --> 0:03:20.280 What is your favorite Tracy memory? And did you know 0:03:20.400 --> 0:03:22.920 she would go to go was going to be a 0:03:22.960 --> 0:03:23.880 star podcaster? 0:03:24.000 --> 0:03:26.560 One day I thought she was going to be the 0:03:26.720 --> 0:03:28.480 US ambassador of the United nations. 0:03:28.520 --> 0:03:31.640 So yeah, I guess she. 0:03:32.560 --> 0:03:37.000 Was always a true intellectual, uh huh. And I would 0:03:37.000 --> 0:03:38.640 say precocious beyond her years. 0:03:39.280 --> 0:03:43.880 So this is yeah, that's probably fair. All right, Sarah, 0:03:43.920 --> 0:03:46.080 talk to us about the company. How would you describe 0:03:46.160 --> 0:03:48.280 Amma Lafleur and when did you get started? 0:03:48.480 --> 0:03:52.160 Sure? So I started the company in twenty thirteen with 0:03:52.200 --> 0:03:56.000 my two co founders. I myself do not come from 0:03:56.000 --> 0:03:58.320 the fashion world. I actually worked in management consulting and 0:03:58.320 --> 0:04:01.240 then in private equity, right, yes, I was at Bain, 0:04:02.160 --> 0:04:05.600 and you know, I always struggled to kind of find good, 0:04:06.280 --> 0:04:11.120 well made, appropriate but still very stylish, professional women's clothing. 0:04:11.120 --> 0:04:12.920 Like I just thought there was a real dearth in 0:04:12.960 --> 0:04:15.880 the market. And I was never I had never been 0:04:15.920 --> 0:04:17.520 in fashion. My mother actually worked in high and fashion 0:04:17.560 --> 0:04:19.680 and she would always bring home these like beautiful, you know, 0:04:19.800 --> 0:04:23.080 pieces of textiles and got these Chanel suits and I 0:04:23.120 --> 0:04:24.960 was like, gosh, that's so beautiful, and that's what I'm 0:04:24.960 --> 0:04:27.000 going to wear when I grow up and I'm a 0:04:27.040 --> 0:04:30.080 working woman, and lo and behold, I found out, you know, 0:04:30.200 --> 0:04:33.080 for my budget, I was not going to be wearing 0:04:33.080 --> 0:04:36.320 a Chanelle suit to work. But the idea stayed with 0:04:36.400 --> 0:04:39.480 me and basically when I was twenty seven, couldn't get 0:04:39.480 --> 0:04:42.000 into business school, didn't know what to do with my life. 0:04:42.040 --> 0:04:43.919 Private equity was not quite the right place for me. 0:04:44.000 --> 0:04:45.799 I was like, you know what, I've always I've always 0:04:45.800 --> 0:04:47.240 thought this was a good idea. Let me, let me 0:04:47.279 --> 0:04:50.480 go for it. So, yeah, it's been gosh, it's been 0:04:50.520 --> 0:04:55.480 almost twelve years. We launched in twenty thirteen. Were predominantly 0:04:55.480 --> 0:04:58.040 an e commerce company, but we also have eight stores 0:04:58.080 --> 0:05:01.480 across the country and we also sell through wholesale. 0:05:01.560 --> 0:05:03.640 So what do you we'll get into, you know, wanted 0:05:03.640 --> 0:05:06.039 to get into the nitty gritty of the business and 0:05:06.080 --> 0:05:08.320 the supply chain and so forth. But from a very 0:05:08.360 --> 0:05:12.359 big perspective, someone sees an ad for your clothes on Instagram. 0:05:12.400 --> 0:05:15.400 Maybe they see a shirt or a jacket or pants 0:05:15.440 --> 0:05:18.640 that they like. Where was it designed? Where did the 0:05:18.680 --> 0:05:22.080 materials come from, and how did it who put them together? 0:05:22.120 --> 0:05:23.720 And how do they get to the end? 0:05:23.720 --> 0:05:27.520 Shopper, Yeah, great question. So we are all designed in 0:05:27.680 --> 0:05:31.039 New York City. Our offices are, you know, in the 0:05:31.080 --> 0:05:35.719 Financial District actually, and it's my creative director who usually 0:05:35.760 --> 0:05:38.599 you start with fabric with collections. I think this is 0:05:38.600 --> 0:05:40.920 like a little known fact. People always think you sketch 0:05:40.960 --> 0:05:43.920 first and then you find the fabrics, right, But it's 0:05:44.000 --> 0:05:47.599 really so much of fashion is really led by the 0:05:47.640 --> 0:05:51.720 fabric and textile industry. So you you know, often you 0:05:51.760 --> 0:05:54.080 go to these fabric shows or these fabric mills come 0:05:54.120 --> 0:05:57.479 to you, you're inspired by different fabrications, and then you 0:05:57.520 --> 0:05:58.960 take that and you say, okay, what am I going 0:05:59.040 --> 0:06:02.240 to design into this. Maybe it's a jacket, maybe it's 0:06:02.240 --> 0:06:05.480 a shirt, what have you. And then from there the 0:06:05.480 --> 0:06:09.680 designer sketches and then the pattern maker, very important person 0:06:10.120 --> 0:06:12.440 I call you know, this person is like the architect 0:06:12.440 --> 0:06:15.440 of the clothing, will actually then say, okay, in order 0:06:15.480 --> 0:06:18.440 for this dress, let's say, to come to life, here's 0:06:18.560 --> 0:06:21.039 how the fabric needs to be laid out on a 0:06:21.040 --> 0:06:22.880 piece of you know, on a piece of fabric, and 0:06:23.000 --> 0:06:26.679 cut and then put together. Different companies do different things, 0:06:26.720 --> 0:06:30.600 but you know, if you are working with a fabric 0:06:30.800 --> 0:06:35.239 factory overseas, then oftentimes you will then send the pattern 0:06:35.360 --> 0:06:38.120 overseas to the factory. The factory will do the first 0:06:38.240 --> 0:06:40.440 what we call fit sample that gets sent back to 0:06:40.480 --> 0:06:43.000 New York. You fit it in New York, you know, 0:06:43.040 --> 0:06:46.159 with your fit model, and you know, depending on whether 0:06:46.279 --> 0:06:48.600 you're a brand that spends a lot of money on 0:06:48.640 --> 0:06:51.839 product development or not, you might do one too, even 0:06:52.000 --> 0:06:54.880 up to three fit samples before you ultimately go into 0:06:55.000 --> 0:06:56.920 production in the factory overseas. 0:06:57.080 --> 0:07:00.520 Wow. Okay, So, given the importance of the fabric in 0:07:00.640 --> 0:07:02.680 the design process, talk to us a little bit more 0:07:02.680 --> 0:07:05.880 about how you actually source that because the fabrics that 0:07:05.920 --> 0:07:08.920 you use are also a big differentiator for you. Right, 0:07:09.000 --> 0:07:11.960 you have very special fabrics and again I'm going to 0:07:12.040 --> 0:07:14.360 sound like I'm doing an ad for this company. We 0:07:14.480 --> 0:07:18.440 love that, but I mean they're great fabrics for work 0:07:18.480 --> 0:07:21.680 where they really are and they're sort of specially made 0:07:21.880 --> 0:07:24.760 is my understanding for exactly that scenario. 0:07:25.040 --> 0:07:28.560 Yeah, we really focus on machine washability and wrinkle resistance. 0:07:28.640 --> 0:07:31.160 So Japan is great with that. You know, it's not 0:07:31.280 --> 0:07:34.440 your mother's polyester. Synthetic fibers have really come a long way. 0:07:34.480 --> 0:07:37.040 So there are a lot of synthetic fibers that behave 0:07:37.200 --> 0:07:39.560 like silk or look like silk, but are still machine 0:07:39.600 --> 0:07:42.440 washable wrinkle resistant. But we also love natural fibers and 0:07:42.600 --> 0:07:44.680 natural fibers. You know, places that are good at that 0:07:44.880 --> 0:07:49.160 historically are when it comes to wool, Italy Germany. When 0:07:49.160 --> 0:07:52.680 it comes to silk, China, like, China is really one 0:07:52.720 --> 0:07:54.720 of the few countries now left in the world that 0:07:54.760 --> 0:07:59.080 still actually does silk. Same for wool in cashmere. You know, 0:07:59.120 --> 0:08:01.520 if you want to do alp haka, well I'll paka 0:08:01.560 --> 0:08:03.920 like you could still go to Peru. There are other places. 0:08:03.920 --> 0:08:07.200 But when it comes to most will most cashmeir, I 0:08:07.200 --> 0:08:10.920 would say it's China. You could go to Mongolia for Kashmir, 0:08:11.160 --> 0:08:14.600 but there aren't that many places across the world that 0:08:14.600 --> 0:08:15.920 that do these natural fibers. 0:08:16.600 --> 0:08:21.120 For the types of sort of high end stylish clothes 0:08:21.160 --> 0:08:25.200 that you sell. Where are the big manufacturing hubs right now, 0:08:25.280 --> 0:08:27.360 and where do you, like, you know, explain the link. Okay, 0:08:27.440 --> 0:08:31.440 there might be some you know, textile company that's really 0:08:31.440 --> 0:08:35.280 good at you know, advanced synthetics in Japan. I know 0:08:35.360 --> 0:08:37.400 that well because I buy all my clothes from Uniclo 0:08:37.679 --> 0:08:40.160 and they never wrinkle, which is really nice because I'm 0:08:40.200 --> 0:08:42.800 very lazy. But then talk to us about like, okay, 0:08:43.320 --> 0:08:46.319 how what is the process from like getting the textiles 0:08:46.360 --> 0:08:48.959 to wherever they're actually cut in a symbol? 0:08:49.200 --> 0:08:54.400 Yeah, great question. Some factories are vertically integrated, meaning they 0:08:54.440 --> 0:08:57.280 both make the fabrics or you know, they have a 0:08:57.280 --> 0:09:00.480 partner from whom they source the fabrics and then they 0:09:00.720 --> 0:09:05.679 produce the actual clothing at their factories. I would say generally, 0:09:05.760 --> 0:09:11.840 although not always, lower priced products are made this way. 0:09:11.960 --> 0:09:17.280 If you are for us, we like to nominate our fabrics. 0:09:17.040 --> 0:09:19.600 That's the word that's used in the industry, meaning we 0:09:19.800 --> 0:09:23.160 are specifying where the fabric should come from, what we 0:09:23.200 --> 0:09:24.599 want it to be, and which mill we want it 0:09:24.640 --> 0:09:27.440 to come from. And then the factory, which is often 0:09:27.520 --> 0:09:30.040 in a different country they usually are not in the 0:09:30.040 --> 0:09:33.600 same country, takes on that fabric from that mill and 0:09:33.640 --> 0:09:38.320 then cuts it and produces it. So often, though not always, 0:09:38.520 --> 0:09:41.079 the two things, the fabric mill and the factory are 0:09:41.240 --> 0:09:43.160 two different companies in two different countries. 0:09:43.480 --> 0:09:46.480 So how do you find factories and mills to work with? 0:09:46.720 --> 0:09:50.280 And I guess a questions as a startup founder, what 0:09:50.400 --> 0:09:54.400 was your first experience actually finding a factory slash mill? 0:09:54.600 --> 0:09:58.880 Actually? Like, well, I think I prefaced earlier that I 0:09:59.000 --> 0:10:03.560 never worked in fashion, and so literally I contacted the 0:10:03.600 --> 0:10:05.800 New York City I think, you know, I was an 0:10:06.040 --> 0:10:11.320 economic development corporation and for a lot of fashion designers 0:10:11.400 --> 0:10:13.480 right who are trying to get their foot in the 0:10:13.520 --> 0:10:17.200 door and start their own line. The garment district in 0:10:17.200 --> 0:10:19.720 New York City is amazing, and I would say, I 0:10:19.720 --> 0:10:22.120 mean when I got started a decade ago, he was 0:10:22.559 --> 0:10:26.360 it was I mean, yes, a declining industry, but definitely 0:10:26.400 --> 0:10:30.480 more bustling than it was now. And there was a 0:10:30.600 --> 0:10:35.520 directory of factories that you could contact. But I mean 0:10:35.559 --> 0:10:37.240 it was kind of laughable because a lot of these 0:10:37.240 --> 0:10:43.079 factories A don't use email. I think they may have 0:10:43.120 --> 0:10:45.960 a phone which they may pick up if it's a 0:10:45.960 --> 0:10:49.719 good day. Really, these factories, the way you get in 0:10:49.920 --> 0:10:53.480 the door is by knowing somebody who's worked with them, 0:10:53.880 --> 0:10:56.079 and even then they may not be willing to take 0:10:56.120 --> 0:10:58.839 you on. You know, it's a huge risk for them. A. 0:10:59.120 --> 0:11:01.760 Can this designer actually pay for whatever it is that 0:11:01.800 --> 0:11:04.839 I'm going to do? And B is this designer actually 0:11:04.880 --> 0:11:07.600 going to be around a year from now? Because you know, 0:11:07.679 --> 0:11:11.240 fashion people come and go so fast, and so unless 0:11:11.720 --> 0:11:14.800 it's through a connection or a referral or you're you know, 0:11:14.920 --> 0:11:18.079 somewhat established, it's really hard to get your foot on 0:11:18.120 --> 0:11:19.920 the door. I mean, I was begging people to take 0:11:19.960 --> 0:11:22.160 my orders when we first got started and we were 0:11:22.200 --> 0:11:23.840 doing manufacturing in the garment district. 0:11:24.280 --> 0:11:26.520 Oh, you're doing manufacturing in the garment district. 0:11:26.600 --> 0:11:28.319 This was this was a decade ago, but yeah, I 0:11:28.320 --> 0:11:44.800 got it today. 0:11:45.160 --> 0:11:48.480 If you want to go to a factory somewhere in 0:11:48.520 --> 0:11:50.880 Asia and you have the textiles, what are like some 0:11:50.920 --> 0:11:53.079 of the minimums you know, like what's a minimum run? 0:11:53.160 --> 0:11:55.080 Because I have to like, like you said, you know, 0:11:55.120 --> 0:11:56.280 they want to know that you're still going to be 0:11:56.280 --> 0:11:59.240 around from now. They have to allocate capacity. They presumably 0:11:59.400 --> 0:12:01.560 don't want to just allocate a little capacity and then 0:12:01.600 --> 0:12:03.320 have to change talk to us about like what you 0:12:03.320 --> 0:12:07.000 have to bring to the table from a volume standpoint, 0:12:07.160 --> 0:12:10.480 in terms of a reliability standpoint, in terms of a 0:12:10.720 --> 0:12:13.880 dollar standpoint, such that it's worth taking you in the door. 0:12:14.240 --> 0:12:21.959 There's huge variability in both factories within one country and 0:12:22.000 --> 0:12:26.240 then from country to country. Right, So I would say China, 0:12:26.440 --> 0:12:31.800 Once upon a time, probably the moq's limitedmnium order quantities 0:12:31.880 --> 0:12:36.760 were north of a thousand easily okay. But now as 0:12:36.880 --> 0:12:40.720 wages in China have gone up, a lot of factories 0:12:40.800 --> 0:12:43.839 that we work with are willing to do moqus as 0:12:43.880 --> 0:12:46.559 low as one hundred. There might be a sort charge 0:12:46.559 --> 0:12:46.800 for it. 0:12:46.880 --> 0:12:51.800 Wait, why is the lower volume? Why take lower volume 0:12:51.800 --> 0:12:52.600 as wages. 0:12:52.280 --> 0:12:57.400 Have gone up because brands have moved to other places 0:12:57.440 --> 0:13:01.640 like Bangladesh, places in Northern Africa. I mean it is. 0:13:01.720 --> 0:13:03.720 I don't want to say it's a race to the bottom, 0:13:03.800 --> 0:13:06.280 but it is in many ways. You know, as labor 0:13:06.320 --> 0:13:09.400 prices rise, brands are always saying like, Okay, well I 0:13:09.400 --> 0:13:11.960 gotta go cheaper, I gotta go cheaper. Oh interesting, So 0:13:12.120 --> 0:13:15.679 they you know, first went to Southeast Asia, they moved 0:13:15.720 --> 0:13:19.040 over to you know, South Asia, you know India. Bangladesh 0:13:19.120 --> 0:13:21.720 still does a lot of you know units where they 0:13:21.960 --> 0:13:25.360 need one thousand, two thousand, sometimes north of ten thousand units. 0:13:25.400 --> 0:13:27.959 And then also Northern Africa is now kind of considered 0:13:27.960 --> 0:13:30.640 the next frontier tracy. This is interesting. 0:13:30.640 --> 0:13:30.800 You know. 0:13:30.840 --> 0:13:32.320 One of the things I've seen a couple of people 0:13:32.320 --> 0:13:35.560 talk about is like China experiencing its own China shock 0:13:36.400 --> 0:13:41.400 because some of these low end textiles, those legacy operations 0:13:41.760 --> 0:13:46.000 are now competing with cheaper wage countries, the same way 0:13:46.440 --> 0:13:49.920 textile companies in the US for competing with other Asian countries. 0:13:50.120 --> 0:13:50.400 Yeah. 0:13:50.440 --> 0:13:53.280 Absolutely, Okay, So Sarah, we got to get to the 0:13:53.320 --> 0:13:56.520 meat of this discussion. I guess let's talk about the tariffs. 0:13:56.720 --> 0:13:58.920 So when I when I asked you about this issue, 0:13:58.960 --> 0:14:01.160 you said that teriffs were all you've been thinking about 0:14:01.200 --> 0:14:02.480 for basically the past month. 0:14:02.640 --> 0:14:04.679 Yes, and even that feels like an understatement. I think 0:14:04.679 --> 0:14:08.360 I dream about it. I mean, it is been so 0:14:10.559 --> 0:14:14.959 detrimental to the business. It's not like running a fashion 0:14:15.000 --> 0:14:18.960 business in twenty twenty five was a cakewalk. Right. It's 0:14:19.000 --> 0:14:24.800 already an incredibly competitive business with razor thin margins. We're 0:14:24.840 --> 0:14:28.800 dealing with pressures on the marketing side from you know, 0:14:29.040 --> 0:14:32.720 Meta and Google, right. I mean, we just went through 0:14:32.720 --> 0:14:35.720 the pandemic where I had to close all eleven of 0:14:35.760 --> 0:14:38.760 my stores and then gradually open them back up again 0:14:38.800 --> 0:14:41.000 to the point where now we have eight. I mean, 0:14:41.080 --> 0:14:45.000 it was it was devastating going through the pandemic, and 0:14:45.280 --> 0:14:48.720 we survived by the skin of our teeth. We've made 0:14:48.760 --> 0:14:52.080 it through the other end. We had just finished budgeting 0:14:52.120 --> 0:14:57.720 for twenty twenty five, and I think, you know, this 0:14:57.760 --> 0:15:01.240 will probably be not a total surprise that I'm a 0:15:01.280 --> 0:15:03.080 New Yorker. But you know, we were saying, okay, when 0:15:03.160 --> 0:15:06.560 when Kamala Harrison get elected, we were like, well, everyone 0:15:06.600 --> 0:15:08.360 says Trump's going to be good for business. We have 0:15:08.400 --> 0:15:11.240 a big business in Washington, d C. Change of administration 0:15:11.440 --> 0:15:14.360 is usually also good for our business. The first thing 0:15:14.400 --> 0:15:18.240 we came, you know, ran across was the Doge cuts. 0:15:18.320 --> 0:15:22.480 So our two DC stores are down about twenty to 0:15:22.520 --> 0:15:25.240 twenty five percent from l Y while all of our 0:15:25.280 --> 0:15:29.560 customers that come in are either have been laid off 0:15:29.640 --> 0:15:32.120 or are nervous that they are going to get laid off, 0:15:32.320 --> 0:15:33.800 or that they're going to have they're going to be 0:15:33.840 --> 0:15:37.280 some repercussions. So we were already feeling those effects going 0:15:37.280 --> 0:15:42.120 into March. I still remember the moment the U what 0:15:42.280 --> 0:15:44.240 was it, Liberation. 0:15:43.920 --> 0:15:45.240 Day, April second. 0:15:45.320 --> 0:15:47.920 Yeah, yes, I was sitting in my office. We were 0:15:47.960 --> 0:15:51.360 doing a meeting and my phone blew up. I'm on, 0:15:51.400 --> 0:15:54.840 you know, various text change with other fashion founders and CEOs, 0:15:55.840 --> 0:16:00.080 and they're saying, have you seen the numbers? And you know, 0:16:00.400 --> 0:16:03.680 I mean just that's all we could focus on. 0:16:03.840 --> 0:16:06.320 You are one of the people squinting at the billboards. 0:16:06.360 --> 0:16:09.120 Aha, ha, we were, And I was like, someone get 0:16:09.120 --> 0:16:14.360 a screenshot of this. Anyway, the numbers were kind of 0:16:14.480 --> 0:16:17.480 beyond I think what anyone of us expected, right, And 0:16:17.520 --> 0:16:21.400 I remember I was actually in China, Hong Kong, in 0:16:21.520 --> 0:16:24.880 Vietnam where a lot of our partners were or are 0:16:24.960 --> 0:16:27.360 in November, and you know, we were all talking about 0:16:27.400 --> 0:16:28.760 and like, how bad do you think it's going to be? 0:16:29.240 --> 0:16:31.080 And one of my partners was like, you know, I 0:16:31.120 --> 0:16:34.360 don't think it can be that bad because where else 0:16:34.360 --> 0:16:36.080 are you going to get your silk? I mean, where 0:16:36.120 --> 0:16:37.840 else are you gonna get your silk? So I predict 0:16:37.920 --> 0:16:40.640 ten percent. It can't be higher than ten percent. Yeah, 0:16:40.680 --> 0:16:42.240 And then when we saw the fifty four percent on 0:16:42.320 --> 0:16:44.560 top of the thirty percent we were already encountering, we 0:16:44.560 --> 0:16:48.640 were like, well, that's just insane. And then it just 0:16:48.680 --> 0:16:50.360 got worse and worse and worse. I mean, i'll tell 0:16:50.360 --> 0:16:53.920 you between Liberation Day April second, and then April eleventh, 0:16:53.960 --> 0:16:57.400 we were on calls with our factories like night and day. 0:16:57.440 --> 0:16:59.960 I don't think I don't think my factory partners slew 0:17:00.400 --> 0:17:03.960 for those seven days. You know, any hour of any 0:17:04.000 --> 0:17:05.920 day we could reach them, and we were just basically saying, 0:17:05.960 --> 0:17:07.600 get it on the boat, get it on the boat, 0:17:07.640 --> 0:17:11.360 except it was total chaos at the ports. So it's 0:17:11.400 --> 0:17:13.880 just like, you know, after forty eight seventy two hours, 0:17:13.880 --> 0:17:15.879 it was like we couldn't even secure a space on 0:17:16.280 --> 0:17:19.000 the boat and like the night before it's all about 0:17:19.040 --> 0:17:20.720 to go down, you know, I'm on a call with 0:17:20.760 --> 0:17:22.359 one of my partners in Hong Kong, and I'm like, 0:17:22.400 --> 0:17:24.080 did you get it on the boat? And he was 0:17:24.160 --> 0:17:26.919 like no, I couldn't get this on the boat. And 0:17:26.960 --> 0:17:28.639 then I was like, okay, then don't put it on 0:17:28.720 --> 0:17:31.639 the boat. And then you know, and then whenever I 0:17:31.640 --> 0:17:34.479 can't even remember the exact timeline now, but whenever, you know, 0:17:34.640 --> 0:17:38.560 we went into whenever it we went into it, like 0:17:38.560 --> 0:17:41.320 the ninety day grace period, I was like, get it 0:17:41.359 --> 0:17:42.879 on the boat, get it on the boat. I mean, 0:17:42.920 --> 0:17:46.240 it just felt like it just felt like I hate 0:17:46.240 --> 0:17:49.200 to use this metaphor, but like it's like the last 0:17:49.240 --> 0:17:52.360 ship or the last helicopter out of Saigon and everyone's 0:17:52.440 --> 0:17:54.720 just like trying to get their things on. Yeah. 0:17:54.760 --> 0:17:57.200 I mean, it's okay metaphor because one, you know, that's 0:17:57.240 --> 0:18:00.720 the helicopter, but it's still probably you know, still coming 0:18:00.720 --> 0:18:03.680 out of Vietnam. But actually, what is so right now 0:18:03.920 --> 0:18:07.600 we're recording this May seventh, I guess two questions is like, 0:18:07.720 --> 0:18:10.640 what is your like sort of geographical exposure because that's China, 0:18:10.680 --> 0:18:13.760 it's to only ten percent and and it may get 0:18:14.320 --> 0:18:16.840 I think you know a lot of people think that 0:18:16.920 --> 0:18:18.880 will get even if there's no deals, that that ten 0:18:18.880 --> 0:18:23.400 percent will get extended. What is your current geographical exposures? 0:18:23.440 --> 0:18:25.640 But to the ten percent and one hundred and fifty 0:18:25.640 --> 0:18:26.359 four percent. 0:18:26.280 --> 0:18:30.520 Well, I had to cancel fifty percent of my May collection. Wow, 0:18:30.520 --> 0:18:34.840 because they were all from China Okay. Many of the 0:18:34.840 --> 0:18:38.640 things were late because they were coming out of places 0:18:38.680 --> 0:18:42.399 like Vietnam, Okay, where it was initially hit with the 0:18:42.440 --> 0:18:44.680 fifty four percent and we were saying, oh, I'm sorry, 0:18:44.680 --> 0:18:46.760 it was forty seven percent. We said, don't don't chip it. 0:18:46.960 --> 0:18:49.119 Oh, so there were even though there was got plus 0:18:49.240 --> 0:18:51.040 even back to ten percent fairly quickly. 0:18:51.040 --> 0:18:54.160 It had to create a hiccup totally because it's like fashion. 0:18:54.280 --> 0:18:58.119 It's like it's all about your selling window, right, and 0:18:58.160 --> 0:19:00.720 you bring in your summer clothes and you want to 0:19:00.760 --> 0:19:02.760 sell through most of it within six weeks, and if 0:19:02.800 --> 0:19:05.600 you miss that selling window, well then we'll wait till 0:19:05.640 --> 0:19:08.359 next year. And so some of our products are going 0:19:08.400 --> 0:19:11.600 to be held for a whole year and they're going 0:19:11.680 --> 0:19:14.440 to wait for summer twenty twenty six to be released. 0:19:15.240 --> 0:19:16.879 I mean, this is just I'd chalk it up to 0:19:16.920 --> 0:19:20.440 bad luck. But we actually we have partners in Turkey, 0:19:20.640 --> 0:19:24.480 we have partners in Portugal, China and Vietnam, but by 0:19:24.600 --> 0:19:26.960 far we do most of our production in China. Got it? 0:19:27.200 --> 0:19:30.480 And why is that? It's because the quality is exceptional, 0:19:30.840 --> 0:19:34.119 the prices are not cheap. You know, I have customers 0:19:34.119 --> 0:19:38.280 who've because we've been really communicating transparently with our customers, saying, 0:19:38.600 --> 0:19:41.280 you know, here are the consequences that we're facing and 0:19:41.359 --> 0:19:45.040 our fact Our customers are you know, very sharp, intelligent women, 0:19:45.119 --> 0:19:47.040 and I've had many of them email me saying like, 0:19:47.280 --> 0:19:49.159 you know, I'm really sorry to hear all this. I'm 0:19:49.200 --> 0:19:51.199 going to support your business, but like why don't you 0:19:51.200 --> 0:19:53.520 move your production back to the US? Like why don't 0:19:53.520 --> 0:19:56.280 you move it back to the garment district? And I'm like, 0:19:56.880 --> 0:19:58.800 I don't even know how to explain, Like that's that 0:19:58.920 --> 0:20:03.720 industry is not only dying in many cases gone, it 0:20:03.760 --> 0:20:06.160 could never support the kind of quantity that we want 0:20:06.200 --> 0:20:07.520 to do. And by the way, we're not even that 0:20:07.560 --> 0:20:11.280 big a business, you know. And you know, they sometimes 0:20:11.280 --> 0:20:15.840 I get like I knew, I knew it was made 0:20:15.880 --> 0:20:18.840 in China because you know, the qualities was X y 0:20:18.960 --> 0:20:20.639 Z and I was like, you know, I was like, 0:20:20.760 --> 0:20:23.320 have you ever seen the inside of a factory in China? 0:20:23.440 --> 0:20:27.560 Because you know, the workers who work there, they get 0:20:27.680 --> 0:20:31.920 free lunch. They have a farm at the factory where 0:20:31.960 --> 0:20:35.280 they make fresh vegetables and their lunch is served using 0:20:35.280 --> 0:20:39.920 those fresh vegetables. And they have these beautiful, beautiful dormitories. 0:20:40.240 --> 0:20:43.159 Like there is a lot that these Chinese factories do 0:20:43.359 --> 0:20:46.919 right to treat their workers right. And meanwhile, the garment 0:20:47.000 --> 0:20:51.440 district factories, everyone brings their own toilet paper because if 0:20:51.520 --> 0:20:54.880