SocietyMade possible by

Store closures and epic discounts suggest big trouble at I Love Ugly

With stores closing and the sales never ending, it has to be asked – what’s going on with New Zealand’s fastest growing fashion brand?

Things aren’t looking good for I Love Ugly. The Auckland-based men’s streetwear brand, which in fewer than ten years has grown from a one-person operation run out of a closet to a global business with reported annual revenue of $25 million in 2015, now appears to be in retreat. After closing its Sydney, Melbourne and Los Angeles flagship stores, the vast majority of its stock (excluding some recent additions) seems to be perpetually on sale.

When I visited its Newmarket outlet a couple of weeks ago, it looked low on stock but not empty. The racks were spaced more like a high-end minimalist store than a thriving streetwear brand. Biggie played on the stereo and a backlit sign read, “The only people who see the whole picture are those that step outside the frame”. Everything was 50% off, including non-I Love Ugly branded items. The salesperson told us that the sale was to make room for a new season, due “in a few weeks”. I Love Ugly’s management has not responded to requests for comment.

Even if “in a few weeks” arrives, that would mean at least two months of significant discounts, which tends to be closely correlated with very bad things in clothing retail.

Recent I Love Ugly communications with customers

Several weeks ago, the company posted a message on Instagram to “squash any rumours that may be circulating” but, at the same time, acknowledge that the company has “been sending a shit tonne of emails lately” about multiple sales and that the company is “in a bit of a pickle”.

The post blames a combination of a rent increase on its LA store, delays from suppliers leading to cancelled orders, leading to warehouses full of stock that needs to be sold quickly. “Long story short… Cancelled orders = too much stock = sell the stock to make way for our new collections.”

The message ends by saying the company was giving its warehouse and website a “detox” to “make way for a new, refined ILU 2017”.

Dr Mark Glynn, associate professor in marketing at AUT, says that I Love Ugly could be discounting heavily for sustained periods either because the discounted price is the actual intended retail price and the higher price is used to anchor consumer’s perception of value. Or, “it could be that the product is not selling and the only way they can motivate people to motivate people to come into their stores is to offer a 50% discount. Most retailers do this occasionally… but if they’re doing it all the time it’s probably an indication that things aren’t going right, they haven’t got their profit formula right and the only way they can keep going is to offer this discount.”

Glynn says I Love Ugly’s story reminded him of Pumpkin Patch, another mid-level brand which expanded rapidly, with a global retail operation that it couldn’t sustain. “They had a global expansion and had to pull back. And perhaps the 50% discount is the reducing of their stock levels, and there maybe some financial side of it that we’re not seeing – how they’re financing their stock. Are they financing it out of their cashflow or are they financing it out money that they’ve borrowed?”

Caitlan Mitchell, editor of the New Zealand Apparel magazine, says, via email, “It’s a difficult time to be a kiwi clothing brand with consumers recently being handed fast fashion giants such as H&M, Zara and more already on their way.

“It’s not the consumers’ fault they have been programmed to want new cheap things that last as long as the trend. A week or two. I personally believe the future for Kiwi brands is focusing on creating slow fashion with transparent backgrounds more frequently with short limited runs.”

THE ZESPI PANT

I Love Ugly was founded in 2008 by Valentin Ozich, who was joined by co-owner Barnaby Marshall in 2011. The brand grew quickly from printing t-shirts in Auckland to exporting its vibrant streetwear to hundreds of stockists around the world and getting its clothing (particularly its drop crotch chinos) worn by rappers like A$AP Rocky. In late-2015, the brand attracted attention for a sexist ad campaign, which was later withdrawn, featuring the hands of a clothed man touching and covering the breasts and genitals of a naked woman.

The company grew quickly, making number five of the Deloitte Fast 50 2014 and expanding both its offering to include accessories like watches, backpacks, and jewellery, and its retail operation to include stores in Australia and the US. Currently, the company has two stores – Auckland and Wellington – and sells globally through its online store and independent stockists.

I Love Ugly’s retreat comes during a tough time in retail. Last week it was announced that two prominent New Zealand men’s fashion brands – Marcs and David Lawrence – would be closing after the brands’ administrators Rodgers Reidy failed to find a buyer for either brand. According to the Herald, when the businesses were placed in administration in February the sole director of the companies behind the labels, Malcolm Webster, blamed deteriorating sales, poor cash flow, and market conditions.

Last weekend, I Love Ugly sent out an email newsletter to its customers complaining about “style poachers” who have ripped off its “iconic” Zespy pants. The upside was the release of a new line of cropped Zespy pants (and a line of caps) after months of only selling old seasons at a discount. Is this the last gasp for a brand that got too big too quickly and is now just another victim of global fast fashion, or has this all been just a bump in the road for one of New Zealand’s fastest growing fashion brands? The next few months should reveal their fate.


The Society section is sponsored by AUT. As a contemporary university we’re focused on providing exceptional learning experiences, developing impactful research and forging strong industry partnerships. Start your university journey with us today.

The Spinoff Longform Fund is dedicated to facilitating investigative journalism. Our focus is on supporting in-depth reporting on important New Zealand stories. Your donation will help us sustain this most resource-intensive form of journalism, ensuring that the most complex and important stories still get told.