Fubu

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Fubu

350 5th Avenue Suite #6617
New York, New York 10118
U.S.A.
(212) 273-3300
Fax: (212) 629-0232
Web site: http://fubu.com

Private Company
Founded: 1992
Employees: 55
Sales: $200 million (1998 est.)
NAIC: 315211 Men’s & Boys’ Cut & Sew Apparel Contractors; 315212 Women’s, Girls’ & Infants’ Cut & Sew Apparel Contractors

Fubu is one of the fastest growing apparel companies in the American fashion industry, producing a variety of clothing and accessories ranging from baseball caps and sweatshirts to men’s semi-formal suits. The company was conceived and founded by Daymond John, a native of Queens, New York, in conjunction with three childhood friends, each of whom continue to play a role in Fubu’s management. Fubu, an acronym for “for us, by us,” gears its product line to young men, and the label’s designs reflect the style of the music and fashion phenomenon known as hip-hop.

Company Origins

Daymond John, CEO of Fubu, entered the retail industry after becoming frustrated with what he perceived as a paucity of street-smart, fashionable clothing in the menswear industry. After having his mother teach him to sew, the 24-year-old began selling tie-top hats and other small accessories on the streets of New York. The venture quickly took on a life of its own, with John’s mother reportedly taking out a $100,000 mortgage on her home to help finance the business. The family house was transformed into a small factory devoted to the production of hats and rugby-style t-shirts. Soon John, who was then also waiting tables at a Red Lobster restaurant in addition to designing clothes, had more orders than he could fill and so turned his energies full time to the fledgling business.

In 1994 Fubu saw its first real expansion. That year, John took his designs to the Men’s Apparel Guild in California (MAGIC), an annual retail event held in Las Vegas, and, unable to afford a booth at the show, sold his wares from a hotel room. Within a couple of days, John, with irrepressible energy and salesmanship, had made Fubu’s presence felt: every accessory and piece of clothing brought to the show had been sold, and John returned to Queens with over $300,000 worth of orders to be filled.

Soon after Fubu’s success at the MAGIC event, the Asian conglomerate Samsung offered to distribute Fubu’s collection, enabling the business to increase both production and the variety of its designs. What had begun with tie-top hats and t-shirts now expanded, with John and a small team of designers creating jackets, baggy “hip-hop” style pants, and oversized “bubble” coats, all of which were emblazoned with Fubu’s distinctive, outsized logo. Within two years of striking its distribution deal with Samsung, the Fubu collection was picked up by the Macy’s chain of retail stores, making the label more accessible nationwide.

From the business’s inception, Fubu was intimately allied, both in its designs and its advertising, with the hip-hop music industry. “For us, by us” was a phrase invented by John to indicate to the consumer that his was a business devoted to fulfilling the fashion needs of young African-American men. According to industry analysts, such a customer demographic tended to adopt its apparel trends primarily from two sources: sports and rap stars. The best way, therefore, for a new urbanwear company to make its mark with its targeted consumer base was to have a high-profile representative of one of these industries involved in the promotion of that company’s merchandise. According to Joel Stein, writing in Time magazine, “the trick to hip-hop fashion money, even more than offering slick styles, is somehow to get a rapper—preferably one on heavy rotation on MTV—to wear your stuff.”

This form of promotion became especially important for a company when, as was the case with Fubu, advertising dollars were in short supply. After Fubu’s breakthrough at the MAGIC show in Las Vegas, the company soon began canvasing the rap star LL Cool J, offering him free Fubu clothing in hopes that he would wear it to public functions. In 1994 LL Cool J wore some Fubu gear in concert, and soon thereafter he became a company spokesperson, giving the small label a high-profile image shared by few of its competitors.

The Right Concept at the Right Time: Menswear Takes Off

The early 1990s saw an explosion of growth in the mens-wear industry, particularly in sportswear. Suddenly, designers such as Ralph Lauren, Donna Karan, and Tommy Hilfiger saw skyrocketing sales in their casual menswear lines, as the young men’s de rigueur uniform of slim-fitted jeans and t-shirts transformed into a more silhouette- and label-conscious look. The style to be imitated during this time, for young men of all backgrounds, was known in the industry as urban streetwear. According to Lauren Goldstein, in Fortune magazine, “In 1990 there were fewer than five urban booths at the MAGIC show. Last August (1998) there were at least 140.” The burgeoning interest in urban wear not only offered an increase in sales to already established designers such as Lauren, but created an opportunity for small businesses to fill a growing niche market.

What fueled and inspired this market was rap music; Goldstein went so far as to note that “urbanwear companies have ridden in on the coattails—and jacket backs, and baseball caps, and shoes—of rap musicians.” This marriage of musical tastes and fashion trends made the urbanwear market huge. Just as the 1980s saw a proliferation of suburban kids turning their tastes and pocketbooks to the urban sounds of hip-hop and gangsta’ rap, so was the case in the retail industry in the 1990s, with urbanwear becoming a “crossover” point at which tastes from the suburbs and the city converged.

CEO John was aware of this convergence and used it to his company’s advantage. Fubu’s marketing efforts began to focus on broadening the concept of urban, making it more about attitude and style and less about ethnicity. According to John at the time, Fubu was “a sportswear company. Calling us ‘urban’ is like saying we come from the street and immediately labels us as something we don’t necessarily want to be.”

However, this style of the street was exactly what sold Fubu; and it was the label’s genius to transform “the street”;—and all the term entailed—into a concept readily recognizable and desirable to a broader consumer base. John acknowledged that the Fubu name represented a complete lifestyle: “The people who buy our clothes know that we’re ‘down.’ They know that we don’t just make the clothes, we wear the clothes. And we are part of the culture.”

As rap music found a multicultural audience, so did Fubu in the mid-1990s. Commenting on the company’s successful marketing to America’s youth, Peter Ferraro, advertising director of The Source magazine, contended that “Fubu is no more hip-hop than the Gap, but by using the language of hip-hop, which is the language of youth in the United States and around the world, they have had success in expanding their brand from the inner city into the suburbs. Hip-hop is the one art form that has cohesion in youth culture. They have understood that hip-hop gets the gear out there on the right kids.”

The “right kids” were of course more accessible when a label was broadly visible and available in many places. Fubu’s distribution deal with Samsung gave the company exactly this sort of exposure, with Fubu lines being picked up by over 100 Macy’s stores and over 300 J.C. Penney stores nationwide. Even while Fubu went more commercial, independently owned specialty stores continued to carry the label, making Fubu by 1998 a ubiquitous force in the hip-hop fashion industry.

From Fubu’s inception, competition was fierce, particularly from other new labels. As hip-hop fashion grew in popularity with young men, so did the desire to wear clothes representative of a new urban ethos, an ethos to which established designers such as Lauren and Karan could stake no claim. The mid- and late 1990s thus saw a flourishing of small, independent labels which were carried by boutiques and, with big distribution deals, large department stores. Dexter Wimberly, an executive of the marketing firm August Bishop, noted in 1998 that “In the last three years, there has been more entrepreneurial spirit shown from African-American and Latino-owned upstart clothing companies than ever before.”

Fubu found itself competing with such brands as Phat Farm, a label owned and begun by Russell Simmons, founder of Def Jam Records, as well as Wu-Wear, a company started by the rap group Wu-Tang Clan. Given the similar ties to the music industry of Fubu’s competitors, it became necessary for Fubu to step up its own celebrity exposure. By 1998, Fubu was not only represented by LL Cool J (who even insisted on wearing a Fubu cap while filming an ad for retailer The Gap), but could also be seen on such music stars as Marian Carey, Will Smith, Whitney Houston, and Brandy. In sales, too, Fubu trumped its competitors, with its wholesale volume jumping from $75 million in 1997 to $200 million in 1998, an increase far ahead those reported by other small labels.

Broadening Appeal: Womenswear and Beyond

Part of Fubu’s contract with Samsung required the sportswear company to gross at least $5 million in sales within three years. John’s company exceeded that figure in less than one year, making it possible for the company to look with confidence to its financial future. Fubu’s early success made the company an appealing investment to other names in the retail industry, and soon Fubu formed licensing contracts which allowed its name to appear on a broad range of womenswear, accessories and loungewear.

Company Perspectives:

Fubu is about Pride and Respect in what you wear and who you are.

In early 1999 Fubu formed a licensing deal with Pietrafesa Corporation, a producer of upscale, formal clothes, which allowed Fubu its first experiment with tailored, higher priced men’s suits. In charge of the designing of the line was Pietrafesa, with Fubu heading up the line’s sizing and form. The line included both single and double breasted suits, tuxedos, and a “country” suit modeled after vintage British designs. Prices for the suits ranged from $395 to $1,500.

While it might have seemed strategically incongruous for the casualwear company to attempt a formal, more conservative line of clothing, Fubu’s deal with Pietrafesa actually reflected a growing demand among young consumers for stylish, tailored clothes. As a Fubu spokesperson put it, “Our customer is beginning to dress up and we want to be there with our own classics.” Moreover, as Fubu’s customer base grew older, and entered a work place in which formal clothing was required, Fubu’s move to corner the tailored clothing market revealed a shrewd marketing sensibility.

Also during this time, Fubu’s expansion plans resulted in a licensing deal in the winter of 1999 with the National Basketball Association. Urbanwear took many of its style cues from the sports world, and basketball, with its players outfitted in knee-length baggy shorts and loose jerseys, had a particularly strong influence over the retail industry. In its deal with the NBA, Fubu created a new line, called Fubu NBA, which focused on 40 pieces of sportswear, from sweatshirts and pants to shooting shirts and headgear. Prices ranged from $45 to $100, and each item carried both the NBA and Fubu logo. In designing the line, particular attention was given by Fubu to the most popular teams in the NBA: the Los Angeles Lakers, the Chicago Bulls, and the New York Knicks. In explaining Fubu’s marketing approach with Fubu NBA, the company’s vice-president, Phil Pabon, stated that “Our alliance with the NBA brings a whole legitimacy to our line—not just in numbers and sales but in that we are a true sportswear collection whether you want to call us urban, suburban, indifferent.... This opens a whole new segment of an existing market.”

Just as Fubu looked towards increasing its sales with tailored clothing and licensing deals with the NBA, the company realized that its core line of clothing—bubble jackets, baggy jeans, and oversized t-shirts—had become quite popular with women as well. As a result, the company developed a line of women’s clothing called Fubu Ladies. The collection, licensed in conjunction with Jordache, consisted of both form-fitting, tailored dresses and skirts, as well as clothing similar to that of the company’s menswear, such as loosely cut shirts and oversized jeans. Competing against such brands as XOXO, Guess, and Tommy Jeans, the Fubu Ladies line was designed to attract younger, style conscious women, with prices ranging from $25 to $180.

In 1999 Fubu revealed its most ambitious plans for expansion, making the decision to open 45 retail stores overseas. Its first store was slated to open in the fall of 1999 in South Africa, where Fubu had already become a coveted brand name. The store, over 3,500 square feet of space, was slated by Fubu to carry all the company’s major lines, including Fubu NBA and Fubu Ladies. Other targeted countries include Greece, Cyprus, Turkey, and three locations in Eastern Europe. Fubu had avoided opening stores in the United States because, according to John, “Here in the U.S. we have strong distribution and putting up freestanding stores would affect our relationship with our current department and specialty store accounts. But because we have no strong distribution overseas, rolling out stores is a good way to display our product.”

A young company which experienced phenomenal rapid expansion, the future for Fubu looked bright, though some analysts found fault with the company’s occasionally disorganized distribution system, probably attributable to that fact that Fubu became popular so quickly that at times it took on more orders than it could fill. However, with a menswear market which grossed in the late 1990s over $5 billion dollars, Fubu remained a singular success story. From the company’s inception its founders took advantage of an exploding niche market in urbanwear, and it would likely continue to create new ways to grow.