NEW YORK, United States — At American discount retailer Stein Mart, Ivanka Trump apparel is being sold under the guise of a different label. BoF has learned that the Jacksonville, Florida-based chain — which has 290 stores in 31 states, everywhere from Little Rock, Arkansas to Madison, Wisconsin — is selling Ivanka Trump garments relabeled as Adrienne Vittadini Studio.
G-III, the company that owns the right to manufacture and distribute Ivanka Trump apparel through a license agreement — and also owns brands including DKNY outright — acknowledges that it sold the relabelled merchandise to Stein Mart without the knowledge of the Ivanka Trump brand. It is not known whether this inventory was also sold to other retailers.
“G-III accepts responsibility for resolving this issue, which occurred without the knowledge or consent of the Ivanka Trump organisation,” a representative for G-III said in a statement to BoF. “G-III has already begun to take corrective actions, including facilitating the immediate removal of any mistakenly labelled merchandise from its customer. The Ivanka Trump brand continues to grow and remains very strong.”
BoF has obtained photos of identical garments being sold at Stein Mart, with the only difference being the name on the label. Some say “Ivanka Trump” while others say “Adrienne Vittadini.”
Why did this happen?
Since the election of her father Donald J. Trump to the office of US president, Ivanka Trump-branded merchandise has been dropped from several prominent American retailers, most notably Nordstrom — which cited weak sales — as well as Neiman Marcus and Shoebuy.com. According to a source within Stein Mart, the retailer has received negative feedback from customers regarding Ivanka Trump product, with one customer spitting on a blouse in front of a cashier before storming out of a store.
But the motivating factors may not be that simple. Swiping labels — or simply ripping the label out completely — before a garment is sold to a discount retailer has long been commonplace. One reason is brand protection: if a brand is hot, it’s not desirable to be associated with a discounter. However, this practice occurs less often now that many major full-price retailers — such as Nordstrom, Neiman Marcus and Saks Fifth Avenue — operate their own off-price outlets, marketing the same brands they sell at full-line stores.
“US textile product labelling laws allow substitution of labels, so long as the entity making the substitution is identified on the new label and keeps records for three years,” explained Susan Scafidi, professor of fashion law at Fordham Law School and founder of the Fashion Law Institute. “This is mostly for supply chain tracking reasons. All of the other required information on the label — fibre content, country of origin, etcetera — must be maintained.”
It could be argued that G-III was simply looking to protect the Ivanka Trump brand from being associated with a discount retailer. In its 2016 fiscal year — which ended at the end of January 2017 — G-III reported that net sales of Ivanka Trump merchandise increased by $17.9 million from 2015, although the company does not break out exactly how much revenue the merchandise generated altogether.
Sales performance of G-III's Ivanka Trump merchandise for the first quarter of 2017 — and since President Trump’s inauguration — has yet to be reported, although much of the success of the brand is thought to be due to sales in China, where she is often referred to as a “goddess” on social media. G-III does not break out Ivanka Trump sales by region.
In a call on Friday with BoF, Stein Mart chief executive D. Hunt Hawkins said that, despite certain customer complaints regarding the Ivanka Trump label being sold in stores, the retailer’s decision to carry the relabelled product was not motivated by politics. “We’ve had both labels for a while. We may see more Adrienne Vittadini in the short term,” he said. “I’ve had an equal number of [customers] say that they don’t want and do want [the Ivanka Trump merchandise] in the store. If we get it, we get.”
The retailer doesn’t have the luxury of being choosy. Unlike many of its off-price competitors — which have benefited from the rise of discount culture, expanding at a rapid rate — Stein Mart, which generated $1.4 billion in its 2016 fiscal year, has struggled. While year-over-year net sales were about flat in 2016, sales at stores open at least one year were down almost 4 percent.
While G-III and Stein Mart have both acknowledged their participation in the swap, it is unclear what role Adrienne Vittadini has played. Authentic Brands Group licenses Adrienne Vittadini, not G-III. However, G-III declined to explain how the Adrienne Vittadini labels ended up on the Ivanka Trump garments. A representative from Authentic Brands Group declined to comment for this story.
It certainly matters if Adrienne Vittadini did not know about the swap. “If the original label [is replaced] with that of a third party unaware of the substitution, the [responsible party] would be liable to the third party,” Scafidi says. “All of this derives historically from the law of fraud.”
And even if label swapping is technically legal, questions remain on whether or not the practice is ethical or in line with customer expectation. “Of course, the fact that a clothing retailer can legally relabel with certain restrictions doesn't mean that it should, especially if label-conscious consumers are likely to be outraged by the switch,” Scafidi says. “Fashion may be trending toward modesty, but when it comes to labels, customers are demanding more transparency than ever.”