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High Stakes in the World of High Fashion

Aired June 18, 2005 - 11:00   ET


BETTY NGUYEN, CNN ANCHOR: "THE TURNAROUND" with Ali Velshi begins in just 60 seconds, but first a check of the headlines right now in the news.
You'll want to check your account. The computer files of Card Systems Solutions, which is a credit card processing company, had been hacked. The accounts of some 40 million credit card customers are at risk. We'll have details on this latest and major threat to your money and identity. That's coming up in just one hour. And we'll also tell you what to do if your accounts have been compromised.

Also in the news, Operation Spear, U.S. Marines are engaged in fierce house-to-house combat with insurgents along Iraq's border with Syria. The military says today's fighting centered on a bunker that serves as a car bomb factory. Marines also four tortured hostages chained to a wall. CNN's Jane Arraf is embedded with the Marines there and she will have an exclusive report next hour.

We'll have more news coming up in just 30 minutes. "THE TURNAROUND" with Ali Velshi begins right now.


ALI VELSHI, HOST (voice-over): Next on "THE TURNAROUND," a husband and wife design team take on the fashion world.

JAMES JURNEY, CO-OWNER, SEIZE SUR VINGT: The thing about our style has always been it's new and fresh but not crazy.

VELSHI: A designer who knows what it takes to get to the top.

JOSEPH ABBOUND, FASHION DESIGNER: The road is never easy. It's not a storybook ever for any of us designers.

VELSHI: Can this design legend teach this couple the tricks of the fashion trade? "THE TURNAROUND" begins now.

It's a world of glitz, glamour and impossibly beautiful people. It's the fashion industry. And while the supermodels turn heads on the runway, it's the fashion designer who's a turning a profit behind the scene. It's a cut-throat, competitive business where trends are set, fortunes are made. The apparel industry generates more than $170 billion in retail sales every year.

(on camera): New York, New York, if you can make it here, you can make it anywhere. Designers Gwen and James Jurney are making it. In fact, their small store has given them a great foothold in the hyper competitive world of fashion. Now, we're going to introduce them to a clothing design legend, one who's walked the same path. Seize Sur Vingt, Joseph Abboud, three days, will our small business measure up?

(voice-over): Top fashion designers are like rock stars, rich, famous and admired around the world.

ABBOUD: You're only as good as your last collection. You can be a darling one day and gone tomorrow and that's happened to a lot of people.

VELSHI: But it hasn't happened to Joseph Abboud. He's one of the fashion industry's biggest names, a creative, trendsetting designer who left his job as director of menswear for Polo/Ralph Lauren in 1987 to launch his own brand.

ABBOUD: When I started in 1987, there were really two schools of fashion. There was very traditional, preppy, Ivy League clothes, very American and there was very fast, slick, European fashion, but there was nothing in the middle. And that was where I found my niche.

VELSHI: Abboud knows how hard it is to get to the top and how much harder it is to stay there.

(on camera): Tell me about the road that you've taken. What is paved with gold or was it riddled with pot holes?

ABBOUD: Well, when I started the business, my hair was black and now, as you can see, that it's -- I've experienced all the obstacles that all of us run across. The road is never easy. It's not a storybook ever for any of us designers. But if you have a passion for it, you just -- you know you just keep moving forward and try to find a way to achieve.

VELSHI (voice-over): New York is one of the world's fashion capitals. There are more than 5,000 designer showrooms in the Big Apple alone and one of them is Seize Sur Vingt, a seven-year-old company started by a husband and wife team, James and Gwen Jurney.

(on camera): Tell me a little about the passion that drives you.

J. JURNEY: We wanted to do something together after we got married. So this was a decision of something we both liked. She was in an interior design job and I was in a banking job and we actually looked at doing this as an extracurricular way back when we were dating.

GWEN JURNEY, CO-OWNER, SEIZE SUR VINGT: So we didn't have any experience.

VELSHI: But they do now. Seize Sur Vingt is known for its finely tailored clothing for men and women.

J. JURNEY: The thing about our style is it's always been it's new and fresh but not crazy, like -- so it's not really out on a limb. VELSHI: Last year, the company grossed $2.6 million in sales, and it is profitable. James and Gwen are ready to take their label to the next level on both the creative side and the profit side. The question is how?

J. JURNEY: We want the business to become sort of self- sustaining without going too big. We don't want to be a mass market brand. We don't want to be in every department store in the country.

G. JURNEY: Our customers were never people that wanted to see themselves coming and going.

VELSHI: Like the young designer, Joseph Abboud was never formally trained in fashion design. And after watching the couple, he realizes it's something that can work for or against them.

ABBOUD: James and Gwen are very intelligent young people. They're filled with all this optimism and excitement. They have a lot of talent. But I think they haven't really experienced what this road of fashion is about. There's a lot of things that they're going to have to look at and make some hard decisions.

VELSHI (on camera): Let's talk about Seize Sur Vingt. They are not struggling. They have some cash. In some ways, when you're a struggling business, you know exactly what you need to do, you need to make ends meet, you need to pay the bills.

ABBOUD: Right.

VELSHI: Now, when you have a little bit of cash and you have a product that works, I almost think that's almost trickier.

ABBOUD: It is. They're not in need of making a move. They're not desperate. That's a dangerous place because it's a little comfortable. Everything is working. You know why rock the boat? I think more good decisions have been made out of desperation than in the position they're in.

VELSHI (voice-over): It's 10:30 a.m. at Seize Sur Vingt, James and Gwen know they're about to meet their monitor, but they have no idea who is about to walk through the door.

ABBOUD: Good morning.


ABBOUD: Hi, Joseph Abboud, how are you?

J. JURNEY: Hi. Hi, Joseph.


J. JURNEY: I'm James Jurney.

G. JURNEY: Gwendolyn Jurney, how are you?

ABBOUD: How are you?

G. JURNEY: Nice to meet you.

ABBOUD: Great spot. Great spot.

VELSHI: I guess you've heard the name.

J. JURNEY: Yes. Yes, of course. I know your stuff well.

We were excited. I thought I recognized when he came in but I wasn't positive until he -- you know he actually said his name. He's one of the, I guess, giants of the America's menswear business.

ABBOUD: I did a lot of reading. You guys have done quite a great job and a very interesting business, as you know. And building a business, there aren't that many parties. It really is about fabrics, and style and design.

J. JURNEY: Let's...

VELSHI: Let's start with a tour.

J. JURNEY: Yes. We do actually make custom pleated trousers quite a bit.


J. JURNEY: We really want to emphasize the shoulder. You notice the stripes matching. We do focus on that as an element of quality.

VELSHI: And those lines are definitely...

ABBOUD: That's a beautiful sign of quality. How is your tie business?

J. JURNEY: It's small but it's all our designs, which we're happy with.

VELSHI (voice-over): In addition to ties, James and Gwen offer other accessories like belts, cuff links, and shoes.

(on camera): Are you looking at being the place that someone can come to and get the whole outfit here?


VELSHI: That it's a full service offering?


J. JURNEY: Yes. Right, exactly.

VELSHI (voice-over): Seize Sur Vingt tries to give its customers the convenience and personal attention that more men are looking for.

ABBOUD: Men are the new women. (LAUGHTER)

ABBOUD: That's the whole deal because we've always wanted to be sort of nurtured and groomed but we were, like, too masculine to talk about it.

VELSHI (on camera): But now we're OK with it?

ABBOUD: So we're OK. You know we're comfortable with who we are and so now, we can do it.

VELSHI (voice-over): James and Gwen take Joseph down to their basement where he can see the guts of the operation and watch the tailors in action.

ABBOUD: I think their philosophy is right, make beautiful clothes, make them for consumers, be a little bit forward but not so forward that you lose a customer.

VELSHI: Day 1 of this turnaround is under way and both James and Gwen are surprised at the connection they've made with their mentor.

G. JURNEY: I actually found him more interesting than I thought I would.

J. JURNEY: He's really approachable. It's just like wow; he's just a normal guy. He's been where we are.

VELSHI: Coming up, James has a hard time describing Seize Sur Vingt's style?

ABBOUD: Do you think you have a specific look about the product?

J. JURNEY: You know I don't know.

VELSHI: But Joseph has an idea for him.

ABBOUD: I would love to see your clothes animated, meaning, seeing your clothes on people.





VELSHI (voice-over): It's the afternoon of Day 1 of this turnaround in New York City, perhaps the beating heart of the fashion word. We have introduced husband and wife designers James and Gwen Jurney to top menswear designer Joseph Abboud.

ABBOUD: When building a business, there weren't that many parties. It really is about fabrics and style and design.

VELSHI: James and Gwen now take Joseph down the street to their second store. It's called Groupe.

G. JURNEY: It's meant to be more casual and it's meant to be more fashionable.

VELSHI (on camera): What's the story with the car?

J. JURNEY: It's theater. It's a billboard really. It's a piece of artwork. We get a lot of people who tell us that they came in the store because of it.


J. JURNEY: They wouldn't have otherwise come in.

ABBOUD: It's certainly something that draws them in and that's part of theater and retail, which is really, I think, totally important.

VELSHI (voice-over): Joseph applauds James and Gwen on their marking strategy to attract their target consumer, younger, style- conscious New Yorkers who might work on Wall Street or in one of the city's tower law firms. Groupe sells a different look than the original store does. To achieve that, James and Gwen offer other brands and designs in addition to their own.

J. JURNEY: It's basically getting new creative spirit under the same production umbrella. The tricky thing here is technically, it's a licensing deal.

ABBOUD: They are tricky.

J. JURNEY: I'd say one of our bigger challenges is how to deal with that aspect of it.

VELSHI: While the clothes at Groupe are produced by James, he doesn't design them. Other people do.

ABBOUD: I'm assuming you're paying them a royalty on everything you sell...

J. JURNEY: Right.

G. JURNEY: Right.

ABBOUD: ... although you produce it. You actually own the inventory. They don't own the inventory.

J. JURNEY: Right.

G. JURNEY: Right.

ABBOUD: That's a pretty aggressive position to take for a young company.

J. JURNEY: We also want to wholesale some of it. We are acting as the showroom as well. ABBOUD: You really have encapsulating everything that we do in our industry: licensing, manufacturing, call of sale, and selling retail, custom. You do so much. It's amazing.

J. JURNEY: Well, thank you, but we'll see if it all works. But...

G. JURNEY: He doesn't like to be bored.

J. JURNEY: Well, no, I can...

ABBOUD: I don't think you're getting bored here. Yes.

VELSHI: James and Gwen have taken on a lot, but it's not entirely clear what their goals are.

(on camera): What would you tell me about where your business is and where you would like it to be?

J. JURNEY: We design and manufacture and have a retail store in mostly men's and some women's clothing. We'd like to grow that but we don't want it to be huge. We're looking at, you know, having some retail in big cities.

G. JURNEY: Yes, some key locations. But I don't think we would ever see more than four or five stores. It would lose the feeling that this has right now if it ever got very big.

VELSHI: But you're looking to grow the brand?

J. JURNEY: You've got to grow it to kind of keep alive. But you also have to manage that so you don't shoot yourself in the foot, I guess, and grow it too much or at the wrong time.

VELSHI: I wouldn't mind getting from you a sense of what you might want some help in accomplishing in that next couple of days while you -- while you have Joseph here.

J. JURNEY: We'd like advice on what's the right balance to approach for that wholesale retail level and also how many brands or how many lines and looks?

VELSHI (voice-over): Joseph thinks James and Gwen may be too eager to take on too much, too fast. They need to establish priorities.

ABBOUD: You have to find the things that you think are going to be the most profitable and most successful to grow. You can't remain status quo for your people, for yourself or for the evolution of your business. If you're not planning on being a mega brand, and that's a choice we all make, what's going to take you to the next level? I think you have to find the two or three spearheads that you think are really what's going to take you to that next level. And then, the other pieces you bring along behind it.

J. JURNEY: Sadly, I think we do need to take a more proactive role in prioritizing because if you don't then priorities get handed to you.

ABBOUD: That's right.

J. JURNEY: So we need to take a step back and try and evaluate where we are for this coming year and for the next season. And so, now, we do decide some priorities because we have all these things we were going to go and some of them are already going to have to start getting cut out.

ABBOUD: Do you think you have a specific look about the product?

J. JURNEY: You know, I don't know. What is a look if it's recognizable as a look, right? We feel like we have one. It's just difficult to define.

VELSHI: James' difficulty in articulating his brand's look and style prompts Joseph to give him an assignment.

ABBOUD: I would love to see your clothes animated because I think I could get your ideas better, meaning, seeing your clothes on people.

VELSHI: What Joseph wants to see is a fashion show. He also has an unusual case study for them to consider.

ABBOUD: I want you to look at the fable of the scorpion and a turtle.

J. JURNEY: We're going to have to look that up, I guess.

ABBOUD: We have to have you look at it. It's fascinating.

VELSHI: James and Gwen have some money to spend on expansion but the kind of growth they're looking means turning to investors. Joseph's fable carries an important business lesson.

(on camera): Tell me the scorpion and the turtle.

ABBOUD: The idea that scorpions will always be scorpions, that the scorpion asks the turtle to go across the water, and the turtle says, "Why would I take you? You're a scorpion. You're going to sting me." And the scorpion says, "Don't be silly. If you die, I die." So the scorpion gets on the turtle's back. As they go across the water, in the middle, the scorpion stings the turtle and they both die and they're both going under. And the turtle says, "Why did you sting me? We're both going to die?" And he said, "Because I'm a scorpion." And I hate to say that all investors are scorpions but the nature and the DNA of investors is to get their money back.

VELSHI (voice-over): The connection has been established. The work has begun and confidence that this turn around will make a difference is growing.

(on camera): It's the end of Day 1 of this three-day turnaround in New York City. Our small business owner, James and Gwen Jurney, are trying to figure out how to expand their small design and retail operation. Their mentor, Joseph Abboud, needs to understand where to put their energies in order to grow the business. So he's given them something to do by tomorrow, find their focus.

(voice-over): Coming up, Joseph gives James a cold dose of reality.

ABBOUD: You're faced with an enormous opportunity but there's a lot of potholes and there's a lot of obstacles.





VELSHI (on camera): Welcome back to THE TURNAROUND. It's Day 2 here in the fashion capital of the word. Yesterday, we introduced an industry legend to two young and up-and-coming designers. Well, they've made a business in this cut-throat world and they're trying to manage their growth. Well, last night they went home with some homework and that was to try and focus on the things that set them apart.

ABBOUD: Being Day 2, it's going to be interesting because getting to know James and Gwen, I think it's now time to really see what they're all about. I think the formalities are over. And I think now we can get down to some nitty gritty.

VELSHI (voice-over): Nine thirty a.m., Joseph arrives at Seize Sur Vingt. First thing on the agenda, meet with James. As with many small businesses that are run by married couples with children, family responsibilities must come first. So today, Gwen had had to care for their young child and that leaves James in charge of this turnaround.

(on camera): Hi, how are you?

ABBOUD: Fine. How are you?

J. JURNEY: Good to see you, Joseph. Good morning. How are you?

ABBOUD: He looks much more relaxed today, doesn't he?

VELSHI: I want to explore the licensing matter a little bit. Licensing allows you to be in places and sell your products in places that it would be too difficult to expand into.

ABBOUD: The theory is if you established a great brand name, as James is doing, you want to maximize or exploit it. But since James doesn't own factories and doesn't deal with major stores, you look for a strategic partner or a licensing partner that can execute your designs and distribute them into a bigger channel of distribution, into stores that you want.

VELSHI: I want to go one further. What's the difference between doing that and going out and finding a factory that make this stuff and paying someone to do the manufacturing and the distribution?

ABBOUD: Licensing really doesn't put any financial pressure on James or the licensor because basically James or any other company would receive a royalty for the amount of sales and perhaps a minimum guarantee. If James wants to go and find a factory, he is going to have to fund it. He's going to have to pay for the inventory. He's going to have to sell the product. The licensee in many cases does all that for you.

And you want to make sure you that you have partners that you can work with. And that's really important part of this thing. You're faced with enormous opportunity, but there's a lot of potholes and there's a lot of obstacles and there's a few scorpions along the way. So it's going to be interesting to see, you know, the course you take.

VELSHI (voice-over): Joseph and James move to the outdoor garden where they turn to the heart of the matter, finding the right product to license.

ABBOUD: You wouldn't necessarily license suits at the moment, but you might license a -- the obvious one is a fragrance.

J. JURNEY: Right, right.

ABBOUD: Go and make your own formula and that's the traditional licensing that's made...

J. JURNEY: Right, right.

ABBOUD: know people like Calvin Klein and Ralph Lauren and Georgio Armani. They found very powerful fragrance licensees and that helped build a brand.

One of the things that licensees will look for is a fairly large opportunity to do business. They may not want to license with you if their opportunity is very small.

J. JURNEY: Right.

ABBOUD: You would want a licensee to contribute marketing and advertising dollars above and beyond the royalty percentage they pay you. If you can get 10 percent including the advertising numbers, that's a good licensing deal.

In your licensing agreements, you would have to negotiate the distribution channel, what you will allow them to do. In many license agreements, they actually list the kinds of stores you can sell.

J. JURNEY: But in this case, you're talking about a case where this actually do the selling?

ABBOUD: Yes. They run the entire operation. You provide the designs and the creative. You have control. But all of the financial responsibility falls on them, owning the inventory, shipping the product, collecting the bills. Now your job goes from managing the business to managing the creative process. That's a true licensing arrangement.

J. JURNEY: It's all fascinating. I'm just trying to digest it all at once.

In all my conversations about world of licensing really, that was the first time everyone has ever, like, broken it down, you know. And I really appreciated that because I feel like I've just -- I just took a class.

VELSHI: As he mentioned on Day 1, Joseph feel that James and Gwen need to raise the profile of Seize Sur Vingt. So again, Joseph suggests the idea of a fashion show.

ABBOUD: You have a certain point-of-view and a certain style that would translate well to see it on guys and girls and to take some of your tailored clothing and some of your sportswear and kind of mix it the way you do it. I think it would be fun and I'm looking forward to it because I'm excited by it. So how do you feel about it?

There was something very interesting about James not wanting to promote himself through his clothes. I think if you're in the fashion business, one of the most important things is to show your wares.

I think it would be great for you to make a statement of you are, you know, in front of a lot of people. I want it to be fun but I think it would just great to see it come to life.

J. JURNEY: Sure, sure, sure. That's not too hard.

VELSHI: But setting up a fashion show in just one day takes a lot of hard work and sometimes even a bit of luck.

ABBOUD: A bird.

J. JURNEY: A bird.

ABBOUD: That's a very lucky thing, I want you to know.

J. JURNEY: Oh really?

VELSHI: In some circles, this is a good thing.

ABBOUD: We just got -- both attacked by a bird. Did you get hit?

J. JURNEY: Right at the shoulders.

ABBOUD: Is that great? We got attacked by birds. This is not the only time that birds have blessed me with a passing overhead and it's generally when I'm wearing a light suit. Maybe that was a good omen for both James and me that the same bird got us both. Maybe it'll be just good luck for both of us.

VELSHI: Coming up, Joseph sits in on the James's brainstorming session for his new line. J. JURNEY: We could try the Bermuda shorts. There's such confidence in knowing that the styles that they're going to show for next season are the right ones.




NGUYEN: Hello, I'm Betty Nguyen at the CNN Center in Atlanta. "THE TURNAROUND" with Ali Velshi continues in just 60 seconds but first a look at the headlines right now in the news.

Your account or credit card account may be at risk. MasterCard and Visa say there has been a security breach of 40 million credit card accounts. MasterCard says it seems a hacker gained access information through a third-party processor. The companies have alerted member financial institutions and the FBI is investigating. We'll have a complete report plus advice to consumers. That's ahead in just 30 minutes.

The votes are still being counted in Iran's presidential election. Former President Akbar Hashemi Rafsanjani will face a run- off next week against another candidate. But it is unclear who that will be. Rafsanjani has about five million votes with roughly three- quarters of the votes counted. Two other candidates are vying for second place.

We'll have more news coming up in 30 minutes. "THE TURNAROUND" with Ali Velshi continues right now.


VELSHI (on camera): Welcome back to THE TURNAROUND. I'm Ali Velshi. We are in New York and it's right in the middle of this three day turn around. Our mentor is Joseph Abboud. He's a fashion industry legend. Our business owners are James and Gwen Jurney. They're up and coming fashion designers. They're not struggling with their business. They're struggling with getting their business to the next level. They're trying to manage their growth. So they've got a lot of questions for Joseph, questions like, how do they finance their expansion, how do they get into wholesaling and distribution, how do they develop licensing arrangements which will get their name and their clothes out to more people. Well, this afternoon, they're looking at doing some of those things.

(voice-over): It's 11:30 a.m. at Groupe, James' second location. James meets with his director of Italian operations, Lorenzo R., assistant designer, Sabrina Phillips, and production manager Elizabeth Thompson.

J. JURNEY: More of our customers that way are lawyers, what you call Wall Street lawyers. We do well with those guys. And also, I mean, say in the advertising level, they feel like they need to wear something that says I've got a little bit going on or in the -- like, our art production, art galleries...

G. JURNEY: People that are in creative industries want to have clothing that makes a statement.

J. JURNEY: You have two pants. Your new people, can they do women's pants?


J. JURNEY: I think they're OK.


ABBOUD: I'm Joseph. So how are you guys?

J. JURNEY: We actually -- we have a legitimate need to go over this for Spring '06. We want to actually go to some of the big stores in June with a pre-collection.

ABBOUD: That's the preview, yes. Well, I like the idea that you're -- so you're basically sort of setting up your pre-collection and...

VELSHI (on camera): Joseph and James have talked a lot about the operation side of James' business. Now, they're sitting down and talking about the stuff that drives them both, clothing design.

J. JURNEY: For spring, obviously spring sweaters. So are we going to -- how are we going to chase that?

UNIDENTIFIED FEMALE: I don't know if you wanted to development new models for (UNINTELLIGIBLE).

J. JURNEY: We love knits but we feel like we got more room to grow in knits here. We could try the Bermuda shorts. Do we sell any?

UNIDENTIFIED FEMALE: I mean we made about 100.

J. JURNEY: No, no, of our line.

UNIDENTIFIED FEMALE: Of our line? The solid wools, wholesale, no, nothing.

ABBOUD: It was only sold at retail.

UNIDENTIFIED FEMALE: Yes. And this year, I don't know how they're going so far.

J. JURNEY: The seersuckers are flying.


ABBOUD: What were the retails for those?

J. JURNEY: Somewhere in the 130-150 range. Let's backburner that then. Sport raincoat, can -- we should have a second version of the city raincoat maybe with a little bi of tricking and then have the jeans.

ABBOUD: What I took away from that was there's such confidence in knowing that the styles that they're going to show for next season are the right ones.

All right, guys, I am going. I will see you tomorrow, I think.

J. JURNEY: OK, great.

ABBOUD: Good to see you all.

J. JURNEY: All right.

ABBOUD: Keep it up.

VELSHI: You've asked them to pull together some sort of demonstration tomorrow of his clothing and to, as you described it, animate it. Tell me how it all comes together.

ABBOUD: Well, I think -- the first day, I think he was a little concerned and a little reserved. I think just seeing this morning James was more relaxed and more comfortable and really understands as a merchant that you have to show your product. Now, he has ideas about shoulders, about shirt fits, but how do we really know that? How do we know it?

VELSHI: And you know you can't see it from a rack.

ABBOUD: You can't see it from the rack and you can't intellectualize it. You have to see it. This is a very -- this is the world of art. It's very visible and it's very tactile.

VELSHI (voice-over): Two thirty p.m., James meets with top menswear designer Alexander Julian at Groupe.

J. JURNEY: Alexander Julian is one of the big names in American menswear/sportswear design.

VELSHI: James and Alexander have created a co-branded mini collection of Alexander Julian for Seize Sur Vingt. Now, they're finalizing plans for an upcoming launch party to promote that line. Alexander brings Suzanne Anderson, his vice president of apparel design and his press relations manager, Margo Lewis, with him to the meeting.

UNIDENTIFIED FEMALE: Who's doing invitations?

J. JURNEY: Music, we can do. Music is easy. We just do e-vites though. Is that all right?


ALEXANDER JULIAN, MENSWEAR/SPORTWEAR DESIGNER: And what about -- what about press?

UNIDENTIFIED FEMALE: We'll do e-vites to press too. J. JURNEY: Do you have a pattern of -- that we could use as a wallpaper background like a fabric design that we could sort of maybe turn on its side or you know kind of diagonally or something...


J. JURNEY: ...or the background of the e-vite, you know, like one of your...


JULIAN: We've already got it on disk, don't we, because we made a card out of it once.

UNIDENTIFIED FEMALE: That was Debaclen (ph).

JULIAN: That was Debaclen (ph).

J. JURNEY: That would be good. All right, guys. That was fun.


J. JURNEY: Thanks for coming.


JULIAN: We'll party hearty.

J. JURNEY: Wish we could do this every day, right?


VELSHI: But before the party, James has to prepare for his big assignment, tomorrow's fashion show. James can't quite bring himself to call it that. For him, it's a presentation.

J. JURNEY: It's a nerve-wracking thing. It's got to be really choreographed and timed and you know all the terms -- the music has to be, you know, absolutely right. It's a performance and so, you expect the performance to go on perfectly.

VELSHI (on camera): At the end of Day 2, it's obvious that James and Gwen Jurney understand exactly who their target customer is. What's less than obvious is what sets a suit like this apart from any other. In fact, to the untrained eye, it's hard to tell. So tomorrow, Gwen and James are going to have an opportunity to bring their designs to life.

(voice-over): Coming up, the mentor explains the business moral behind the scorpion and the turtle fable.

ABBOUD: The danger is that he will lose control, that he will have to compromise.

VELSHI: And later, James grows anxious about presenting his fashions. J. JURNEY: I wonder how many shades I'm blushing from just having to expose myself to this.





VELSHI (voice-over): It's 9:00 a.m. in Manhattan.

UNIDENTIFIED FEMALE: The man's city raincoat, like, the overall silhouette is going to be straighter and less like the Chesterfield.

J. JURNEY: Right. Not as curved like the Chesterfield.

UNIDENTIFIED FEMALE: More like very traditional.

J. JURNEY: Straight. Yes, I think so.

VELSHI: The owner of Seize Sur Vingt continues to work out next spring's line with his assistant designer but his mind is focused on a much more pressing task.

(on camera): Clothes in motion, clothes on people, it's kind of the point of this third day of this three-day turnaround here in New York City. Our small business owner James Jurney, he runs the small design and clothing operation, and our mentor is Joseph Abboud, a legend in the fashion industry. Well, today Joseph wants James to figure out how to animate his clothes, how to show what they look and feel like on real people. And that's the task he's setting himself to today.

(voice-over): And with his wife and partner, Gwen, at home coping with childcare issues, today James is on his own.

J. JURNEY: And nothing worries me more.

VELSHI: While Joseph Abboud wants to see Seize Sur Vingt's designs look on moving bodies, there is another reason he pushed for the fashion show. Joseph says if their goal is to finance the further growth of the label, James and Gwen had better get more comfortable showing off their talent.

(on camera): He knows who his target customer is.

ABBOUD: Right.

VELSHI: He knows what he'd like that target customer to feel like when he wears the clothes. But somehow, he has said, that's hard to express in words.

ABBOUD: Well, if it's hard to express in words, then the best way to do it is to dress it on people or manikins or -- he's not big into display, as you can see in the store. But he's going to have to show it to somebody somehow to sell it.

VELSHI (voice-over): The big question, where will James and Gwen get the serious money they need to grow their business?

(on camera): When you're looking at succeeding in this business, what is the best way to finance your expansion?

ABBOUD: My gut is he would be better off with a strategic investor and not a financial investor. That's my gut.

VELSHI: A strategic investor means someone who comes in and puts something on the table, somebody who's got something not just money.

ABBOUD: It's very symbiotic. It's -- he may have factories. He may have infrastructure. He may have licensing finesse and expertise. So they would bring something to his business. It really is not just the money.

VELSHI: What's the danger because you, clearly, in your parable describe that there is a danger? What's the -- what's the equivalent in your industry of getting stung by the scorpion?

ABBOUD: Right. The danger is that he will lose control, that he will have to compromise. And then they maybe come at odds with each other.

VELSHI (voice-over): Joseph gets to work on this final day of the turnaround. James takes us to the office where he coordinates his fabric orders.

J. JURNEY: You'll see there's a significant amount of, you know, color dots. You have green is good, red is bad. Red means cancelled. Green means confirmed.

ABBOUD: Well, to clarify this, are these for production or for sales?

J. JURNEY: Production.

VELSHI: In other words, even though James ordered all these fabrics from mills in Italy, he simply won't get some of them. It's a problem many designers face.

(on camera): How does that happen?

J. JURNEY: They'll pool orders across the world and you hope that that pooling, you don't end up crossing over with somebody that's down the street from you. So that's a risky thing.

VELSHI: So you're ordering, for argument sake, 50 meters of these.


VELSHI: Something like that.

ABBOUD: You get the right lingo but...

VELSHI: They're not going to make 50 meters for you. They've got to have...

J. JURNEY: They make about 60 or 80 depending on their mill rate.

VELSHI: So you've got to -- you're counting on the fact that enough people are -- not so many people are ordering this fabric that it's going to be available on every street corner but enough people are ordering this fabric so that they can actually make your order.

J. JURNEY: That's exactly right.

VELSHI: What percentage of your seasonal order ends up with red?

J. JURNEY: That's a pretty large percentage. I mean it looks like somewhere in the, hopefully, just under 20 percent. But we also -- you have to plan for that. It's almost like you overbook, right?

VELSHI: Right.

ABBOUD: But my formula was you always would order 125 percent of what you want to show. I had the same issue. Because ultimately, if you just order to what you think you'll need...

VELSHI: You'll be short.

ABBOUD: will ultimately -- there's always reasons that things fall out of your collection.

VELSHI (voice-over): We head to James' second retail location, the Groupe store, where today's fashion show is about to begin. Their Joseph introduces James to a surprise guest.

ABBOUD: Say hello to James. This is James.

JANE HALI, RETAIL AND TREND EXPERT: James, it's very nice to meet you, Jane Hali.

J. JURNEY: Hi, Jane. Hi. Nice to meet you. Thanks for coming.

HALI: Oh my pleasure.

ABBOUD: Jane is, I'd like to call, a retail expert.

HALI: And now, I'm doing trended editions too, so....

J. JURNEY: Right.

VELSHI: This professional trend spotter will be critiquing the presentation with Joseph. Even before the show starts, Jane spies something she likes.

HALI: Oh, I love this.

ABBOUD: Isn't this great?

HALI: This is terrific.

VELSHI: As the models prepare for the show, James takes a quick break from the action to explain some fundamentals about the clothing business.

(on camera): Tell me why I'm buying this for $1,650? What about this thing is $1,650?

J. JURNEY: Well, the construction on it -- it's mainly about the construction. This is all handmade garments without glue, so you can't actually lift this fabric off the front. Now, some people, they get used to that look and then they look at this and they see sort of puckering and they think this is bad. Well, this is actually the good sign because this means it's not glued.

VELSHI: So stylistically, what's different about this? What makes this a better suit or at least your suit?

J. JURNEY: All right. Well, mostly slim. It looks slim. It's not meant to be boxy or wide or drapey. It's meant to be fairly form- fitting. The high shoulder, his arm hole, fitted waist, which again you can't -- you can maybe see a little bit of the curve here.

VELSHI: So it gives you a little shape but it's close to your own shape.

J. JURNEY: Yes, exactly. Well, you have to see it on the body to see that -- how it's fitted in the waist.

VELSHI: Coming up, Joseph Abboud finally gets a chance to do just that. And wait until you get a load of one of the models.

ABBOUD: And who is the supermodel here?

VELSHI: Plus, James makes a major decision about his label's future. The final moments of this turnaround next.




VELSHI (voice-over): It's the final day of this turn around. Two days ago, Seize Sur Vingt designer James and Gwen Jurney met one of the fashion industry's top menswear designers, Joseph Abboud. After receiving some solid advice in licensing, wholesaling and distribution in this dog-eat-dog world of fashion, it's time for Seize Sur Vingt's final presentation to their mentor. James is putting on an impromptu fashion show for Joseph and trend forecaster Jane Hali.

J. JURNEY: It raised the anxiety a bit by having a third party.

ABBOUD: I'm looking forward to this fashion presentation to really see James' work. That's what this is all about, to see it on people, because clothes are all about movement. They're about being on bodies and I think it's a sense of confidence for James to see his clothes look really great.

VELSHI: One p.m., the fashion show begins.

J. JURNEY: I wonder how many shades I'm blushing just having to expose myself to this. I got over that anxiety pretty quickly when I realized it's just -- this is all just about having fun.

ABBOUD: But it certainly looks great to see your stuff put together. When I saw them all together with the knit shirt and the seersucker and the stripes, they became much more alive and much more animated. And he became more animated through it. And I think a little light bulb went off probably for him to say, you know what, I've got this great space. I can do fashion presentations and do it in a way that people will love to see my clothes.

J. JURNEY: This outfit is a striped polo again but it's one of a series that we did. And women's striped polos are great.

This is actually a men's line.

ABBOUD: It looks great on her.

HALI: Yes, it looks great. That's a very sexy jacket.

J. JURNEY: I know. We've...

HALI: The fur and the leather looks unbelievable here.

ABBOUD: And who is the super model here?

J. JURNEY: The supermodel Ali. He's got on one of the several (UNINTELLIGIBLE) shirts and he's got the jeans and he's got this new sneaker.

ABBOUD: It's interesting though how an outfit can be really simple about a shirt, the sneaker and the jean, and have a lot of style.


VELSHI: After the show, it's clear Seize Sur Vingt has a new fan.

HALI: I appreciate you inviting me. And I'll stay in touch and see what's happening. And I'll come down and shop.

J. JURNEY: Yes, and send friends.

VELSHI: And James breathes a sigh of relief. His presentation was a complete success.

ABBOUD: I saw a sense of real joy and excitement in seeing and talking about his clothes. And that's always turned me on about my clothes. So you know, I think in that sense, we've accomplished something (UNINTELLIGIBLE).

J. JURNEY: I think the best thing was seeing the Ali transformation. It's nice to see, you know, what some people might call a regular guy like Ali and his -- you know that transformation that does -- it changed his silhouette. He wore it well.

VELSHI: But this turn around isn't over yet. James wants to show Joseph that he took his lesson in licensing to heart. He's been motivated to act on something that's been simmering for years.

J. JURNEY: After we had talked yesterday about licensing, it actually got my mind going about a conversation I've been having for six years with one of my best neighbor's friends. He's a wonderful hat maker, Kelly Christy. And Gwen and I have been chatting for years about doing something together in a collaborative sense. And as you so wisely pointed out, that licensing seems to make a lot of sense. So I'm going to take you down there and just introduce her.

VELSHI: One forty-five, James and Joseph arrive at Kelly Christy's.

J. JURNEY: Hey, Kelly, this is Mr. Abboud.

ABBOUD: Hi, Kelly, Joseph Abboud.

CHRISTY: Very nice to meet you.

ABBOUD: Nice to meet you. How are you?

CHRISTY: I'm doing well, thank you.

VELSHI: Kelly opened up her hat boutique in 1996. In addition to creating her designs, she's also teamed up with many top designers. Now, James is about to propose she team up with Seize Sur Vingt.

J. JURNEY: She's a true specialist and we share a lot of customers. We -- you know we bring people to her and she brings people to us.

ABBOUD: Right.

J. JURNEY: So they're...

ABBOUD: Right.

J. JURNEY: ...people who can appreciate this kind of quality and creativity.

ABBOUD: It sounds like a great collaboration. I think it'll be a lot of fun.

CHRISTY: Oh, I've been very excited about it.

J. JURNEY: We've been talking for, what, six years, I guess?

CHRISTY: Yes, at least. So now it's time. VELSHI: A potentially profitable new partnership is born.

ABBOUD: So what are you sort of thinking about? What kind of collaboration are you thinking about?

J. JURNEY: To come up with a couple of looks that fit, you know, our different looks.

ABBOUD: Because of all of the different approaches to, you know, classic Seize Sur Vingt and then of course to Groupe. And you know you've got room to do with hats, and if they are edgier, to go with your beautiful tailored suits and your shirts.

J. JURNEY: What we're talking about with Kelly is not just something that would be just in the stores, it's also maybe to be able to leverage her distribution network with -- and maybe find additional customers for her in the wholesale business but also maybe open some doors for us...


J. JURNEY: Absolutely. Yes. And to also help broaden our collection so that a buyer of our collection might be, you know, with -- including the Kelly Christy part of -- Christy for Seize Sur Vingt idea into the collection, they feel like it's gotten a little more breadth.

ABBOUD: It's one more dimension, yes.

J. JURNEY: One more dimension to the collection.

ABBOUD: Yes, that's how collections grow over the years.

VELSHI: As this turnaround comes to an end, Joseph is proud of the road that James and Gwen have traveled.

(on camera): Your prognosis for James? What's his future look like?

ABBOUD: He's going to be very successful. He has great logic along with great curiosity. He seems to arrive at a problem and then starts to figure out how to deal with it. He gets there organically but he's a very smart guy and much different with a lot more experience than many designers.

J. JURNEY: I'm excited for this -- the short-term and long-term futures. I feel like it's going to take a lot of work and not an insignificant amount of money and so we need to make sure we can balance all that.

VELSHI: When this turnaround started, James Jurney was looking for a way to expand his small but successful design and retail business. So he spent the last three days with Joseph Abboud and they've had some serious discussions about financing, about licensing, about wholesaling, about distribution and about how to get his brand out to more people. Well, as we leave this turnaround from New York City, James Jurney seems to have decided on his next step.

I'm Ali Velshi. See you next time on THE TURNAROUND.



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