Radio

Channelingsuccess, 104.3MyFM wentfrom 11th to 1stplace. PAGE 10

News &Analysis

Retail

Eric Schiffer’sidea for a 99Cents store onRodeo Drive isdeeply discount-ed. PAGE 14

M A I L T O :

Volume 34, Number 42 October 15 - 21, 2012 • $5.00T H E C O M M U N I T Y O F B U S I N E S S TM

Philip Anschutzis pulling out ofL.A., but he’sputting in vin-tage rail cars.PAGE 5

In Stitches By JOEL RUSSELL Staff Reporter

One of the premium denim pioneers, TrueReligion Apparel Inc., says there might be atrue believer out there who would buy it for apremium price.

The Vernon-based jeans maker announcedlast week that its board had formed a specialcommittee to explore strategic options, includ-ing a sale of the company. The move came inresponse to inquiries from potential buyers.

Analysts estimate True Religion could sellfor about $650 million to $930 million.

Shares of the company quickly spiked Oct.10 to close at $25.71, a gain of 24 percent for

By JAMES RUFUS KOREN Staff Reporter

IF you want a leather interior in your new car butdon’t want to pay for the whole luxury packagethat includes a sunroof and fancy stereo, car

dealers have you covered: They’ll take your newride to a restyler, who will tear out the fabric on theseats and sew on new leather upholstery.

For years, that’s been Katzkin Leather Inc.’s corebusiness. The Montebello company makes leatherupholstery kits used by installers to upgrade new cars.

But with new-car sales still slower than before the

recession, Katzkin is trying a fresh approach – target-ing the used-car market. And it’s doing it in a big way.

This year, the company completed the rollout ofa partnership with Richmond, Va.-based CarMaxInc., the nation’s largest used-car retailer. CarMaxhas 110 car lots across the country, all of whichnow feature a Katzkin display promoting upgradesto leather seats.

“For us, the CarMax opportunity was reallyimportant,” said Brooks Mayberry, Katzkin’s

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Please see AUTOMOTIVE Page 37Please see APPAREL Page 39

Who’ll PocketJeans Maker?

Balance ShiftIn Debit Cards

Leather upholsterer hopes to sew up used-car market

APPAREL: True Religion forms panel to consider sale.

By ALFRED LEE Staff Reporter

With a Bluebird taking flight, enthusiasmfor Green Dot Corp. is plummeting to Earth.

The Monrovia company’s days as the leaderin the prepaid debit card space could be comingto an end as Wal-Mart Stores Inc. launches acompeting card this week from financial giantAmerican Express Co., called Bluebird.

Green Dot will continue to sell prepaid cardsthrough its own partnership with Wal-Mart, butlast week’s announcement was seen as a hugeblow. More than 60 percent of the company’srevenue come from cards sold at Wal-Mart.

To make matters worse, American Express

FINANCING: Green Dot faceschallenge from AmEx product.

Please see FINANCING Page 38Hide in Plain Sight: Fromleft, David Giddings andDave O’Connell at Katzkin Leatherin Montebello.

By TOM DOTAN Staff Reporter

When FarmVille exploded in popularity a fewyears back, everyone and their mother started playingsocial games. Especially the mothers.

In fact, most social gamers are adult women, mak-ing it one of the only sectors of the gaming worldwhere young men are just a niche market.

But Scott Philp thinks he knows how to break intothat niche: sports.

The computer gaming executive has launchedWedge Buster Inc., which makes interactive sports-themed social games for Facebook. The L.A. company,

which counts pro quarterback Drew Brees and skate-boarder Rob Dyrdek among its investors, already offersabout 100 games, from air hockey to darts.

“If you walk into a Best Buy, sports dominates thevideo game shelves, but in social gaming it had beennonexistent,” the 37-year-old Philp said. “Right now,that sports category in social gaming is so new. Guysare just starting to dip their toes in.”

Social games, which typically refer to gameswhere players interact through Facebook, havebecome popular in the past few years. Though manygames have stumbled recently, Philp believes the mar-ket still has potential, in part because historically therehave been few social games catering to males.

Since Wedge Buster’s games went live last year,

Video Game Developer Makes Play for Men on Facebook

Please see ONLINE Page 38

ONLINE: Wedge Buster turns tosports titles to grow social market.

Teamed Up: Scott Philp at his L.A.-area home.RINGO H.W. CHIU/LABJ

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OCTOBER 15, 2012 LOS ANGELES BUSINESS JOURNAL 37

chief executive. “So much of our business isfocused on new vehicles, but this was a greatopportunity to tap into the preowned market.”

Katzkin is also trying to become a morerecognizable brand. Executives said that theyhope to turn the company, now known mostlyby auto dealers and detail shops, into a con-sumer brand name.

Last year, the company brought in a newdesign team and, more significantly, the pre-vious year it started sewing small, visibleKatzkin tags onto its products. It’s a strategyexecutives hope will boost sales by gettingconsumers to request its products by name.That could protect the company from down-turns in the new-car market by making it lessreliant on business referred from dealerships.

“The dream is for consumers to realize ifyou want leather, you can have any car on thelot,” Mayberry said. “Nobody knows that.”

But the plan isn’t a sure thing. Industryanalysts say after-market sales for leatherupholstery aren’t necessarily suited to a used-car lot, where many cars with leather aren’tmuch more expensive than those without.

Richard Arca, a senior manager at vehi-cle information company Edmunds.com inSanta Monica, said consumers generally caremuch more about quality and price than thelabel on a car accessory. In the case of uphol-stery, Arca noted that Katzkin’s new brandingstrategy – especially its tags – could even hurtbecause customers might want their seatmaterial to look like factory leather.

“I don’t believe a majority of customerscare who makes their interior leather,” hesaid. “And I think most customers would pre-fer to not have a branded interior that displaysthe brand to passengers.”

Low-cost leatherKatzkin has been making leather uphol-

stery for cars since 1986 and has patterns forabout 3,000 vehicle models dating to thatyear. At its plant in Montebello and a contractmanufacturer in Malaysia, automatedmachines cut patterns out of leather andworkers sew pieces into almost fully assem-bled interiors.

These aren’t seat covers: Katzkin’s leatherupholstery is sold to independent autorestylers who remove a vehicle’s existingupholstery and replace it with one of the com-pany’s tailor-made kits.

An average Katzkin interior retails forabout $2,000. That’s not cheap, but it’s oftenless expensive than purchasing a factoryleather trim package, which most often comesonly on models with souped-up engines,deluxe electronics and other goodies.

For instance, Ford Motor Co. offersleather seats in its compact Focus sedan, butonly on the midrange and deluxe models,meaning buyers have to pay about $5,000above the basic model price to get leatherseats. That’s the value proposition at the heartof Katzkin’s business.

“You might not want a sunroof, or youdon’t want to spend the extra $5,000,”Mayberry said. “So the dealer can say, ‘Noproblem, you can still have leather seats.’”

About three-quarters of Katzkin’s productsare for new cars sold through dealerships.That meant a decline in business as new-carsales plunged by about 35 percent, from 16.2million in 2007 to 10.6 million in 2009.

Mayberry said Katzkin’s sales also

slipped, though not as sharply. He declined toprovide revenue for the private company. Thecompany now has 462 employees at theMontebello plant.

He said that sales have since picked up,but executives now hope the CarMax deal andrelationships the company is developing withother new- and used-car dealerships will helpboost Katzkin’s sales in the used-car market.

CarMax declined to comment for this article.Americans buy more than twice as many

used cars as new ones each year, according tofigures from the federal Bureau ofTransportation Statistics. In 2010, used-carsales totaled 36.7 million, compared with

new-car sales of 11.6 million.“Right now, we have a tiny fraction of that,

but the upside is immense,” said DavidGiddings, Katzkin’s vice president of marketing.

He said the CarMax partnership was stillin the launch phase so he could not commenton sales.

Name brandCarMax is the nation’s largest used-car

retailer, but it sold only 408,000 used cars lastyear, a small fraction of the total market.Used-car sales are more spread out than new-vehicle sales, with sales coming from new-cardealers, small car lots and person-to-person

arrangements.But Giddings said the CarMax deal also

plays into Katzkin’s larger goal of making itsbrand better known. For most of the compa-ny’s history, drivers sitting on Katzkin uphol-stery likely had no idea who made it. Becausethe company sells to restylers who work withdealers, consumers are usually several stepsremoved from the company. Until 2010,Katzkin seats didn’t come with a tag or anysign of a brand name.

What’s more, unless shopping at a new-cardealership, many car buyers might not know theycan get leather upholstery installed, said DaveEdmondson of Roadwire Leather Interiors, aKatzkin competitor in Santa Fe Springs.

“In the consumer world, it’s basicallyunheard of,” he said. “It’s difficult for us toget out into the mainstream.”

But having Katzkin-branded informationkiosks in 110 CarMax locations will put thecompany name in front of used-car shoppers.

Meanwhile, Katzkin brought in a newdesign team with the goal of making its seat-work more distinctive.

“Design makes companies stand out,” saidDave O’Connell, chief designer. “We wantpeople to say, ‘Put a Katzkin interior in it.’”

Chrysler Group LLC is installingKatzkin-branded interiors in some limited-edition vehicles, such as a Mopar-editionDodge Charger. Mayberry said that showsthat the brand strategy is already a comfort-able fit.

“Chrysler is interested in informing itscustomers that it’s installing Katzkin interi-ors,” he said. “We feel our product lives up to(manufacturer) standards of quality and per-formance, and we want people to be aware ofour product and our brand.”

Automotive: UpholstererLooks to Cover Used Cars

Sowing Sales: Brooks Mayberry, Katzkin chief executive, at the auto upholsterer’s headquarters in Montebello. PHOTOS BY RINGO H.W. CHIU/LABJ

Continued from page 1

Getting on Roll: From left, Katzkin’s Dave O’Connell and David Giddings.

‘The dream is for consumers to realize ifyou want leather, you can have any caron the lot. Nobody knows that.’BROOKS MAYBERRY, Katzkin Leather Inc.

‘In the consumer world, it’s basicallyunheard of. It’s difficult for us to getout into the mainstream.’DAVE EDMONDSON, Roadwire Leather Interiors

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