Kids' Execs Rally Against Safety Law
Story from wwd.com

WASHINGTON — Children’s footwear companies struggling with stricter lead standards and new testing requirements are pushing for changes to a consumer product safety law.

Hundreds of executives, claiming they will be forced out of business because of the new rules, held a rally on Capitol Hill last Wednesday urging lawmakers to amend the law — the Consumer Product Safety Improvement Act — which was enacted last year.

“Our industry has seen companies go out of business as a result of this act,” said Kevin Burke, president and CEO of the American Apparel & Footwear Association, who spoke at the rally. “Our members are laying off people, and our industry has incurred severe financial losses.”

With the law, Congress aimed to improve product safety and strengthen the understaffed Consumer Product Safety Commission in the wake of a string of contaminated imports from China last year that created a public panic.

The legislation set up a broad range of new rules, including significant reductions in lead allowances in children’s footwear, apparel, jewelry and toys. It also increased the age level that defines children’s products to 12 years from 8 years and increased fines for violations to a maximum $15 million from $1.8 million. The penalty for individual violations, assessed per product, increased from $5,000 to $100,000.

Rep. Joe Barton (R., Texas) and 16 House Republicans introduced a bill last Tuesday to make changes to the CPSIA, including setting specific dates for products to meet the standards and allowing retailers to sell off inventory for one year after the manufacturing standards go into effect. It also creates regulatory flexibility in exemption authority and labeling authority for the consumer product commission and permits component part testing.

But Democratic leaders, who control the agendas in both the House and Senate, supported the bill last year, and any attempts to change it could be difficult.

For kids shoes manufacturers opposed to the new legislation, it’s not a dispute over the responsibility of companies to produce safe products for children, but rather a question of the necessity for such rigorous laws.

“I, of course, don’t question Congress’ intentions, but I do think there are mistakes in the legislation — that it’s not as appropriately crafted as it could be,” said Bernard Leifer, president and CEO of Hackensack, N.J.-based SG Footwear, which has sent numerous letters to local congressmen and senators to urge them to consider modifications to the legislation.

“It is a question of degree. In this case, Congress has been overzealous. The new safety rules are too strict.”

Leifer said he believes the legislation will have repercussions for the children’s footwear industry, particularly for smaller companies that can’t easily absorb the high cost of product testing. “Hopefully the protestors will be heard and Congress will start to see the light,” he said.

Collective Brands Inc., parent of Payless ShoeSource and Stride Rite Corp., is taking the legislation changes in stride. “We take children’s safety seriously and work closely with our suppliers to ensure our products are safe and [that they] comply with all applicable laws, including the new U.S. requirements,” said Matt Rubel, CEO of the Topeka, Kan.-based company.

According to Rubel, the company has for several years utilized an independent lab to test its products, so the more stringent legislation is not expected to have much of an impact on its manufacturing process.

“We had been monitoring the new initiative since 2007 and took proactive steps as early as last fall to train and inform our manufacturing partners and other agents,” he said.

Nike Claims Wal-Mart Copied Shoes

Nike Inc. is suing Wal-Mart Stores Inc., alleging the retailer is selling shoes that step too closely on the sports brand's own patented technology and design.

In the complaint, filed in a federal district court in Chicago this week, the sportswear giant accused the world's largest retailer of offering "shoes having designs that are covered by the Nike design patents." Nike named two patents related to its popular "Shox" brand, a cushioning system that uses small hollow columns to soften the impact of an athlete's stride. The Wal-Mart shoe used the name Detra a brand of Boys Shoes and Girls Shoes.

A Wal-Mart spokesman had no comment. A Nike spokesman declined to comment beyond the court filing.

In the complaint, Nike called Wal-Mart's actions "intentional and willful." The Beaverton, Ore. company provided the court with side-by-side comparisons of its own sketches for Shox and the Wal-Mart shoe.

Nike requested an injunction against Wal-Mart and "an award of damages adequate to compensate Nike for the patent infringement."

The clash between the manufacturer and retailer comes about a year after the two began to part ways. Nike, which is known for its high-end merchandise, experimented in the discount market with its subsidiary brand Starter, which was sold in Wal-Mart. In November 2007, it agreed to sell Starter to Iconix Brand Group Inc. Lately Nike has pursued a closer relationship with Target Corp., which sells its Converse One Star Brand.

Nike's complaint comes shortly after German rival Adidas AG prevailed against Collective Brands Inc., owner of the Payless discount chain, for a trademark suit involving look-alike shoes. In May, A federal jury in Oregon awarded Adidas $305 million. A judge later reduced the award to $65 million for kids shoes and childrens shoes.

Ethan Horwitz, who practices intellectual-property law at New York-based firm King & Spalding, said Nike's choice to pursue a patent claim rather than a trademark claim may bolster the Oregon company's case. While consumers would be unlikely to confuse the Wal-Mart shoes with Nike's branded footwear -- a trademark issue -- patent claims involve more clear-cut issues of research and development, he said.

Credit crunch: Americans Buy Less of Everything Except Kids Shoes

Despite reports that retail sales are suffering almost across the board recently due to the low consumer confidence, while the housing market remains in the doldrums sales of childrens shoes are pacing very strong. As the back to school shopping season winds down sales figures indicate that retail sales of kids shoes are very strong.

According to two key consumer surveys published last month sales of girls shoes and boys shoes were significantly higher than in past years. It appears that kids shoes sales are immune to the current economic situation. The US Retail Commission recently reported that retail sales fell in 2008 compared with the same period in 2007 however sales of children's shoes were above par.

"Record-low consumer confidence and increasing demands on household budgets meant shoppers looked for value and planned spending carefully to take advantage of the widespread promotions and discounts. Housing market weakness continued to hit big-ticket housewares yet consumers still bought new shoes, especially for the children in the household..," said staffers from the US Retail Commission.

It pointed to the rainy weather in August as not being able to keep consumers from shopping for back to school kids shoes. Americans are buying less of everything except kids shoes.

Despite reports that retail sales are suffering almost across the board recently due to the low consumer confidence, as the housing market remains in the doldrums sales of children's shoes are pacing very strong. As the back to school shopping season winds down sales figures indicate that retail sales of kids shoes are very strong.