Luxury Apparel - April 2008
open in pdf format
Table of Contents
The Big Picture
 After a disappointing March, retailers retook some ground in April, thanks to a pickup in spring merchandise. While we saw modest month-on-month improvements, we’re still expecting a challenging retail environment throughout the remainder of this year as oil prices and the collapsed housing market continue to shake the U.S economy.
Consumer confidence fell to its lowest level since 1982 in April and a survey of business leaders predicted that the economy would worsen over the next six months.
That said, the luxury market continues to thrive. Big name luxe brand such as Louis Vuitton, Prada and Armani all reported strong gains for the first quarter of the year while independent, high-end retailers held their ground.
April Trends
Sales of menswear dropped 11% in April while women’s wear performed somewhat bettter, showing a 5% dip over last year, according to Blacks exclusive trending data. Warmer weather prompted demand for spring items such as short-sleeve knits, dresses, skirts and shorts. Women's novelty jackets are in strong demand, and we're seeing a trend toward brightly colored shoes in tones of red and yellow.
In men's, the biggest gains were in Sportswear, although the Suit business also fared well.
Other than seeking spring/summer goods, some merchants are reporting that customers are already inquiring about new fall outerwear. Early indications point to increased sales of traditional outerwear this fall now that most men have filled their wardrobe with soft jackets.
Summer Slowdown
Over the past few summers we’ve seen strong early sales of fall-weight goods but this year we predict that those sales will be pushed later into the season. It’s unlikely that consumers will want to splash out on high-priced specialty merchandise early in the season. In the current climate, consumers are geared more toward the Buy Now, Wear Now cycle.
Blacks predicts small sales decreases over the next few months, with slightly deeper decreases in June when the stores are conducting their summer sales. However, we expect an upturn as we head into fall and toward the holiday season.
During these challenging times, merchants need to have a clear understanding of their working capital. You need to make sure that purchases are in-line with sales so that you can increase your gross profit to make up for losses in volume and expenses.
Blacks Bottom Line
Spend extra time analyzing your balance sheet to get a clear understanding of your working capital. |
