Luxury Apparel - March 2008

Table of Contents

• The Big Picture
• Smooth Landing
• Changes & Challenges
• Blacks Bottom Line

The Big Picture

Negative economic news continued to rattle consumers this month, leading to slower spending. In fact, consumer confidence about the future has tumbled to its lowest level since 1973, according to a recent survey conducted by the Conference Board. Falling home prices and rising energy costs are the main culprits when it comes to consumer unease.

Retailers across the board are feeling the pinch, with mass market and specialty retailers bearing much of the burden.

Sales of both menswear and women’s wear fell 7% last month, according to Blacks exclusive trending data. In men’s, furnishings took the biggest hit, falling 12%. In women’s, accessories saw the largest drop with sales down 17%.

In general, women’s stores are being challenged more than men’s operations, and resort shops are faring well. We expect business to get better as we move into warmer weather, prompting shoppers to buy new spring goods.

Smooth Landing

In difficult times like these it’s more important than ever to land appropriate merchandise in season. For example, many of the mass market retailers who are suffering today have bright, lightweight spring merchandise in the front of their stores, even though their customers are still wearing sweaters.They landed these goods too early and placed them too prominently.

Apparel retailers who are doing relatively well right now are showing lightweight cashmere in spring colors and spring-weight jackets, such as the fashion trench. They have landed their goods very close to selling time, and as a result they seeing stronger sales. All retailers should adapt to this "Buy Now, Wear Now" trend.

Try to determine what you will need over the next several months and save money to buy in season. You should also look for margin opportunities by asking for discounts on late arrivals. Cancel orders if merchandise does not fit with current buying patterns.

Changes & Challenges

This is undoubtedly a challenging time for retailers but it is also an opportunity to really reexamine the strengths and weaknesses of your business and make adjustments. Take a look not only at your sales but also at your gross profit by using what we at Blacks call The Acid Test. The Acid Test allows you to see the relationship between what you buy and what you sell to make sure that you are staying in-line with profit goals. We encourage you to use this tool to do an analysis of your business, and if you have questions, give us a call.

Blacks Bottom Line