Blacks Retail Report

Luxury Apparel
November 2007

Table of Contents

• The Big Picture
• Season's Greetings
• Looking Ahead
• Blacks Bottom Line

The Big Picture

U.S. consumer confidence continued to wane in November, leading economists to predict weaker sales this holiday season. The Conference Board’s consumer confidence index fell to its lowest level since Hurricane Katrina hit in 2005, due to high energy costs, the collapse of the housing market and the weak dollar.

While growth is expected to slow in the fourth quarter, economists are still optimistic about the resilience of the U.S. economy. They predict a resurgence of growth in the second half of next year.

Season's Greetings

The holiday shopping season is well underway and there’s no reason for retailers to expect anything less than moderate growth. Sales on Black Friday were stronger than anticipated and online sales on the Monday after Thanksgiving (dubbed Cyber Monday) came in at over $700 million.

Retailers are going ahead with their planned promotions and we’re seeing early sales of Outerwear and Clothing in menswear. Sport Coats have also come back to life and are pushing positive trends.

Suits, on the other hand, are experiencing a slowdown. Men are purchasing fewer suits with an emphasis on special occasions. A tell tale sign of this trend is the dip in furnishings. Men who only wear suits once in a while are less likely to invest in multiple furnishings.

The suit market is also being affected by the rising price of European merchandise due to the relative weakness of the U.S. dollar. Although consumers seemed undeterred by higher prices a few months ago, retailers are now reporting a slowdown in sales of key European brands.

This is especially true for European suits that had been selling in the $1,200 to $1,500 range. The same suits are now selling for $1,700 and consumers are unwilling to accept such a rapid price increase. While the suit business faces challenges, we continue to see growth in sportswear

Women’s wear is riding the same Dress and Skirt trend we’ve been seeing for the last few seasons. Coats have been a standout since the weather cooled and the need for a "Dress Coat" popped.  Boots have also exploded onto the scene. The shoe guys were right on the mark when they tied current boot presentations to the Dress boom.

Both men’s and women’s wear could use new trends to spark consumer enthusiasm. Fashion is the vehicle that drives market growth and designers have been slow to move forward with exciting new trends.

Looking Ahead

Most retailers have Christmas wrapped and Spring ‘08 is in the can; now it’s time to look toward Fall ‘08. Men’s wear buyers will soon be off to New York to view the new Collections. This will be their first opportunity to see how vendors are interpreting the trends.

Spring sales will probably get off to a slow start so we recommend that retailers flow merchandise as evenly as possible. An even flow will allow retailers to balance cash flow and add newness to their collections. This is the only chance you have to counteract the expected drop off in traffic.

Blacks Bottom Line