Blacks Retail Report

Luxury Apparel
October 2005

Table of Contents

The Big Picture
Completion & Cash Flow
Men's Fall Report
Womenswear
Brands To Watch
Blacks Bottom Line
TrendLines Expert Data

The Big Picture

While middle market retailers continue to get lashed by waves of bad news - in some cases, literally - our Better businesses are being buoyed by an almost ceaseless demand for luxury goods.

For clear proof of the health of the luxury market, one need only look to the high-ticket items on display during New York fashion week, where a $5,000 coat was considered one of the season’s must-haves.

Still, the macroeconomic environment remains cloudy as questions remain over the long-term effects of high energy prices and the damages wrought by hurricanes Katrina and Rita.

These concerns could have a considerable impact on middle market retailers, which are already facing the challenges of increased competition from discount chains. The discount players have been developing brand relationships with designers in an effort to drive traffic but they have ultimately downgraded the value of names that have previously been important differentiators for the middle market stores.

Completion & Cash Flow

One way for all retailers to increase cash flow right now is through prudent on-order management. We are fast approaching the Oct. 15 merchandise cancellation date and it's the perfect time to determine if there are going to be any late on-orders that can be discounted.

Demand discounts from your vendors if products aren’t on time or if a higher than expected balance of on-orders is still outstanding. After all, we are already firmly into the Fall/Winter delivery season and anything later than Oct. 15 is a margin opportunity.

Men's Fall Report

Speaking of Fall, the trends marked out earlier in the season - sport coats, woven items and loose constructed jackets - are now taking hold. Our merchants are also seeing an early burst of activity around sweaters.

The sweater category has been stagnating for a few years in part due to lackluster design and the strength of woven shirts. But consumers are now eager to refresh their wardrobes with up-to-date knitwear.

We are even seeing an uptake in sweater sales in warm weather areas. The sweater business should build solidly into the holiday season.

Womenswear

As we head into the holidays, womenswear is trending toward dresses in dark jeweled tones, with red flashing particularly hot. Sophisticated cocktail dresses are the order of the day in urban areas with a rich and cultured nightlife, such as New York, Chicago and Boston.

These dresses are showing in solids with silk, wool and knit fabrics, occasionally topped with fur trims. In women's casual we’re seeing printed feminine skirts with embellishments.

To accompany more casual wear, high-hitting constructed boots with flat heels are on the march. This look complements the military styling that has been coming out of London, New York and other fashion-forward markets. At the same time buyers should also look for boots with western inspirations.

Brands To Watch

As we continue to look beyond the current season, Blacks has its eye on a handful of hot brands, the foremost being France's Lanvin. Although not one of the traditional fashion juggernauts, Lanvin has stepped into the limelight, thanks largely to its feminine and sophisticated pieces.

Marni is also gaining admirers due to its classy feel and sexy silhouettes— a look that only the Italian designers can produce.

Blacks Bottom Line

Given that we are two-thirds of the way into the Fall receiving season, any outstanding order that is more than 10% outstanding is a margin opportunity.

TrendLines Expert Data - Menswear

All data represents 2005 year-over-year data

Clothing	August Sales	90 Day Sales	90 Day Avg. Inventory	90 Day Avg. Markdown
Suits	- 15.9%	- 9.4%	12.8%	- 12.1%
Sportscoats	- 5.5%	2.3%	18.5%	- 8.4 %
Blazers	8.3%	9.4%	- 30.2 %	-1.2%
Dress Pants	- 10.6%	0.9%	6.0%	0.1%
Custom Clothing	2.3%	0.8%	N/A	N/A

Furnishings	August Sales	90 Day Sales	90 Day Avg. Inventory	90 Day Avg. Markdown
Dress Shirts	- 1.5%	3.0%	- 16.7%	11.8%
Neckwear	4.1%	3.0%	12.3%	28.9%

Sportswear	August Sales	90 Day Sales	90 Day Avg. Inventory	90 Day Avg. Markdown
Sportshirts	0.1%	9.7%	23.4%	27.5%
Knits	- 0.2 %	1.1%	10.7%	- 11.7%
Sweaters	- 12.7%	- 19.3 %	- 3.7%	- 23.2 %
Casual Pants	- 14.3%	- 10.4%	- 0.9 %	12.5%
Jeans	- 1.5 %	42.3%	108.8%	- 14.9%
Outerwear	2.3%	- 9.9%	- 11.6%	- 25.1 %

Retail Report