Blacks Retail Report

Luxury Apparel
September 2005

Table of Contents

The Big Picture
Fast Into Fall
Spring Forward
Top Dogs
Womenswear
Denim Dilemma
Blacks Bottom Line
TrendLines Expert Data

The Big Picture

'Wait and see' seems to be the attitude among economists these days as the U.S. continues to grapple with soaring energy prices and the fallout caused by Hurricane Katrina.

But despite these economic double-whammies, many consumers still appear willing to spend, even beyond their savings rate.

Third-quarter growth forecasts have been curbed in the wake of Katrina but still hover around 4 percent. The luxury market continues to thrive, buoyed by the wealthy and apparel addicts.

For retailers, the mix of economic ambivalence and persistent consumer demand could make for a choppy Fall market.

Fast Into Fall

To make the most of their Fall purchasing decisions retailers should make contact with their customers early on in the season. They need to execute on their marketing plans with events such as trunk shows and in-store promotions.

An early turn into colder weather could help jumpstart the season, but as always weather is an unpredictable factor.

Fortunately, Blacks has identified two Fall factors that are likely to aid retailers with early sales. The first is on-time delivery of merchandise, which is being reported by many of our merchants. The second is the late arrival of Yom Kippur and Rosh Hashanah, which could boost cool weather sales.

Spring Forward

Early indicators for Spring show a heavy focus on bottoms, especially in the men's category of Dressy Casual.

Blacks is seeing a proliferation of cotton and linen blends with a dominant washed out trend, which is being carried from denim to dressy.

Top Dogs

Although we detected the rumble of a knit top trend earlier in the season, vendors did not deliver for Spring. Instead, there continues to be an emphasis on sportshirts and woven merchandise. But Buyers Beware: Pick these items very carefully because this trend has been going on for over two years. To justify new sport and woven shirt purchases the pieces must be special.

Womenswear

For Fall, high-end womenswear is moving away from patterns on patterns - the Boho look - and into clean, monotone pieces. There has been a movement into deep tones and dark browns but Spring will bring back an assortment of colors. And like Men's, these garments will be washed out and subdued due to the fabric treatment.

Denim Dilemma

There is some speculation that the denim bubble could burst. Denim runs in cycles and there is a point where vendors cannot take the trend much further. There is a lot of competition and we could see a price break. But even if we move away from denim, there's still an emphasis on the 5-pocket body in other fabrics such as cotton, linen and silk blends.

Merchants should continue to keep their eye on the leading vendors, such as the Louis Vuitton group and Gucci, to see where the trends take them.

Here at Blacks we are also interested in watching the development of Lacoste. The alligator appears to have snatched a strategy from Burberry's playbook to go from a specialty vendor to developing a full ready-to-wear collection. So far, it looks as though they will be able to pull it off as long as management stays on track.

Blacks Bottom Line

Retailers can take control and push up Fall margins through prudent on-order management.

TrendLines Expert Data - Menswear

All data represents 2005 year-over-year data

Clothing	July Sales	90 Day Sales	90 Day Avg. Inventory	90 Day Avg. Markdown
Suits	- 8.9%	- 2.0%	7.9%	- 11.1%
Sportscoats	- 8.6%	6.5%	10.4%	12.6%
Blazers	- 15.8%	4.9%	- 25.9 %	16.6%
Dress Pants	7.6%	1.4%	2.8%	10.4%
Custom Clothing	62.1%	0.8%	N/A	N/A

Furnishings	July Sales	90 Day Sales	90 Day Avg. Inventory	90 Day Avg. Markdown
Dress Shirts	4.2%	4.6%	- 16.9%	19.7%
Neckwear	- 7.0 %	4.8%	10.4%	28.3%

Sportswear	July Sales	90 Day Sales	90 Day Avg. Inventory	90 Day Avg. Markdown
Sportshirts	16.5%	9.4%	25.9%	31.9%
Knits	- 7.9 %	- 3.5%	11.3%	FLAT
Sweaters	- 35.8%	2.8%	- 7.5%	- 6.1 %
Casual Pants	- 13.6%	-4.2%	3.6%	21.7%
Jeans	27.7%	56.1%	49.6%	- 18.0%
Outerwear	- 17.2%	- 1.6%	- 22.8%	5.4%

Retail Report