Blacks Retail Report

Luxury Apparel
December 2007

Table of Contents

• The Big Picture
• Blacks Holiday Survey
• New Year
• Blacks Bottom Line

The Big Picture

Consumer confidence nudged up slightly in December but concerns over the strength of the U.S. economy still remain. The subprime mortgage crisis is seen by some as just the tip of the iceberg, underneath which lies substantial liabilities from zero-interest loans and credit card debt.

The good news is that consumers are still spending and despite nationwide handwringing over Christmas sales, retailers reported decent gains.

Holiday sales tracked up 3.6% between Thanksgiving and Christmas, according to data by MasterCard. This fits with Blacks earlier prediction that holiday sales gains would be in the low single digits.

Blacks Holiday Survey

Blacks’s own survey of U.S. specialty apparel retailers showed that sales of menswear increased by 2.5% between Thanksgiving and Christmas while women’s wear slid 0.8% compared to last year.

Both men’s and women’s made their greatest gains in the week of Nov. 26 to Dec. 2, according to our survey. Sales of menswear surged 9.8% in the period while women’s wear grew by 15.1% over last year. Both categories fell by around 6% from Dec. 3 through Dec. 9, but menswear gained ground the following week, increasing by 7.8%, while women’s continued its slide, down by 8.2%.

Sales of women’s wear recovered slightly in the week before Christmas, growing 2.7%, while men’s saw a 6.8% gain.

New Year

The New Year means it’s time for buyers to go back to market. Menswear buyers are first up with shows in New York and Europe. Word out of Europe is that business is trending down. There is confusion in the vendor community over whether they should move sourcing of goods out of country and into Asia, and how that will affect the European economy. Buyers should expect a tumultuous atmosphere when they go to market.

There’s a general sense of ambivalence as we head into 2008 since consumers are keeping a close hold on their cash and there are no new trends persuading them to do otherwise. Blacks advice is to be prudent with your buying and hold back OTB dollars so you can catch in-season trends. You also want to hold back dollars to buy into margin opportunities later in the season, such as off-priced goods and fast-moving items.

We expect the first 60 days of the coming season to be challenging, with less demand than usual for markdown goods. When there’s no top-line growth it’s more important than ever to keep your eye on details such as your merchandise plan, in-season trends and sizing issues resulting from the slimmed down bodies that designers have been putting forward the last few seasons.

Blacks Bottom Line