Blacks Retail Report

Luxury Apparel
March 2006

Table of Contents

The Big Picture
March Merchandise
The New Fall
Keeping Open (To Buy)
Blacks Bottom Line
TrendLines Expert Data

The Big Picture

After a bumpy 2005 the U.S. economy appears to be back on track, with economists predicting growth of 4.5% for the first quarter of 2006. This represents a significant upswing from the 1.6% rate recorded for the fourth quarter of last year.

In other good news, retail sales surged 2.3% in January, thanks in part to unseasonably warm weather, which prompted consumers to go out and shop. February was not as strong as a lack of compelling spring merchandise and a blizzard in the northeast put a chill on sales.

While 2006 growth is expected to be solid, analysts predict that the economy will expand at a slower rate than last year. The Fed has pledged to take continued actions to stave off inflation with the hope of spurring further growth.

March Merchandise

March means the men's stores have already returned from the fall market, and the women's stores are just wrapping up. Feedback from merchants so far is that although the fall collections look strong, there is nothing really exciting to bring back to the floor. Still, retailers are feeling enthusiastic about the overall business climate, which looks a bit brighter than it was in the second half of last year.

In the men's market, vendors are continuing to rehash old trends - such as soft jackets and sport shirts - and we aren't seeing any big breakout items. The colorations continue to get darker, especially in dressier clothes.

Men's dressing in general has moved toward extremes - either casual and blue (denim), or black and formal. The casual trend is more prominent on the West Coast and in warm weather areas, where seasonal wardrobes are generally unnecessary.

The New Fall

In warm weather climates in particular spring "is the new fall." Consumers are prone to throw jackets over lighter-weight clothing or wear tights under spring dresses instead of buying a fall wardrobe. We are even seeing this trend move into colder climates.

What is driving the current women's market is accessories. Cowboy boots and oversized bags remain popular, although these trends have already come and gone in hip European markets.

The accessories craze appears to be part of a movement toward lifestyle-driven trends rather than apparel-driven buying. In this case, the boots and bags aim to say something about the habits of the wearer.

Keeping Open (To Buy)

While we always have to keep one eye on fashion, we need to keep the other eye focused on our merchandising strategy. This month watch the merchandise that landed from Dec. 1 to Jan. 30th and try to identify potential markdowns. Your strategy may be to take markdowns now or wait until later in season. Either way, be prepared and remember: "the early markdown is the cheapest."

It's also important to evaluate how much in season open-to-buy you have for the balance of spring. In-season OTB is crucial for increasing your margins since it allows you to buy off-priced goods. It also gives you room to buy fast-turning items with a high sell-through rate.

While retailers are often swept up in the bustle and excitement of the fall buying season, you cannot afford to take your eye off the ball. As always, set aside some time to strategize.

Blacks Bottom Line

Determine your in-season OTB now, or risk losing margins.

TrendLines Expert Data - Menswear

All data represents 2005 year-over-year data

Clothing	Dec. Sales	90 Day Sales	90 Day Avg. Inventory	90 Day Avg. Markdown
Suits	- 8.7%	- 13.8%	8.5%	- 6.9 %
Sportscoats	- 0.1%	- 1.9%	9.8%	11.7%
Blazers	50.3%	18.2%	- 2.7%	17.3%
Dress Pants	10.2%	5.8%	16.6%	61.7%
Custom Clothing	49.7%	68.8%	N/A	N/A

Furnishings	Dec. Sales	90 Day Sales	90 Day Avg. Inventory	90 Day Avg. Markdown
Dress Shirts	1.6%	4.8%	- 6.1%	- 2.1%
Neckwear	- 2.4%	- 10.0%	18.5%	23.7%

Sportswear	Dec. Sales	90 Day Sales	90 Day Avg. Inventory	90 Day Avg. Markdown
Sportshirts	- 8.3%	- 11.6 %	4.7%	- 8.2%
Knits	- 21.8%	- 16.8%	- 8.8%	- 24.1%
Sweaters	- 2.4 %	11.8%	5.4%	11.1%
Casual Pants	- 8.6%	- 18.3%	- 6.5%	- 10.0%
Jeans	123.4%	148.5%	134.1%	316.6%
Outerwear	0.4%	- 0.9%	- 2.4%	24.0%

Retail Report