Apparel and Footwear

Industry Surveys
Apparel & Footwear: Retailers & Brands

Jason Asaeda, Apparel & Footwear Equity Analyst
MAY 2013
Current Environment ............................................................................................ 1

Industry Profile ...................................................................................................... 8
Industry Trends ................................................................................................... 10
How the Industry Operates ............................................................................... 17
Key Industry Ratios and Statistics ................................................................... 24
How to Analyze an Apparel Company............................................................. 26
Glossary ................................................................................................................ 33
Industry References ........................................................................................... 35
CONTACTS:
Comparative Company Analysis ...................................................................... 37
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CURRENT ENVIRONMENT
Ongoing macroeconomic headwinds warrant a cautious retail sales outlook
Sales for the 2012 holiday season were basically flat, as the National Retail Federation (NRF), a trade
group, reported that such sales increased 3.0% from the prior-year period. For full-year 2012, the US
Census Bureau reported that total retail sales (excluding motor vehicles and parts) rose 4.6%. While this is a
solid number, it represents the slowest rate of growth since 2009, when retail sales declined 4.9%.
S&P Capital IQ expects retail sales growth to moderate in 2013 as the consumer remains under pressure.
Our main concern centers around the loss of about $1,000 in pay by the average worker over the course of
2013 resulting from the termination of the payroll tax holiday (in effect in 2011 and 2012), during which
time the FICA tax rate was lowered to 4.2% from 6.2%. We think the initial sticker shock of lower takehome pay will lead to weaker sales in the first half of this year, with consumers gradually becoming more
accustomed to the situation as 2013 progresses. With household net worth still impaired following the
recession, we believe consumers will resist dipping into savings to relieve some of the payroll tax pressure.
Another risk is rising gasoline prices, which could lead to fewer trips to the mall, particularly among lowand lower-middle income consumers. Although the US Energy Information Administration (EIA), a
government agency that collects and disseminates energy data and statistics, was projecting, as of May
2013, a 3.6% decline in average gasoline prices for this year, consumers could end up paying more at the
pump if oil prices rise in expectation of stronger global economic growth.
However, its not all bad news for retail spending in 2013. First, we think that the employment situation
will continue to improve, giving more consumers money to spend. In addition, low interest rates have
allowed many homeowners to refinance their homes. While nominal wage growth has remained poor over
the past several years, a tightening labor market should pressure wages upward. This combination of factors
should lead to higher retail sales for the year. Below are a few of our predictions for 2013.
We are projecting retail sales to grow 3%4% in 2013. Our expectation is that sales will begin the year
very soft and then improve gradually as the year progresses. Working on limited budgets, consumers
will be highly value-conscious yet again this year, with sales fueled around holidays garnering a greater
and greater share of total retail sales for the year.
Online retail sales will notch a fourth straight year of double-digit growth, outpacing overall retail sales.
In 2012, online retail sales increased 11.6%, year over year, according to the Census Bureau. This trend
will be boosted by mobile commerce (m-commerce), driven by the increasing proliferation of
smartphones. We also expect free shipping offers, online-exclusive promotions, and product offerings to
support sales growth.
Although apparel is a relatively low-cost category, we expect consumers on limited budgets to invest
more in accessories and footwear, which offer more bang for the buck. Apparel retailers also face
tough comparisons in the first half of 2013 as they benefited last year from the early arrival of spring
weather and a new color trend in fashion. The Census Bureau reported a 5.5% sales gain for clothing
and clothing accessories stores in 2012.
Ongoing rationalization of store locations by US retailers will support further market penetration by
international competitors.
Specialty apparel retailers that use customer feedback from social media sites as a tool to improve their
products and services will gain a competitive edge. This will be particularly true for teen retailers
moving away from a key-item merchandising strategy to offering head-to-toe looks.
We expect another good year for off-price retailers, given their attractive value pricing, frequent in-flow
of new merchandise, and their ability to move in and out of product categories quickly based on
INDUSTRY SURVEYS
APPAREL & FOOTWEAR: RETAILERS & BRANDS / MAY 2013
customer demand. We see the continued expansion of Ross Stores Inc. and The TJX Companies Inc.
into new markets putting pressure on value competitors in the off-mall channel.
Specialty apparel retailers will focus their expansion on outlet centers in order to reach cost-conscious
consumers who might otherwise not shop their brands and to raise brand awareness among
international shoppers.
Retailers with strong balance sheets and those differentiated by product and brand positioning will be
best positioned to capture market share and expand internationally.
COMPANIES FOCUS ON GROWTH OPPORTUNITIES

Companies are now looking at rationalizing their brand portfolios with a view toward concentrating on
their key brands. They are also pursuing growth through international expansion, which has gained ground
after recent signs of slowness in the American and European markets. Further, the direct-to-consumer
channel, including online retailing, is also growing in popularity with modern-day consumers, from which
retailers are hoping to reap high margin returns.
Companies streamline their business
Both apparel and footwear companies are streamlining to deal with the consolidation and merchandising
shifts in department stores, with many focusing on their best-performing brands and divesting others.
Liz Claiborne Inc. went on a brand-selling spree in 2011. In October, the company sold its jewelry brand,
Dana Buchman, to Kohls and its Kensie portfolio of brands to Bluestar Alliance. In November, the
company sold its Mexx business to a joint venture in exchange for 18.75% of the common equity and $85
million in cash. The Gores Group owns the remaining interest. Also in November, the company sold its Liz
Claiborne and Monet brands to J.C. Penney Co. Inc. for $288 million. The company also agreed to
terminate its license for the DKNY Jeans and DKNY Active brands with Donna Karan International as of
year-end 2011 (i.e., one year ahead of the scheduled termination). The company is now focusing on three
global lifestyle brandsJuicy Couture, Kate Spade, and Lucky Brandwhere the growth and margin
opportunities are higher. To reflect its sale of the Liz Claiborne brand and its new strategic direction, the
company changed its name to Fifth & Pacific Cos. Inc. on May 15, 2012.
On May 31, 2012, Nike Inc. announced its plans to sell its Cole Haan and Umbro brands to rationalize its
portfolio and focus on its four core brands (Nike, Converse, Jordan, and Hurley). Nike acquired Cole
RETAIL APPAREL STORE PERFORMANCE*
- - SAME- STORE SALES - - - - - - - - - - NUMBER OF STORES - - - - - - - - - - - - - - - - - - - SQUARE FOOTAGE - - - - - - - - - - (YR- TO- YR % CHANGE)
2011
2012
S P ECIALTY AP P AREL RETAILERS
Abercrombie & Fitch

Aeropostale Inc.
Amer. Eagle Outfitters
Ann Inc.
Bebe Stores*
Buckle
Chicos FAS
Gap Inc.
L Brands
Urban Outfitters
7.0
3.0
(1.0)
10.7
0.4
1.2
6.3
1.0
9.0
4.0
5.0
(8.0)
4.0
6.8
5.3
8.4
8.2
(4.0)
10.0
(3.8)
2013
- - CHANGE - 201120122011
2012
2013
2012
2013
1
57
0
11
105
(210)
(514)
57
6
27
(46)
31
0
9
101
59
(65)
47
TABLE B05: RETAIL

APPAREL
(1.0) 1,069
1,045 STORE
1,051
(24)
PERFORMANCE
(2.0) 1,022
1,057 1,084
35
9.0
3.3
(7.5)
2.1
7.2
5.0
6.0
(0.6)
1,089
896
252
420
1,151
3,246
3,455
372
1,090
953
252
431
1,256
3,036
2,941
429
1,044
984
252
440
1,357
3,095
2,876
476
- - - MIL. SQ. FEET - - - - - % CHANGE - 201120122011
7.8
3.7
6.3
5.3
1.0
2.1
2.8
38.2
10.9
2.8
2012
7.8
3.9
6.3
5.6
1.0
2.2
3.0
37.2
10.9
3.3
2013
8.0
4.0
6.0
5.7
1.0
2.2
3.3
36.9
10.8
3.3
2012
2013
(0.3)
6.8
0.0
5.7
(0.2)
2.7
8.7
(2.6)
0.4
15.3
2.3
2.3
(4.2)
1.8
(0.8)
2.4
8.1
(0.8)
(0.8)
2.5
O FF- P RICE RETAILERS
Ross Stores
5.0
7.0
6.0 1,055 1,125 1,199
70
74
24.8
26.4
27.8
6.5
5.3
The TJX Cos.
4.0
4.0
7.0 2,859 2,905 3,050
46
145
66.0
67.2
70.0
1.7
4.2
*Data for all stores is for fiscal years ended in January, except Bebe Stores, w hich has a June fiscal year-end. 2013 data for
BeBe Stores are estimated. Excludes online sales.
Sources: Company reports; S&P Capital IQ estimates.
INDUSTRY SURVEYS
Haan, the dress-shoe brand, in 1988 and Umbro, the British soccer brand, in 2008. The two brands jointly
contributed 3.3% to Nikes total revenues of $24.1 billion in the fiscal year ended May 2012. However, the
combined pretax losses recorded by the brands in fiscal 2012 stood at $43 million, up from losses of $18
million in fiscal 2011. In December 2012, Nike completed the sale of Umbro to Iconix Brand Group for
$225 million in cash and, in February 2013, it sold Cole Haan to Apax Partners for $570 million.
In August 2012, American Eagle Outfitters sold its loss-making division, 77kids, to Ezrani 2 Corp. for an
undisclosed sum. The sale included 77kids store assets, inventory, online business, and a temporary license
to use the name 77kids until January 15, 2013. In the fiscal year ended January 2012, 77kids recorded
losses of $24 million on sales of $40 million. American Eagle said it would record losses of $35 million on
the division in the second and third quarters of fiscal 2013. The retailer now wants to focus on the
businesses that have the potential to generate maximum returns.
In March 2013, The Mens Wearhouse Inc. announced that it would work with Jefferies & Co., a global
private equity firm, to evaluate alternative strategies for its K&G operations. Same-store sales fell 4.3% at
K&G in the fiscal year ended January 2013 as its lower-income customers, whose spending remains
constrained, did not respond as well as the company had expected to planned promotions and a new
marketing campaign. We believe a sale of K&G would enable the company to focus on growing its core
Mens Wearhouse and Moores chains.
According to a Wall Street Journal article dated April 14, 2013, Barington Capital, an activist hedge fund
that holds 2% of The Jones Group Inc.s stock, was pushing the company to undertake cost-cutting
measures and to hire financial advisers to reduce its 35-brand portfolio and concentrate on its core and
emerging brands. On April 24, Jones Group announced that it would take actions to curtail costs and
enhance its profitability by improving margins in the retail and wholesale channels. As part of the plan, the
company will close 170 underperforming domestic retail stores by mid-2014. It also would reduce its total
headcount by 8%, comprising a reduction of 18% in domestic retail staff and 2% in corporate, support,
and supply chain staff. The company plans to streamline its structure by consolidating the production,
design, and selling divisions, and by integrating its distribution and supply chain facilities. It also plans to
increase the proportion of outlet stores in its overall retail portfolio. By taking these measures, Jones Group
expects to achieve expense savings of around $11 million in 2013 and about $40 million by mid-2014.
Companies invest in online and outlet channels
Both apparel brands and retailers are increasing their investments in the online and outlet channels, which
provide attractive growth and margins. The use of e-commerce is particularly gaining popularity and acts as
a convenient medium for retailers to reach out to customers on a global level. According to an April 2013
report by eMarketer, a provider of research on digital media and marketing, the apparel and accessories
category is emerging as the fastest growing category in the US retail e-commerce sector. According to the
report, online sales for the category grew over 21% to $45.6 billion in 2012 from $37.6 billion in 2011,
and are projected to grow another 19% in 2013.
Due to the growing popularity and success of online shopping, TJX Companies intends to launch an ecommerce website for its T.J. Maxx brand in fiscal 2014 (ending January 2014). According to S&P Capital
IQ, the company has an opportunity to leverage e-commerce to reach new customers and to expand its
product offering beyond what it currently sells in its stores (thus, online sales would complement rather
than hurt brick-and-mortar sales). Since fiscal 2011, TJX has been testing off-price e-commerce with its
T.K. Maxx brand in the UK. In fiscal 2013, the company began development of a US e-commerce platform.
In December 2012, it acquired Sierra Trading Post, a privately held off-price Internet retailer of apparel and
home fashions, for $200 million in cash. Sierra had over $200 million in annual revenues from its online
operation and four outlet stores in Idaho, Nevada, and Wyoming. TJX stands to benefit from Sierras
experienced management team and organization, as well as its online capabilities and infrastructure. TJX
expects the acquisition to be modestly accretive to earnings starting in fiscal 2014.
Gap Inc., which reported online sales of $1.9 billion in fiscal 2013, is leveraging new online capabilities to
increase sales productivity in its brick-and-mortar stores. These include a reserve-in-store option for online
shoppers, which the company plans to launch by mid-2013. Reserve-in-store will enable customers to
INDUSTRY SURVEYS
reserve items online at a nearby store, which will hold the items until the end of the next business day.
When customers come in to try on their selected items, store associates will have an opportunity to cross-sell
(i.e., suggest other items for purchase). We believe the ability for store associates to engage with customers
who have self-identified as having purchase intent will give Gap an advantage over competitors offering instore pickup for online orders.
Both apparel brands and retailers are also pushing into the outlet channel where they enjoy higher margins
on sales of made-for-factory products. Gap, for example, plans to open about 60 new outlet stores in fiscal
2014, which would take its total outlet store count to over 510. Performance apparel and footwear maker
Under Armour, by comparison, plans to open only 10 new outlet stores in 2013. However, the company
expects to more than double its outlet store business over the next six to seven years by upsizing its existing
stores to 8,000 to 9,000 square feet from the current 5,200 square foot average. As of the end of 2012,
Under Armour operated 101 outlet stores in the US and one outlet store in Canada.
Foreign retailers enter the US
The move by a few US retailers to close underperforming stores in the US has created an opportunity for
foreign retailers to enter the American market. Among the first to arrive were Swedens H&M Hennes &
Mauritz AB (H&M) and Spains Industria de Diseo Textil SA (Inditex), which owns the Zara clothing
chain.
H&M and Zara offer fashionable clothing at inexpensive prices, and they turn over their inventory more
rapidly than American competitors such as Gapthus encouraging shoppers to visit often and buy items
that they like on the spot. Both companies have grown their brands by offering what some call disposable
chic or fast fashionexceptional fashion quality at affordable prices. Both retailers enjoy healthy
margins. H&Ms gross margin was 59.5% for its fiscal year ended November 2012, while Inditexs gross
margin was 59.8% in its fiscal year ended January 2013. By comparison, Gap had a gross margin of 39.4%
for its fiscal year ended January 2013.
Following H&Ms and Zaras lead, the United Kingdoms Topshop (a unit of Arcadia Group), another fastfashion retailer, opened its first US store in 2009; it currently has four flagship stores in New York,
Chicago, Las Vegas, and Los Angeles. It is also considering a second store in New York and a store in
Miami. According to a New York Times article dated July 12, 2012, Topshop is planning to expand its
business in the US and is looking to open 15 to 20 flagships in the next five years. Further, it aims to achieve
revenues of about $1 billion from the region within five years. To expand its presence in the US, the
company entered into a partnership with Nordstrom in July 2012. Under the partnership, Nordstrom
placed Topshops apparel and accessories in 14 of its 117 locations in September, and sees potential for
expansion to 75100 locations in the future. The shop-in-shop concept includes a 2,500-square-foot space
for womens merchandise and a 1,500-square-foot space for the mens collection (called Topman). In
addition, Topshops full collection is available online on Nordstrom.com. Based on strong customer
response, Nordstrom plans to expand distribution of Topshop to another 28 stores this fall and about 30
additional stores in early 2014.
More recently, Joe Fresh Style, a Canadian fashion brand owned by Loblaw Companies Ltd., expanded its
presence in the US through a partnership with J.C. Penney Co. In March 2013, Joe Fresh shop-in-shops
offering womens apparel and accessories opened within 681 JCPenney stores in the US. The shop-in-shops
range in size from 750 to 2,500 square feet, with all products priced under $70.
Japans Fast Retailing Co. Ltd. is expanding its Uniqlo clothing chain in the US. Uniqlo, as of April 2013,
had three flagships in New York City and one flagship in San Francisco; and stores located in malls in New
Jersey and New York (2). The company is also looking at store locations in Los Angeles, Philadelphia,
Chicago, Boston, Washington, D.C., and other cities in California. It plans to open around 1020 stores in
the US by 2014. By 2020, the company plans to have around 200 stores operating in the US, with a target
of $10 billion in revenues from the US, which would equal 20% of its total projected revenues for that year.
Uniqlo launched its US e-commerce website in October 2012. Shin Odake, Uniqlos US CEO, intends to
make Uniqlo an American company and is keen on hiring Americans in the roles of top management,
4
INDUSTRY SURVEYS
designers, merchandisers, and public relations. Uniqlos previous attempt to expand in the US was a failure,
as it had to shut three stores in New Jersey in 2006. However, the company believes with greater brand
recognition, more extensive advertising, and larger stores, it will be successful in its expansion plans this
time. The company, known for quality-fabric basics at low prices, will offer direct competition to retailers
such as Gap that cater to customers seeking affordable and basic clothing.
M&A OUTLOOK
The leveraged buyout (LBO) market is heating up again, with retailers and apparel brands seeing renewed
interest. Some reasons for the attractiveness of the fashion sector include high potential asset returns, high
and growing cash balances, and balance sheets capable of supporting increased debt loads. Corporate
underperformance and
APPAREL COMPANY MERGERS & ACQUISITIONS20092013
undervalued shares are
other factors financial
CLOSING
APPROXIMATE
sponsors target in LBOs.
DATE
ACQUIROR
TARGET
VALUE
Feb. '13
Oct. '12
Oct. '12
PVH Corp.
Clayton, Dubilier & Rice
Blum Strategic Partners;
Golden Gate Capital
Opportunity Fund;
Wolverine World Wide
The Warnaco Group, Inc.

David's Bridal, Inc.
Collective Brands, Inc.
$2.9 billion
$1.05 billion
$2 billion
Aug. '12
Sycamore Partners
The Talbots, Inc.
$391 million
Feb. '12
Perry Ellis International
Nov. ''11
J.C. Penney Co.
Oct. ''11
Gores Group, LLC
Oct. '11
Oct. '11
Bluestar Alliance LLC

Kohl's Corp.
Sep. '11
Sep. '11
Jul. '11
Jun. '11
Jun. '11
Mar. '11
Mar. '11
Feb. '11
Jan.'11
Nov. '10
Oct. '10
Aug. '10
May '10
Mar. '10
Dec. '09
Aug. '09
Jul. '09
Jul. '09
Jul. '09
Jun. '09
Jun. '09
May '09
Apr. '09
Chico's FAS
VF Corp.
Carter's Inc.
PPR SA.
The Jones Group
Nordstrom
TPG Capital
DSW Inc.
Perry Ellis Intl.
LF USA Inc.
Bain Capital
Hanesbrands Inc.
Jones Apparel Group
Phillips-Van Heusen
Essilor International
Advent Int'l Corp.
Amazon.com
Golden Gate Capital
Dress Barn
Syms Corp.
Golden Gate Capital
Levi Strauss Co.
Coach Inc.
Source: Company reports.
INDUSTRY SURVEYS
TABLE
B012:
Callaw ay
Golf Co.'s Ben Hogan
APPAREL
brands
Liz Claiborne's Liz Claiborne and
COMPANY
Monet brands
M&A
81.25% interest in Liz Claiborne's

MEXX business
Liz Claiborne's Kensie brands
Liz Claiborne's Dana Buchman
brand
Boston Proper
Timberland
Bonnie Togs
Volcom
Kurt Geiger Ltd.
HauteLook, Inc.
J Crew Group
Retail Ventures
Rafaella Apparel Group, Inc.
Oxford Apparel
Gymboree Corp.
GFSI Holdings Inc.
Stuart Weitzman, LLC
Tommy Hilfiger Group B.V.
FGX International Holdings Ltd.
Charlotte Russe Holdings
Zappos.com
Eddie Bauer Holdings
Tw een Brands Inc.
Filene's Basement
J.Jill
Anchor Blue Retail Group
Coach Domestic Retail Business
in China, HK, Macau
$6.8 million
$267.5 million
$85 million
terms undisclosed
terms undisclosed
$213 million
$2.3 billion
$98 million
$608 million
$351 million
$75 million
$3 billion
$1.2 billion
$192.4 million
$121.7 million
$1.8 billion
$228.3 million
$180.3 million
$3.2 billion
$568.1 million
$371.1 million
$823.0 million
$286 million
$157 million
$47.6 million
$66.9 million
$72 million
terms undisclosed
Strategies are similar to

a body shop: buy, fix,
and sell. Many sponsors
possess industry
expertise and thus
believe they can turn
around operations,
reposition a brand, close
underperforming stores,
and improve cash-oncash returns. The true
fixation is on the exit
strategy.
Private equity firm
Sycamore Partners
purchases Talbots. In
August 2012, TLB
Merger Sub Inc., an
affiliate of the private
equity firm Sycamore
Partners, completed the
acquisition of The
Talbots Inc. for around
$391 million, including
net debt. The two firms
closed the deal at a
purchase price of $2.75
per share in cash, which
represented a 113%
premium to Talbots
closing price on the day
before the
announcement of the
deal. Sycamore Partners
is working towards
rekindling Talbots
brand image and
restoring the brands
position as a category leader. The private equity firm appointed a new senior executive team at Talbots,
with Michael Archbold, previously president and COO of the Vitamin Shoppe, as the new CEO and CFO.
Collective Brands agrees to buyout. In May 2012, Collective Brands Inc. agreed to be acquired, for $21.75
per share in cash (or $2 billion), by global footwear company Wolverine World Wide Inc. and investment
firms Blum Capital Partners and Golden Gate Capital. The transaction closed in October 2012. Blum Capital
and Golden Gate Capital jointly acquired the Payless ShoeSource and Collective Licensing International
businesses, while Wolverine Worldwide acquired the wholesale and retail operations of the Sperry Top-Sider,
Saucony, Stride Rite, and Keds brands. Collective had reported a loss of $164.5 million in fiscal 2012 (ended
January 2012), versus a $112.8 million profit in fiscal 2011.
PVH Corp. acquires Warnaco Group. In February 2013, PVH acquired The Warnaco Group Inc., which
previously licensed the Calvin Klein jeanswear and underwear businesses, for $2.9 billion. We think the
acquisition will enable PVH to simplify the Calvin Klein brand structure and to accelerate growth in Asia
and Latin America by leveraging Warnacos presence in these regions. That said, given the time and the
investments needed to right size the Calvin Klein jeanswear business and to enhance Warnacos
infrastructure, PVH now expects the acquisition to be $0.25 dilutive to earnings per share in the fiscal year
ending January 2014, versus its original guidance of $0.35 accretive. Given PVHs track record with
acquisitions, we look for a turnaround in jeanswear starting in fiscal 2015.
V.F. Corp. evaluates Billabong. In January 2013, V.F. Corp. and Altamont Capital Partners made a joint
offer to acquire all shares of Australia-based Billabong International Ltd. at AU$1.10 per share, matching
the offer made in December 2012 by Paul Naude, the former head of Billabongs Americas division, and
Sycamore Partners, a private equity firm. V.F. Corp. would acquire the Billabong brand and Altamont the
other assets. However, after Billabong reported a loss of AU$537 million in the first half of fiscal 2013
(ending June 2013), compared with profit of AU$16.1 million in the year-earlier period, both parties
lowered their bids. According to a Womens Wear Daily article dated April 5, 2013, the new bid by V.F.
Corp. and Altamont was below AU$0.50 per share, while the bid by Naude and Sycamore was between
AU$0.55 and $0.60 per share. On April 9, 2013, Billabong announced that it had entered into a 10business-day period of exclusive talks with Naude/Sycamore to acquire the company for AU$0.60 per share
in cash. The exclusivity period was extended for an additional 10 business days through May 8. On May 7,
the company voluntarily suspended trading of its shares in order to continue buyout discussions.
NEAR-TERM SUB-INDUSTRY OUTLOOKS

Apparel, accessories, and luxury goods. Our fundamental outlook for the apparel, accessories, and
luxury goods sub-industry is neutral. We believe the reduction in take-home pay caused by the expiration of
the payroll tax holiday benefit on January 1, 2013, will result in some consumers cutting back on their
apparel purchases this year. While apparel is a relatively low-cost category, we expect shoppers on limited
budgets to invest more in accessories, which offer more bang for the buck.
As for personal luxury goods, our outlook is positive despite global macroeconomic headwinds. According
to international management consulting firm Bain & Co., worldwide sales of personal luxury goods grew
an estimated 10% in 2012, to 212 billion, led by an estimated 16% increase in the leather goods category.
By region, sales rose an estimated 18% in Asia-Pacific, 13% in the Americas, 8% in Japan, and 5% in Europe.
Bain projects worldwide luxury goods sales to grow 4% to 5% in 2013, and 5% to 6% in 2014 and 2015.
We look for growth to be supported by underlying demand for luxury goods in the US, Europe, and Japan,
and growing luxury demographics in Asia-Pacific, particularly China, and the emerging markets. Apparel
brands are increasing their investments in company-owned retail, outlet, and online stores, which provide
higher-margin growth opportunities than the highly competitive and promotional department store channel.
This strategy enables apparel brands to showcase their entire merchandise assortment, enhance consumer
brand awareness, and test new products. Apparel companies are also pursuing growth through development
of new product lines specifically for discounters and mass merchandisers, as well as international expansion.
INDUSTRY SURVEYS
Finally, we expect lower cotton prices and supply chain improvements to support gross margin expansion
for apparel and accessories brands in 2013. We also look for companies to maintain discipline in inventory
and expense management in support of earnings growth. We believe companies with strong brands,
differentiated products, and attractive price-value propositions are likely to outperform their peers. Year to
date through May 17, 2013, the S&P Apparel, Accessories & Luxury Goods Index advanced 19.9%, versus
a 17.1% gain by the S&P 1500 Composite Index. In 2012, the sub-industry index rose 16.2% compared
with a 13.7% increase for the S&P 1500.
Apparel retailers. Our fundamental outlook for apparel retailers is neutral. We believe the reduction in
take-home pay caused by the expiration of the payroll tax holiday benefit on January 1, 2013, will result in
some customers cutting back their discretionary spending this year. However, we look for apparel sales to
grow 3% to 4% in 2013, supported by new fashion trends and sales promotions. According to the Census
Bureau, sales at clothing and clothing accessories stores increased 5.5% in 2012. Apparel retailers face
tough comparisons in the first half of 2013, as they benefited last year from an early arrival of spring
weather and a new color trend in fashion. We also see increasing competition for share of customer wallet
from international retailers expanding in the US. We believe off-price retailers are best positioned to gain
market share in 2013, given their attractive value pricing, frequent inflow of new merchandise, and their
ability to move in and out of product categories quickly based on customer demand.
We believe apparel retailers that use customer feedback from social media sites as a tool to improve their
products and services will gain a competitive edge. This will be particularly true for teen retailers, in our
view, as they move away from a key item merchandising strategy to offering head-to-toe looks. We also
expect apparel retailers to focus their expansion on outlet centers in order to reach cost-conscious consumers
who might otherwise not shop their brands and to raise brand awareness among international shoppers.
Finally, with cotton prices now a tailwind versus a headwind in 2011 and early 2012, we see opportunity
for apparel retailers to achieve higher gross margins in 2013. We also look for companies to maintain
discipline in inventory and expense management in support of earnings growth. Year to date through May
17, 2013, the S&P Apparel Retail Index rose 16.8%, versus a 17.1% gain for the S&P 1500 Composite
Index. In 2012, the sub-industry index outperformed the broader market, advancing 26.5% versus a 13.7%
increase for the S&P 1500. In our view, the positive price performance of the group reflected gross margin
recovery on lower apparel costs and well-controlled promotional activity.
Footwear. Our fundamental outlook for the footwear sub-industry is positive. We look for footwear
companies with strong brands to leverage quality, newness, and innovation in their product offerings to
stimulate consumer demand in 2013. We also expect geographic diversification to benefit global footwear
companies.
In a gradually improving, but still weak, economy, we see consumers seeking out value when making
discretionary purchases, but also stretching their budgets when the merchandise is right. As such, we view
footwear brands and retailers offering fashion newness and technical innovation in their products as having
the best chance of capturing sales and gaining market share. We also expect sales of performance athletic
and outdoor footwear, and related apparel and accessories, to be supported this year by the secular trend of
people becoming more active and health conscious. However, following two unseasonably warm winters,
we believe many US retailers will plan sales of cold-weather footwear conservatively.
While product cost inflation pressured gross margins in 2011 and 2012, many footwear companies increased
their earnings by raising retail prices (more on premium products and less on basic styles) and leveraging
expenses off higher sales. While labor costs are rising, commodity costs are starting to ease, so we see an
opportunity for footwear companies to regain lost margin in 2013. We also look for footwear brands and
retailers to maintain discipline in inventory and expense management to support earnings growth. Year to
date through May 17, 2013, the S&P Footwear Index was up 26.0%, versus a 17.1% gain for the S&P
1500 Index. In 2012, the sub-industry index advanced 4.4%, versus a 13.7% rise in the S&P 1500. In our
view, the underperformance of footwear industry stocks reflected investors concerns over slowing sales
growth reported by global companies in Europe and Asia, partially offset by strong growth momentum in
the US.
INDUSTRY SURVEYS
INDUSTRY PROFILE
The industry that suits everyone
According to the US Bureau of Economic Analysis (BEA), US gross domestic product (GDP) rose 4% to
$15.68 trillion in 2012, versus $15.09 trillion in 2011. In 2012, US consumers spent about $366 billion on
clothing and footwear, according to the BEA, up 5% from 2011, when they spent $350 billion. Given an
estimated US population of 315.0 million at year-end 2012 and 312.8 million at year-end 2011, per capita
expenditures on clothing and footwear
equaled roughly $1,162 in 2012 and
US APPAREL INDUSTRY EMPLOYMENT
(Production workers, in millions)
$1,119 in 2011.
1.4
Chart H01 US
APPAREL INDUSTRY
EMPLOYMENT
1.2
1.0
0.8
Chart H05 APPAREL &

FOOTWEAR SHARE OF
TOTAL PCE
0.6
0.4
0.2
0.0
1965
69
73
77
81
85
89
93
97
01
05
09
2013
Source: Bureau of Labor Statistics.
APPAREL & FOOTWEAR'S SHARE OF TOTAL

PERSONAL CONSUMPTION EXPENDITURES
(In percent)
6.0
5.5
5.0
4.5
4.0
3.5
3.0
1982 84 86 88 90 92 94 96 98 00 02 04 06 08 10 2012
Source: US Department of Commerce.
US employment levels in apparel and

footwear manufacturing have fallen
drastically in recent decades. According
to the US Department of Labor, domestic
apparel employment has fallen by 83%
from the mid-1990sto 148,100 in
December 2012 from 853,800 in
December 1994, a 9.3% annual decline.
The US Department of Labor expects
domestic apparel employment to decrease
in line with an overall manufacturing
decline of 9% in the 200818 period.
Increased quotas, reduced tariffs, and a
string of free-trade and preferentialtrade agreements have contributed to the
steady flow of manufacturing jobs out of
the United States and into low-cost
countries in Asia, Latin America, Africa,
and the Caribbean.
According to Department of Labor data,
domestic apparel employment peaked in
1973 at 1.45 million; since then, the
sector has shed more than a million jobs.
In the past 12 months, weve seen a
modest return to domestic apparel
manufacturing for fashion merchandise,
due to increased labor costs in developing
nations and higher freight costs. Whether
this will become a small (but significant)
trend remains to be seen.
APPAREL
With respect to both manufacturing and retailing, the US apparel industry is large, mature, and highly
fragmented. Apparel sold in the US is made both domestically and internationally. (Some of the largest USbased apparel wholesalers are listed in the Major apparel companies table on the next page.)
Apparel worth $76.81 billion was imported into the US in 2012, down 1.1% from $77.66 billion in 2011.
Imports from China, which accounted for 38% of US apparel imports, declined 1.1%. In 2010, US apparel
imports totaled $71.40 billion, up 13.1% from $63.10 billion in 2009. Exports of US-made clothing totaled
8
INDUSTRY SURVEYS
$5.51 billion in 2012, up 7.0% from

$5.15 billion in 2011 (which was up
14.2% from the exports total of $4.51
billion in 2010).
US IMPORTS AND EXPORTS OF APPAREL

(In billions of dollars)
90
80
CHART H04 US
IMPORTS AND
EXPORTS OF
APPAREL
70
60
50
40
US retail sales at clothing and accessories

stores increased 5.5% to $239.2 billion in
2012, according to the US Department of
Commerce. In 2011, sales totaled
$226.75 billion, up 6.1% from $213.74
billion in 2010.
30
20
10
0
1996
1998
2000
2002
2004
Imports
MAJOR APPAREL COMPANIES

(Ranked by sales)
FISCAL
COMPANY
YEAR
SALES
TABLE B01
(MIL.$)
MAJORENDING
May
'12
24,128
APPAREL
Jan.'13 10,880
COMPANIES
Nike
V.F. Corp.
Ralph Lauren
Mar.'12
PVH Corp.
Jan.'13
Hanesbrands
Jan.'13
Jones Group
Dec.'12
Carter's Inc.
Dec.'12
Quiksilver
Oct.'12
Columbia Sportsw ear
Dec.'12
Fifth & Pacific
Dec.'12
Oxford Industries
Jan.'13
Maidenform Brands
Dec.'12
6,860
6,043
4,526
3,798
2,382
2,013
1,670
1,505
856
600
The US apparel market can be divided

into two tiers: national brands and other
2006
2008
2010
2012
apparel. National brands, produced by
Exports
about 10 sizable companies, currently
account for some 18% of all US
wholesale apparel sales. The other
apparel category, accounting for about 82% of all apparel
distributed, comprises small brands and private-label (or store
brand) goods.
According to The NPD Group Inc., a consumer market research
firm, adult apparel sales at retail grew 2.6% in 2012, to $168.0
billion. Of that total, womens apparel sales increased 3.3%, to
$111.4 billion, outpacing the 1.4% growth in mens apparel sales,
to $56.6 billion.
FOOTWEAR
Like the apparel business, the US footwear industry is mature and

fragmented, and its manufacturing base is declining. According to
The NPD Group, total footwear sales rose 3.0% to $54.0 billion in
2012. By wearer segment, dollar sales of womens, mens, and
childrens footwear grew by 4.0%, 2.4%, and 3.8%, respectively.
Footwear brands generally benefited from pricing power in the
200812 period, as new fashion and product innovation drove
consumer interest. We note this trend is likely to continue as consumers use fashion accessories to update
their fashion look, and performance footwear are trending strong at retail.
According to the American Apparel & Footwear Association, a trade group, US footwear imports slid 4.0%
to 2.15 billion pairs of shoes in 2011 (latest available) from 2.24 billion pairs in 2010. However, the value
of imported footwear rose by a steep 16.1% in 2011 to $20.5 billion, from $18.9 billion in 2010. China
continues to be the largest supplier to the US market, with 86.2% of the quantity and 74.7% of the value of
all US footwear imports in 2011.
While the US imports most of its soft-sole footwear, it is a particularly strong manufacturer of protective or
safety footwear (most of which feature steel safety toes). Even so, domestic footwear producers looking to
offer a wider range of goods often import shoes to round out their product lines.
Today, the footwear industry is truly global in nature, with large manufacturers sourcing products from and
selling products in different countries over several continents. US-based Nike Inc., for example, generated
nearly two-thirds of its revenues outside of North America in the fiscal year ended May 2012. A
multinational strategy allows companies like Nike to sustain growth momentum despite pockets of
weakness in some geographies.
INDUSTRY SURVEYS
Deckers Outdoor Corp. has had great success with its popular UGG boots (84% of the companys 2012
sales were UGG brand), which offer US consumers comfort and attainable luxury. Deckers has broadened
its UGG product offerings through line extensions (including sandals, slippers, and accessories) that
capitalize on the UGG brands association with affordable, yet luxurious and comfortable footwear. The
company is also seeking to expand internationally. International sales (including Europe, Asia Pacific,
Canada, and Latin America) were 31% of its total sales in both 2012 and 2011, up from 24% in 2010.
Footwear companies, particularly manufacturers of athletic footwear, have diversified into related apparel
and sporting goods categories as a way to extend the reach of their brands and grow revenues. Nike, for
example, offers golf clubs, watches, and yoga mats, in addition to sneakers.
INDUSTRY TRENDS
Most trends affecting apparel and footwear manufacturers today are driven by consumer demand and relate
to the size of the various demographic groups and their particular wants, shopping patterns, and spending
power. Changing styles in workplace and leisure attire also are influencing retail and manufacturing
operations.
CONSUMER DISCRETIONARY REVIEW

We see 2013 as another year of half-speed economic recovery. Standard & Poors Economics (which
operates separately from S&P Capital IQ) expects the unemployment rate for 2013 to be around 7.4% (a
slight improvement from the 8.1% rate in 2012), with continued improvement through 2015, when it
projects a 6.2% unemployment rate (compared with 5.8% in 2008).
CONSUMER SPENDING2012
Other durables
7% H08:
Cars Chart
4% CONSUMER
SPENDING
Other services
22%
Food
7%
Apparel
3%
Energy
6%
Other
Nondurables
5%
Recreation
and travel
services
5%
S&P Capital IQ thinks that the events of

200708 have become the impetus for
more responsible behavior, and we see a
savings rate increase in tandem with a
population taking greater responsibility
for its future.
We see a new normal shopping
environment, with a more constrained
consumer, which has forced the sector to
adjust to lower sustainable levels of
demand.
Health care
20%
Real gross domestic product (GDP) grew

at an annual rate of 0.4% in the fourth
Housing
quarter of 2012, less than the 3.1%
15%
increase in the third quarter, while
Source: US Bureau of Economic Analysis.
personal consumption expenditures (PCE)
grew 1.8% in the fourth quarter, versus
1.6% growth in the third quarter. Nonresidential fixed investment increased 13.1% in the fourth quarter
after declining 1.8% in the third, versus residential fixed investment, which increased 17.9% in the fourth
quarter and 13.6% in the third. As of April 2013, Standard & Poors Economics was projecting a 2.8%
gain in 2013 PCE, compared with 2.7% growth projected for real GDP in 2013.
Restaurants
6%
LUXURY RETAILERS ADAPT TO CHANGING CONSUMER PREFERENCES

Bain & Co. expects the global luxury goods market to grow 4% to 5% (at constant exchange rates) in
2013, reaching record sales of 220 billion to 223 billion. It projects sales to grow 20% in Southeast Asia,
7% in China, 5% to 7% in the Americas, and 5% in Japan, and to be flat to up 2% in Europe. While
growth in China has decelerated from prior years, luxury brands still see a huge scope of expansion in the
10
INDUSTRY SURVEYS
tier 2, 3, and 4 cities in China. Further, the growing popularity of e-commerce in China creates a big
opportunity for high-end retailers. The report also pointed out that India is likely to present the biggest
global market opportunity in the next five years, with the market expected to grow around 20% to 30% in
the next five years. With China and other emerging markets still underpenetrated, we believe momentum in
the luxury market will continue in 2013.
Along with domestic spending in key markets, we believe travel retail contributed to growth in luxury goods
sales in 2012. We see the latter reflected in foreign tourist spending reported by Tiffany & Co. The
company estimated that about 45% of its New York City flagship store sales in fiscal 2013 (ended January
2013) came from foreign visitors, led by Asia-Pacificbased visitors, followed by European tourists. Tiffany
also reported a growing benefit from sales in Europe to non-European tourists, which it estimates now
represent approximately 25% of European sales. In 2012, the company saw higher spending by foreign
tourists make up for the lower spending by local customers in some of its European markets.
According to Coach Inc., Chinas demographics are best suited for its potential as a market for luxury
goods, as it has a population of 1.3 billion people, of which 50% is urban. At the end of fiscal 2012 (ended
June 2012), the company had operations in 36 cities in China, out of a total 120 cities with a population of
over one million each. Given its positioning as both a womens and mens brand, the company believes its
potential to grow in China is immense (compared with other luxury brands). Coach sees a $12 million
market for mens premium handbags and accessories in Asia. Of that, China represents about a $3.2 billion
opportunity. Globally, the mens business totaled $400 million (over 8% of total sales) for Coach in fiscal
2012, and the company sees it reaching $1 billion over the next three to five years.
As part of its broader efforts to build awareness of its luxury apparel and accessories assortments in Asia,
Ralph Lauren Corp., during the fiscal year ended March 2012, closed around 60% of its points of
distribution (retail stores and concession shops) in the region it calls Greater China, which encompasses
mainland China, Macau, Hong Kong, Taiwan, Malaysia, and Singapore. Over time, the company expects to
rebuild a distribution network that better represents its luxury brand positioning.
SUSTAINABILITY, ETHICAL SOURCING ARE GAINING IN IMPORTANCE

Another way companies have been attempting differentiation from their competitors is by positioning
themselves as a green brand, appealing to consumers who favor conscious spending. Many brands are
now offering environmentally friendly products that are also ethically sound, in response to consumers who
have become increasingly aware of the impact of their purchases and favor companies that offer compelling
product with additional benefits.
Apparel and footwear product sustainability
On March 1, 2011, the US Environmental Protection Agency (EPA) launched the Sustainable Apparel
Coalition, in conjunction with retailers, manufacturers, academic experts, and leading apparel and footwear
brands. The coalition will work on an industrywide index to measure apparel and footwear product
sustainability and look at ways to improve the existing social and environmental practices in the supply chain.
Timberland Co. has a set of programs and policies dedicated to the elimination of our carbon footprint and a
vision of an accountable, sustainable enterprise. Timberland is also one of the first companies to have a
formal document that shows its strategy for managing and reducing its impact on global warming. Timberland
also launched an online campaign, called Earthkeepers, to promote environmental responsibility and
community awareness of environmental issues.
Responsible sourcing of precious metals and gemstones
Companies operating in the jewelry and accessories area are looking at obtaining precious metals and
gemstones in ways that are more responsible. For example, Tiffany & Co. has long been associated with the
process of sourcing materials that have been mined, processed, and crafted in an environmentally and
socially appropriate manner. The company is involved with various non-governmental organizations and
the mining industry to devise operating standards. The company has also established a program to ensure
that human rights and workers rights are considered throughout its supply chain.
INDUSTRY SURVEYS
11
COMPANIES MOVE INTO OVERSEAS MARKETS

Many of the companies in our coverage universe are looking abroad for growth opportunities. Gap Inc., for
example, in fiscal 2013 had sales of $3.3 billion (21% of consolidated sales) derived internationally through
438 company-operated stores in Europe and Asia, and 312 franchised stores in 40 countries. While a
company like Gap has had international operations for more than 25 years, this is a relatively new strategy
for some apparel retailers and brands.
Under Armour Inc. is in the early stages of international expansion. Although its products are distributed in
more than 60 countries, international sales accounted for only 5.9% of the companys 2012 revenues.
Under Armours most mature international market is Japan, where it has had a license agreement with
Dome Corp. since 2002. The company earns royalties from Dome, which reported nearly $200 million in
Under Armour wholesale revenues in 2012, up 30% from 2011. Under Armour sees room for product
diversification in Japan, where the business is skewed toward mens and compression apparel. Europe
represents the companys second largest international market. Since 2006, Under Armour has built a $60
million business in Europe through direct sales operations (wholesale and e-commerce) and independent
distributors. In an effort to build brand awareness in Europe, the company began sponsorship of the
Tottenham Hotspur Football Club in the UK. Beyond Japan and Europe, Under Armour is laying the
foundations for growth in China, where it has four retail stores (two company-owned, two partneroperated) and has launched e-commerce; and in Latin America, which is a distributor-based business. With
the September 2012 hiring of Karl-Heinz Maurath as president of Under Armour International, we think
the company now has the leadership needed to accelerate its pace of international expansion. Mr. Maurath
had spent 22 years at Adidas, most recently as Senior VP of Adidas Latin America.
International expansion requires expertise in site selection and merchandise assortment, and the ability to
adapt to local market conditions. Given these complexities, Aeropostale Inc. is expanding its brands
internationally through nine license agreements covering 20 countries. The company finished fiscal 2013
(ended January 2013) with 27 licensed stores in Singapore, Turkey, and four countries in the Middle East.
With licensees opening new stores in the Philippines, Panama, Colombia, and Mexico, Aeropostale expects
to end fiscal 2014 with nearly 90 international stores. The company also expects international licensing to
contribute $0.07 or more to earnings per share (EPS) in fiscal 2014.
Competitor American Eagle Outfitters Inc.s international growth strategy involves a blend of wholly owned
stores, licensed stores, and joint ventures. At the end of fiscal 2013 (ended January 2013), the company had
49 licensed stores in 13 countries, including Japan, Russia, and Israel. In February 2013, American Eagle
mutually terminated its store license agreement in Hong Kong, China, and surrounding markets with
Dickson Concepts (International) Ltd. The company will assume operation of Dicksons six existing
American Eagle Outfitters stores in Hong Kong and China. In March 2013, American Eagle announced the
opening of its first licensed store in the Philippines. Globally, the company expects its licensees to open at
least 20 new stores in fiscal 2014. American Eagle also plans to open six company-owned and operated
stores in Mexico this fiscal year.
With positive demographic and income trends for the foreseeable future, the Chinese luxury market should
thrive, in S&P Capital IQs view, albeit with more competition as more brands enter this next frontier.
Coach and Polo Ralph Lauren are just two well-known brands that have increased their focus on Chinese
mainland expansion, as well as Europes fashion capitals (such as Paris, London, Rome, and Milan) to be
where the Asian tourist travels. However, there has been a slight decline in Chinese demand for luxury
goods owing to Chinas recent economic slowdown, along with the governments initiatives against
corruption, which usually involves luxury gifts. That said, the Chinese market continues to be the highestgrowth market for luxury goods. According to Boston Consulting Group, China is projected to become the
largest luxury market in the world by 2015, moving ahead of Japan and the US.
For luxury goods makers, Asia is an alluring market, but one that is also feeling the impact of the current
global economic state. Japan has traditionally been a strong market for luxury goods, thanks to its consumers
taste for high-end products. In fiscal 2013 (ended January 2013), jewelry retailer Tiffany & Co. generated
48.5% of its revenues from the Americas, 21.4% from the Asia-Pacific region, 16.8% from Japan, and
12
INDUSTRY SURVEYS
11.4% from Europe. The increase in revenues from the year-earlier period was the highest for the AsiaPacific region at 8%, followed by Japan at 4%, while it was 3% for Europe and 2% for the Americas. In
fiscal 2014, Tiffany expects to open a net of 14 company-owned stores, of which seven are planned in the
Asia-Pacific region, five in the Americas, and three in Europe. Tiffany also plans to close one store in Japan.
Upscale retailers consider Chinas growth rates to be attractive, and are trying to sell to that nations
burgeoning middle and upper classes. Chinas economy grew at a 9.2% pace in 2009, picking up steam in
2010, when it grew at 10.4%. However, GDP growth slowed to 9.3% in 2011 and 7.8% in 2012. Given
the economic conditions in Europe, China should continue to lure high-end retailers as a high-growth
market, despite fears of an economic slowdown in the country. China is Nikes second largest market,
generating sales in excess of $2 billion annually. Tiffany has 22 boutiques in China, six of which were
opened in fiscal 2013.
Coach Inc. also has accelerated its new store openings in China. At the end of its fiscal 2013 second quarter
(ended December 2012), the company had 117 stores in China, 21 of which had opened during the six
months ended December 2012. The company had plans to open around 30 new locations in China in fiscal
2013. The company is building a multi-channel distribution model in China, which will include flagships,
retail stores, shop-in-shops, and factory stores. Coach is achieving double-digit comparable-store sales
(comps) in the region, and reported sales of over $300 million in China in fiscal 2012, up more than 64%
from fiscal 2011. In Asia, where the company believes men tend to be more fashion-conscious, Coach sees a
$12 billion market for mens premium handbags and accessories. Of that, China represents about a $3.2
billion opportunity.
DEMOGRAPHIC TRENDS
Because specialty retailers usually target a narrow market, they must pay close attention to the age
distribution, ethnic background, and priorities of potential customers in their markets.
Teens entering adulthood
Teenagers aged 15 to 19, who represent about 7.1% of the US population, have been a powerful force in
retail over the past decade. Gap, Abercrombie & Fitch Co., American Eagle Outfitters Inc., and Urban
Outfitters Inc. have been among the leading beneficiaries.
Today, a large share of the roughly 71 million Americans born between 1977 and 1994a group dubbed
Generation Y or Millennials by market researchershave entered adulthood. This is an attractive
group for retailers. Shoppers aged 25 and older, for instance, often have more to spend on apparel and may
need to expand their wardrobes to include professional clothes for the office.
Retailers that traditionally targeted teens are trying to hold onto those consumers as they enter their twenties.
Stores that targeted this demographic included Ruehl (from Abercrombie & Fitch), aimed at men and women
aged 22 to 35, and Martin + Osa (American Eagle Outfitters), a chain that debuted in the fall of 2006 for
shoppers aged 25 to 40. Results were mixed, however, and both of these chains were shuttered. J Crew
Group launched the Madewell chain of stores to target the female 20-something; Urban Outfitters Free
People stores are aimed at the same demographic. The early read on both Madewell and Free People is
positive, showing that perhaps 20-something women dont want to shop with the opposite sex.
Some retailers seeing progress in the struggle to draw older women
Specialty retailers and apparel manufacturers find the over-35 woman (or the forever 39-year-old) a very
attractive target customer. Although they had difficulty attracting her business during the recent recession,
we believe we are seeing a turn in trend for this demographic.
Female shoppers, particularly those over the age of 35, spend the lions share of retail dollars, making them
the most desirable target for retailers. Much of this group belongs to the baby boomer generation (the
nearly 76 million Americans born between 1946 and 1964). Specialty retailers are striving to reach these
shoppers, who may be looking for fashionable clothes that are not too provocative or youthful. While this
group tends to have significant discretionary income, it has been hurt by the global economic slowdown. In
INDUSTRY SURVEYS
13
a challenging economic environment, many women are opting for practical basics with a twist that they
can wear immediately and purchase for value prices at discount retailers, such as Wal-Mart and Target.
Specialty apparel retailers catering to the forever 39 woman, including Ann Taylor and Chicos, benefited
in 2012 from customers appetite for fashion newness, a trend we see continuing in 2013. We also think
Ann Inc.s LOFT division benefited last year from shoppers trading down from higher-priced department
store brands for casual work attire.
US POPULATION PROJECTIONS
To boost store traffic and encourage

spending, we see retailers like Gap Inc.s
AGE GROUP
Banana Republic brand partnering with
Under 5 yrs.
20,428
6.5
21,808
6.5
22,252
6.2
highly regarded fashion designers to offer
5 to 14 yrs.
41,145
13.0
41,923
12.6
44,815
12.5
exclusive limited-edition collections. With
15 to 19 yrs.
21,108
6.7
20,806
6.2
21,946
6.1
Jacqueline Durran, who designed
20 to 24 yrs.
22,766
7.2
21,651
6.5
21,940
6.1
costumes for the movie Anna Karenina
25 to 29 yrs.
21,558
23,366
7.0
22,712
6.3
TABLE6.8
US POP-2
(adopted from Leo Tolstoys 1877 novel),
30 to 34 yrs.
21,262
6.7
22,906
6.9
23,340
6.5
US POPULATION
Banana Republic launched a full line of
35 to 39 yrs.
19,593
6.2
21,869
6.5
24,423
6.8
PROJECTIONS
clothing inspired by this movie in
40 to 44 yrs.
20,837
6.6
20,361
6.1
23,403
6.5
October 2012. In January 2013, Banana
45 to 49 yrs.
21,198
6.7
20,008
6.0
21,935
6.1
Republic announced a partnership with
50 to 54 yrs.
22,553
7.1
20,467
6.1
20,083
5.6
Michelle Smith, the designer behind the
55 to 64 yrs.
39,301
12.4
42,764
12.8
38,847
10.8
brand Milly, to launch a limited edition
65 yrs. & over
44,689
14.1
55,969
16.8
72,774
20.3
collection in May that would be inspired
All ages
316,439 100.0
333,896 100.0
358,471 100.0
by the Hamptons summer sophistication.
Note: Totals may not add due to rounding.
In April 2013, Banana Republic
Source: US Department of Commerce, Population Series P-25.
announced a partnership with Daniella
Helayel, the founder of the Issa London brand (and known for designing Kate Middletons engagement
dress), to launch a safari-inspired limited edition collection in August.
- - - - - - - - - 2013 - - - - - - - - - - - - - 2020 - - - - - - - - - - - - - 2030 - - - - - - - NUMBER
% OF
(THOUS.) TOTAL
NUMBER
% OF
(THOUS.) TOTAL
NUMBER
% OF
(THOUS.) TOTAL
Specialty retailers are losing shoppers to department store chains that have overhauled selections to bring
shoppers back. Chains such as J.C. Penney Co. Inc., Kohls Corp., and Macys Inc. are offering more
exclusive private-label goods that are fashionable.
A LOOK AT THE INTIMATES CATEGORY

Intimates have a number of attractive characteristics as an apparel category. Notably, since intimates (or
bras and panties) are both staples and luxuries, the category is less cyclical than fashion, yet provides
growth opportunities for specialty retailers.
What triggers our interest is how many specialty apparel brands are testing the intimates market, notably in
the youth (18- to 24-year-old) market. The intimate category differs from the apparel category in that
demand is less discretionary than fashion apparel, yet it is a relatively cheap way to splurge on oneself or
receive a thoughtful gift from ones significant other. Moreover, raw material cost inflation is not a
significant factor, in our view.
Traditionally, intimates have been sold in a second-story corner of a department store or national chain
retailers such as Macys, Sears, J.C. Penney, or Kohls. Maidenform Brands, Inc. is a significant player in
these channels: in 2012, approximately 41% of its sales were to department stores and national chain
stores, and another 32% to mass merchants. In 2011, Maidenform launched its Maidenforms Charmed
collection of bras and panties in Macys department stores and company-owned retail stores. It will be
interesting to see if the target 18- to 22-year-old will find the intimates department within the behemoth of
Macys.
L Brands. This company (formerly Limited Brands) was the first to take the intimates category to the
specialty store format in scale. But as Les Wexner, L Brands founder and CEO, frequently notes, there is a
lot of prime white space for growth opportunists, and if Victorias Secret can execute a successful sub14
INDUSTRY SURVEYS
brand with Pink, why cant American Eagle Outfitters or Chicos? This is not as easy as it sounds, but we
think the worst is behind them as both concepts are reaching critical mass and beginning to benefit from
scale economies in sourcing (bra manufacturing is far more complex than apparel, with as many as 75 steps
in assembly).
L Brands Victorias Secret brand reported a 7% gain in comparable-store sales (comp) in fiscal 2013 (ended
January 2013) against a 14% comp gain in fiscal 2012. With brand sales of $6.6 billion in fiscal 2013,
Victorias Secret is the juggernaut in the intimate apparel space, though an estimated 35%45% of its sales
are in categories other than traditional intimates (bras, panties, slips, and foundations). Strength in the
Victorias Secret brand has allowed for successful extensions to fragrances, cosmetics, and all forms of
apparel and accessories at Victorias Secret Direct.
The overt sexuality of the VS brand is intimidating to many young women, ergo, development of the subbrand Victorias Secret Pink in fiscal 2005, positioned as an aspirational brand celebrating campus life
designed to appeal to the spirit, humor, optimism, and self-confidence of the college woman. Pink has since
grown into a $1 billion-plus brand sold in 34 US and 10 Canadian stand-alone stores, as well as 1,000+
Victorias Secret stores, as of May 2013. Ideally, the Pink customer graduates to a Victorias Secret
customer, where her intimate needs can be met until shes 40-ish, when Soma (from Chicos FAS) is eagerly
awaiting her arrival.
Chicos. Chicos Soma brand offers an attractive growth opportunity, with sales through 600+ domestic
stores and categories spanning traditional intimates as well as sleepwear, activewear, and very casual attire.
Among all of Chicos FAS brands, Soma achieved the highest comp sales gain in the fiscal 2013 fourth
quarter (ended January 2013). Further, the fourth quarter was the Soma brands 11th straight quarter of
double-digit comp sales growth. The company plans to open 45 net Soma locations during fiscal 2014. As
of February 2013, there were 193 Soma frontline boutiques and 16 Soma outlets.
American Eagle Outfitters. At aerie, sold at 151 stand-alone stores as well as the 1,000+ American Eagle
Outfitters locations, success was early as the American Eagle girl was quick to walk across the store to the
aerie shop-in-shop. But as the brand extended over an increasing number of categories from dormwear to
personal care and activewear, we believe it was cannibalistic to American Eagle. In the fiscal year ended
January 2013, the company closed seven stand-alone aerie stores. American Eagle is currently evaluating the
remaining stand-alone stores with respect to the margin run rate and the return on invested capital, but
believes the other stores will run profitably. The company has adopted a new approach for aerie, whereby it
is focusing more on side-by-side and shop-in-shop aerie locations that will stock a full assortment of bras,
panties, sleepwear, loungewear, swimwear, personal care, and fragrance. The company is looking at its
existing stores across the US and Canada and has identified a number of stores suitable for either a side-byside or a shop-in-shop aerie location. Using this approach, the company believes it will be able to leverage
its American Eagle Outfitters customers and assets more meaningfully.
Abercrombie & Fitch. This company joined the fray in 2008, with its twist on intimates by sprinkling a
little fun and sand in the launch of Gilly Hicks; officially labeled as, the cheeky cousin of Abercrombie &
Fitch, inspired by the free spirit of Sydney, Australiathe All-American brand with a Sydney sensibility.
Currently, there are 20 Gilly Hicks locations in the US and seven international locations. Among the new
stores, there is a new combined Hollister and Gilly Hicks store in London.
Our take on the attributes of these youth intimate brands is that aerie is feminine and demur, delicate and
girly; Pink is brash and colorful, irreverent and flirty; and Gilly Hicks is sporty beach-babe with an easy
Australian laidback style. On the merchandise front, the differences arent so great, though Pink is the most
colorful and Gilly Hicks the most nuanced. In terms of sizing, we see Pink and aerie providing dormwear to
most body types, and Gilly Hicks just the skinny-model type.
In sum, despite Victorias Secret accounting for an estimated one in four bras sold to women under 30 in the
US, we see substantial opportunity for Victorias Secret along with these newer brands, as they grow and
develop, to include product extensions, and channel and geographic penetration. Noting that a Victorias
INDUSTRY SURVEYS
15
Secret flagship opened in London in July 2012, we see Europes fragmented intimates market as fertile
ground for the Victorias Secret brand.
SPORTING APPAREL GOES HIGH-TECH

Athletic apparel has come a long way from the era of pairing a dowdy gray cotton sweatsuit with tennis
shoes. Now, athletic togs promise to hug the body with materials that insulate the wearer from cold weather,
while wicking away sweat to boost performance. Running shoes can be synced with computers to measure
performance. Other advances in sports apparel include tagless T-shirts and fabrics that manage odors.
Technological advancements allow manufacturers to maintain or increase prices and keep consumers loyal
to their brands. Consumers have responded to the high-tech offerings, with activewear apparel sales
representing a $58 billion market, according to industry sources.
Under Armour. One of the pioneers in advanced athletic apparel is Under Armour Inc. Founded in 1996,
the company offers compression apparel that regulates body temperature by wicking away perspiration to
keep an exerciser comfortable. Users wear the companys HeatGear line when it is warm, ColdGear when it
is cold, or AllSeasonGear for moderate temperatures. Revenues have more than tripled since 2006, to $1.84
billion in 2012, as it expanded into apparel for women and footwear. In March 2011, the company
introduced Charged Cotton, its cotton performance apparel gear line, which includes mens and womens
shirts and shorts, along with capri tights for women. The company also launched t-shirts with its new
Coldblack technology, which keeps the body cool and protects the skin from sun damage.
Under Armour has opened a few of its own retail stores and ended 2012 with 102 factory stores in the
outlet channel, up from 80 in 2011. The company is also investing in both talent and a new design center in
New York City to support its womens division, which accounted for 30% of apparel sales in 2012, up
from 20% in 2005. We look for Under Armour to sharpen its womens apparel offering (i.e., improved fits
and styles) to better compete with industry leaders such as Nike and Lululemon Athletica Inc.
Nike. Nike keeps innovating constantly to come up with new technologies. Its most recent innovation is
the Flyknit shoe technology, which the company believes could become a blockbuster product. The Flyknit
Racer is a 5.6-ounce running shoe, manufactured from synthetic yarn woven together using a computercontrolled weaving technology. The manufacturing process not only makes the shoes feel like a second skin,
but also results in higher margins and enhanced operational efficiencies by reducing labor costs and
production time. Since the upper part of the shoe is woven into a single piece, the production process is
nearly zero-waste. It is one of the most environment friendly shoes produced by Nike. The shoes, priced at
$150 each, hit US stores in July 2012 and were made available globally at select Nike retail locations in
August. Nike has released other versions of the Flyknit shoe, such as the Flyknit Trainer+ and Flyknit
Lunar1+ (which was launched in February 2013).
OFFSHORE SOURCING
In the ongoing push to cut expenses, US apparel and footwear manufacturers increasingly have moved their
production facilities to lower-cost regions outside the United Statesnotably Mexico, the Caribbean,
Central America, Asia, and sub-Saharan Africa. Many manufacturers, though, have retained some facilities
in the United States to manufacture products that require a fast turnaround time.
Following the 1995 implementation of the North American Free Trade Agreement (NAFTA) and the
subsequent lowering of tariffs, apparel manufacturing in Mexico and the Caribbean grew significantly. The
proximity of these countries to the United States means that their facilities can offer significantly shorter
shipping times compared with Asian manufacturers, while also providing low-cost productionfactors that
are especially important for basic goods.
China: a key source of US apparel imports
China accounted for 37.8% of all apparel imported into the United States in both 2012 and 2011, versus
39.2% in 2010, 37.2% in 2009, and 32.0% in 2008, according to the Office of Textiles and Apparel
16
INDUSTRY SURVEYS
(OTEXA), part of the US Department of Commerce. China also accounted for 71.9% of US footwear
imports in 2012, versus 74.1% in 2011, 76.0% in 2010, 76.1% in 2009, and 74.4% in 2008. We believe
rising production costs, along with a slowdown in the US economy, has eased the rate of growth that
Chinese imports have enjoyed in the US.
Having plants in Mexico and the Caribbean provides a quick turnaround time, an advantage that may prove
increasingly significant for manufacturers in those areas as Chinas low-cost advantage erodes. Nevertheless, as
Chinese manufacturers improve quality, they will be able to maintain and grow their share of the US (and the
worlds) apparel market, in our view. Chinas factories employ highly skilled laborers capable of producing
complex garments. In contrast, AGOA-eligible countries are unable to produce fashionable, high-quality
garments due to the generally low levels of technical expertise and literacy, underdeveloped infrastructure, and
a dearth of capital. In addition, companies that set up and run plants in China are taxed by the Chinese
government at a lower rate than if those plants were operating in the United States. Moreover, by keeping
their sweetened profits in China, US-based apparel makers can fund future growth.
HOW THE INDUSTRY OPERATES

Although apparel and accessories can be considered as two separate industries, they often overlap, with
many companies selling goods in both categories. In addition, their consumer demand profiles are similar:
apparel and accessories such as footwear are necessities, yet they are partly discretionary as well.
At their most basic level, these industries supply people with utilitarian attire that is affordable and unlikely
to change drastically in style from year to year. For more fashion-conscious consumers, the industries strive
to update their assortments to reflect changing trends or to offer innovative styles or features that command
premium prices.
While individual companies sales depend on the specific products they offer, overall industry demand is
driven by general economic trends, including changes in disposable personal income, consumer confidence,
and consumer spending. During periods of prosperity, for example, consumers are more inclined to update
their wardrobes, buy the newest fashions on a whim, or splurge on luxury items. During recessions,
consumers tend to shy away from luxury goods, postpone apparel and footwear purchases that are not
absolutely necessary, or replenish their wardrobes with inexpensive items.
Population growth and demographic trends also influence demand. Obviously, when the number of people
rises, so does overall demand for apparel and accessories. However, with the US population growing by only
1% per year, companies in this industry are looking overseas for growth opportunities. Economic growth will
be particularly dramatic in Asia. According to the World Bank, more than 600 million people in East Asia will
earn enough to be considered middle class by 2030, up from just more than 100 million in 2000.
Demographic trends within the United States also can affect the quantity and type of apparel and
accessories consumers demand. For example, as the leading edge of the baby boomer generation (those born
between 1946 and 1964) enters retirement, these consumers have shifted their spending priorities to needs
other than clothing, such as healthcare. They are also more likely to buy comfortable clothes and shoes
rather than the latest fashions.
Changes in consumer attitudes and preferences also have an effect on apparel demand. Apparel designers
and merchants must adapt to lifestyle and fashion trends by altering their product lines. To accommodate
consumers increasing emphasis on fitness and exercise, for example, many apparel manufacturers have
added athletic styles to their mix. Preteen and teen markets tend to be particularly fashion-driven, and
apparel and footwear brands must closely monitor and anticipate the ever-changing styles and items that
these consumers want.
Although these industries are mature and slow growing, they exist in a dynamic and competitive
environment. In order to improve profitability, many companies are adopting new technologies and
restructuring to create leaner organizations. Consolidation has been prevalent in these industries in recent
INDUSTRY SURVEYS
17
years, as larger companies strive to lower their costs by gaining leverage in buying from suppliers and selling
to customers, and by achieving economies of scale in manufacturing and marketing. Moreover, the line
between traditional manufacturers and retailers is blurring: the Internet offers brands direct access to their
customers, while traditional department stores develop proprietary store labels for differentiation purposes.
DIVERSE PRODUCT LINES AND WAYS OF OPERATING

The apparel and accessories industries are diverse, with hundreds of product lines designed for men,
women, and children in a wide range of styles and price points. Each line is designed specifically for a
targeted consumer group, based on its observed and expected trends and needs.
In the apparel industry, companies can operate as manufacturers (wholesalers), as retailers, or as both. For
instance, Gap Inc., a vertical retailer, outsources the production of its apparel and accessories, which it then
sells in its own stores. Some manufacturers, like Kellwood Co., sell almost exclusively to retail channels. Yet
others, like Quiksilver Inc., The Jones Group Inc., and Fifth & Pacific Companies Inc. (formerly Liz Claiborne
Inc.), distribute their products through multiple channels, combining traditional retail channels with their own
retail stores.
APPAREL MANUFACTURERS' RETAIL OPERATIONS
RETAIL
COMPANY
FISCAL
YEAR END
NO. OF
AS % OF
STORES NET SALES*
Carter's Inc.
Jan. '13
663
52
Coach Inc.
Jun. '12
729
89
Branded stores
354
Factory stores
169
AsiaTable B03: APPAREL

310
The Jones
Group
Dec. '12
935
26
MANUFACTURERS
Branded
stores
247
RETAIL
Outlets
454
OPERATIONS
Concessions
234
Fifth & Pacific
Jan. '13
511
NA
Branded stores
344
Outlets
133
Concessions
34
Maidenform Brands
Dec. '12
77
10
Nike
May '12
826
15
PVH Corp.
Jan. '13
2,000+
NA
Polo Ralph Lauren
Mar. '12
853
50
Ralph Lauren
103
Club Monaco
59
Rugby
16
Outlets
201
Concessions
474
V.F. Corp.
Dec. '12
1,129
21
Branded stores
1,049
Outlets
80
NA-Not available. *Includes Internet and catalog sales.

Department store shop-in-shops, branded stores, and
factory stores. Formerly Liz Claiborne Inc.
An apparel manufacturer may sell its products under its

own brand name, a brand name that it has licensed
from another company, or a retail customers private
label. For a manufacturer, private-label manufacturing
not only provides an additional source of revenue, but
also allows its plants to run at greater capacity, thus
reducing the per-unit production costs of its own
branded goods. Moreover, since the manufacturer does
not have to support the marketing of private-label
goods, such items can be almost as profitable as
branded products. The increasing diversification of
operations means that the roles of apparel
manufacturer, retailer, brand manager, and licensee
continue to overlap and blur.
Broad apparel categories include sportswear, career
apparel (comprising both traditional and casual styles),
dress, and athletic apparel. Price points in the apparel
industry are (in ascending order) popular, moderate,
better, bridge, and designer.
Fabrics play an important role in function and quality.
In general, woolens and knits are high-quality fabrics
that can command higher selling prices. Woven fabrics
tend to be lower in both quality and price.
Many traditional apparel vendors, aiming to diversify

their assortments, offer complementary accessories like
costume jewelry, handbags, hats, belts, watches,
sunglasses, scarves, gloves, and footwear. A smaller
number of firms are niche players in the accessories
market, targeting different price points. For example,
Coach Inc. aims for the premium-priced segment, while Fossil Inc. and Claires Stores Inc. focus on the
moderate- and popular-priced markets, respectively.
The unique skill set of vertical apparel retailers
The desire to better control their destiny has propelled apparel companies to develop a specialty retail
strategy. In this approach, the store location is a branding tool; merchandise presentation and customer
18
INDUSTRY SURVEYS
service are integral to the total brand experience. Companies that market wholesale apparel brands, in
contrast, depend on the retailer for prime store real estate, as well as for knowledgeable and engaged store
associates.
In addition to the marketing and product skills (design and sourcing) that are common to both wholesalers
and retail apparel brands, specialty apparel retailers need real estate expertise, the ability to flow
merchandise in a timely manner from sourcing base to individual stores (often by way of a distribution
center), and in-store presentation and store labor scheduling skills. At the same time, they need to maintain
brand positioning and not over-distribute the brand.
FACTORING
A factor is a specialized financial intermediary that purchases accounts receivable at a discount. Companies
use factoring to manage their accounts receivable and provide financing. Under a factoring agreement, a
company sells or assigns its accounts receivable in exchange for a cash advance. The factors discount
incorporates a credit risk premium (based on the likelihood of collecting the receivable), administrative fees,
commissions, and interest charges.
Typically, apparel firms enter factoring arrangements because alternative (and cheaper) sources of credit
arent available. Without factoring, these vendors would not have the cash to operate fully and thus would
be unable to deliver goods in sufficient quantities to the retailers. The result, retailers would face meaningful
stock-outs, which would have a negative impact on revenues in an already weak environment.
According to the National Retail Federation, an industry trade group, CIT Group Inc. is the primary factor
for roughly 2,000 vendors, most of which generate less than $100 million in revenue. These vendors deliver
to about 300,000 retailers. According to several factoring companies, CITs portion is sufficiently large that
it would be difficult for other players to absorb the total factoring needs should CIT be unable to participate
in the market.
INTENSE COMPETITION
Despite years of consolidation activity, the apparel and accessories industries remain extremely competitive
and highly fragmented. This is most likely due to the low barriers to entry: these industries are characterized
by simple technologies, low fixed assets per employee, and ease of expansion through the use of contractors.
One needs only good clothing designs that attract department store and/or specialty store buyers. If a
designer gets orders, he or she can contract the production of the item to a low-cost, independent
manufacturer, usually outside the United States.
Although getting into the business may be relatively easy, staying in is much more difficult. Typically, small
start-up companies are undercapitalized and lack broad-based global sourcing; they may also lack marketing
muscle to give their products the exposure needed to build brand loyalty among consumers. In addition, many
do not have the technology and systems infrastructure that major retailers now demand. These small firms
often seek to be acquired by larger companies as a way to expand the sales of their designs.
The power of big retailers is a major challenge for many apparel vendors and manufacturers. As retailers
shrink their inventories and order closer to the time that merchandise is needed, manufacturers are forced to
assume more inventory risk. In addition, their sheer size puts big retailers in a strong position to negotiate
favorable terms with manufacturers, with regard to pricing, shipping, co-advertising (in which retailers and
manufacturers share the cost of advertising), and product labeling.
Consumers also wield considerable power over apparel and accessories brands, as they can switch readily from
one product or brand to another. To dissuade them from doing so, manufacturers attempt to raise brand
awareness and build brand loyalty among consumers. A strong brand image typically gives a manufacturer
more pricing flexibility by creating a must-have perception to the consumer. Of course, some segments, such
as the popular-price segment, compete strictly on price: consumers purchase whichever product is the cheapest.
Manufacturers in this segment must focus on obtaining low-cost manufacturing.
INDUSTRY SURVEYS
19
BRAND MANAGEMENT AND THE SPECIALTY RETAIL STRATEGY

Both traditional apparel brands (those available in department stores) and vertically integrated specialty
apparel retail brands need to execute brand management strategies that create value for the consumer and
brand equity for the apparel company. When apparel becomes a commodity, the apparel companys pricing
power is nil and deflationary pressures (along with price wars) rule the day. On the other hand, when
companies create apparel brands that provide some emotional meaning to the consumer, pricing is not the
sole driver of purchases. Successful brands provide opportunities for brand extensions and potentially
generate superior gross margins.
Over time, consumers have become brand polygamists according to Design Forum, a retail consulting
firm, a position with which we heartily concur. To compensate for lower levels of brand loyalty, companies
now must incorporate tangible product features, such as quality and appearance, with intangibles, such as a
personal level of communication and innovation, an emotional connection, or aspirational value. For
example, Nike Inc.s NIKEiD program enables shoppers to design their own footwear, apparel, and bags.
By bringing individual customization to the activewear giant, this program differentiates the brand from its
competition and more thoroughly involves the consumer in the overall brand experience.
Lifestyle branding began with Ralph Laurens successful foray into domestics 25 years ago. The launch of
the Martha Stewart Collection in 2007 was the largest brand debut in Macys history. The collection spans
bed, bath, entertaining, and cooking in an exclusive branding statement with an authoritative editorial voice.
Brand management requires a balance between preserving and growing brand value (also known as brand
equity) and capitalizing on opportunities to expand or stretch the brand. Done well, a brand extension can
strengthen the brand propositionthe perception of value associated with the brand. However,
extending a brand too far beyond its core associations or expanding its markets to less prestigious channels
can weaken a brand.
Superior brand strategy often translates into a sustainable competitive advantage and creates barriers for
competitors to dislodge loyal customers. Other brand benefits include premium pricing and leverage in the
distribution channel. For an apparel or accessories brand, such leverage means superior product placement
or preferred square footage in retail outlets. Specialty apparel retailers with leading brands have distribution
leverage: they can demand (and get) the best mall locations.
ENHANCING CUSTOMER LOYALTY

Apparel companies go to great lengths to attract new customers and retain existing ones. In a market that
bombards consumers with advertising campaigns, and lifestyle and fashion messages, a brand name is a
powerful weapon in these efforts.
Brands have become increasingly significant to apparel and footwear sales. Many consumers have less time
to shop than previously, and they are spending their disposable income more carefully. Established brand
names, conveying an image of quality, make shopping easier and faster for many consumers. For
manufacturers, brands build consumer loyalty, which translates into repeat business.
Many established brand manufacturers, such as Tommy Hilfiger, Polo Ralph Lauren Corp., and Under
Armour Inc., are leveraging their existing brand names by adding accessory lines, such as sunglasses,
watches, fragrances, wallets, and footwear. For instance, in February 2013, Under Armour opened its new
Brand House store in Baltimore to showcase its breadth of products and increase consumer awareness of its
womens and footwear businesses, specifically. Some apparel makers, such as Polo Ralph Lauren, even have
ventured into home furnishings, adding branded linens and dinnerware. Footwear manufacturers, too, have
capitalized on the strength of their brand names, with companies such as Nike and Adidas adding apparel,
accessories, and sports gear to their product portfolios.
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INDUSTRY SURVEYS
License to grow
Licensing is a common means for companies to extend their product lines and is often a key element of an
integrated brand-marketing program, enabling a company to extend its brand into new categories. Brand
owners collected nearly $5.3 billion in licensing royalty revenue in North America in 2011 (latest available),
up 5.0% from 2010 (following a 1.9% decline in 2010), according to the International Licensing Industry
Merchandisers Association (LIMA), a licensed property marketing group. Entertainment/character licensing
continued to garner the largest share of the market, accounting for 47% of the total, while
trademarks/brands was second with $910 million, or 17%, followed by fashion (14%) and sport (13%).
Merchandising is key
Manufacturers must support their brands through advertising campaigns and by delivering the right product
in an appropriate retail setting. They also must establish and maintain good relationships with retailers and
help them to effectively present and sell their goods. Some manufacturers supply retailers with an in-store
shopfrom concept to display, including fixtureswhich allow the retailer to create an environment
consistent with the brands image. It also increases consumer product recognition and loyalty as customers
become familiar with a products in-store presentation and location.
A manufacturers merchandising team usually utilizes consumer focus groups to provide customer feedback
on the companys products or to generate new product ideas. This information is shared with designers and
the production staff. The merchandising team also will educate the retailer on the companys new products
and servicing of customers. Increasingly, manufacturers will open a few retail stores as a way to test their
products and gain direct feedback from their end customers. An example is Under Armour, which opened
its first specialty store geared toward skiers and snowboarders in Vail Village, Colorado, in November 2011.
CUTTING LABOR COSTS WITH OFFSHORE SOURCING

US labor costs tend to be relatively high, leading many manufacturers to turn to overseas sourcing for a
majority of their products. Companies can establish overseas production in three ways. They can buy or
build a plant, establish agents that have ties with factories in the foreign country, or contract directly with
the owners of foreign factories. Typically, major US apparel companies establish overseas production in all
of these ways. They also use domestic sources other than their own plants.
Using overseas manufacturers and/or outside domestic contractors has several benefits for apparel
companies. Overseas sourcing allows them to compete with less expensive imports. Domestic sourcing
allows companies to respond quickly to fashion changes and to retailers needs for automatic inventory
replenishment.
For production of more complicated apparel items, US companies generally go to Southeast Asia, where many
countries have large pools of skilled laborers who can create high-quality products. Products that are simpler
to make are outsourced to less-developed countries, where labor rates are lower than in Southeast Asia.
Reduced trade regulation
The shift of clothing jobs away from the US has accelerated with the expansion of free-trade agreements and
the elimination of tariffs on imported goods. Some of the more important developments are detailed below.
The Multi Fibre Arrangement (MFA), also known as the Agreement on Textile and Clothing (ATC),
governed the world trade in textiles and garments from 1974 through 2004, imposing quotas on the
amount developing countries could export to developed countries. It expired on January 1, 2005.
The North American Free Trade Agreement (NAFTA), which went into effect on January 1, 1994,
allows US companies to ship fabric produced in the US to Mexico for assembly and to ship the clothing
back to the US without incurring import duties.
The Caribbean Basin Trade Partnership Act (CBTPA), passed in May 2000, led to a growing
percentage of production being sourced in that region, which offers the advantage of much shorter lead
times because of its proximity to the US. In particular, the CBTPA extended preferential tariff treatment
to textile and apparel products assembled from US fabric (previously excluded from the program).
INDUSTRY SURVEYS
21
The African Growth and Opportunity Act (AGOA), also passed in May 2000, promised to spur the
level of apparel and footwear imports from sub-Saharan Africa, which it did. However, the dismantling
of the MFA agreement in 2005 significantly increased competition from non-African developing
nations, especially China. Since the phasing out of quotas, Africa is the only region that has seen its
share of the US apparel import market decrease.
Trade Development Act (TDA), which took effect in October 2000, gives duty and quota preferences to
many countries in the Caribbean and sub-Saharan Africa that export apparel to the US if the goods
meet certain content conditions (such as including fabric made in the US).
The Dominican Republic-Central American Free Trade Agreement (DR-CAFTA), signed in May 2004
with Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua, eliminated tariffs and trade
barriers between the US and those countries for many products, including apparel. CAFTA was
subsequently expanded to include the Dominican Republic and was renamed DR-CAFTA. Implemented
on a rolling basis in 200607, it immediately eliminated tariffs on about 80% of US exports to the
participating countries; the rest will be phased out over the subsequent decade. As a result, DR-CAFTA
does not require substantial reductions in US import duties with respect to the other countries, as the
vast majority of goods produced in the participating countries already enter the US duty-free due to the
US governments Caribbean Basin Initiative. DR-CAFTA reduces tariffs, but every nation remains free
to set its overall tax level as it sees fit.
Other talks are progressing under the auspices of the World Trade Organization (WTO). China joined the
WTO in December 2001. After the elimination of quotas among all WTO-member countries in 2005, exports
of clothing and shoes from China surged. From a 25.9% share in 2006, China grew to represent nearly
38% of all apparel and nearly 72% of all footwear imported into the US in 2012, according to the Office of
Textiles and Apparel (OTEXA), part of the US Department of Commerce. In tandem with the rise of Chinas
apparel and footwear exports to the US, China has become one of the fastest growing export markets for
US-made textile mill products (a category that includes yarns and fabric), according to OTEXA. In its
ranking as an export market for US-made textile mill products, China was in fourth place in 2012, behind
Honduras (third), Canada (second), and Mexico (first).
VITAL ROLE OF TECHNOLOGY

In both the apparel and footwear industries, technological innovations have facilitated global expansion and
closer coordination between retailers and manufacturers, while also cutting costs. For example, improvements
in manufacturing processessuch as efficiencies in cut-and-sew operations in the apparel industryare
helping to reduce manual labor costs.
Rapid improvements in computer technology have helped to shorten the new product development phase
from years to practically months, especially in the fashion/style/high-performance areas. In the athletic
footwear industry, for example, computer-aided design (CAD) systems enable a manufacturer to reduce the
design-to-production cycle to only a few months, so footwear companies can provide the marketplace with
a steady flow of new products.
Apparel makers that link with retailers through quick-response programs and other electronic technologies
go a long way toward making themselves indispensable to their customers. The goal of quick response is to
keep inventories lean and avoid overstocking, while ensuring that retailers have the merchandise customers
want to buy, when they want to buy it. By assuming responsibility for stocking stores, apparel companies
help to carry inventory costs, historically one of retailers highest costs. They also alleviate many of the
retailers reordering headaches and help them buy as close to the selling season as possible. For
manufacturers today, quick response has become key to survival.
One such system to link retailers and manufacturers is called electronic data interchange (EDI). An EDI
system employs interconnected computer terminals throughout the entire manufacturing and sales systems.
At the retailers checkout counter, electronic point-of-sale scanners read the bar code attached to each item
and record the product sold, its price, and even such details as its color and size. This up-to-the-minute
report on a given stores sales is then relayed to the manufacturer.
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INDUSTRY SURVEYS
With direct access to detailed sales information, the manufacturer can tailor its production to consumer
demand. The data recorded by bar code scanners in the EDI system also are used for automatic (or just-intime) reordering, enabling a manufacturer to restock a retailers shelves quickly, using no more than a
computer for communication. In addition to providing for automatic replenishment, EDI makes distribution
and shipping information processing more efficient.
Quick response and EDI technologies have proven successful with basic goods, which are relatively simple to
produce, require shorter lead times, and increasingly are being manufactured in highly automated factories in
the US. These systems are more difficult to implement for seasonal and fashion apparel, however, because such
goods require more labor input and thus tend to be made in the Caribbean or Southeast Asia.
SALES CHANNELS PROLIFERATE

Today, most companies distribute their products through a variety of channels: wholesale, catalog, and
Internet sales, as well as through their own retail stores. Within the wholesale channel, manufacturers often
try to sell to various types of retailers, including department stores, specialty stores, discount stores, and
national chains.
In the past decade, many manufacturers have opened their own retail stores, reducing their dependence on
the wholesale channel while potentially increasing sales. This strategy has benefitsit permits
manufacturers to showcase an entire line of products, enhance brand awareness, test new products, and
directly collect customer feedbackbut it also carries the risk of alienating retailers who carry the same
merchandise. Some manufacturers have also established outlet stores to move older inventory.
Specialty retailers the most important channel
Consumers buy apparel and accessories from a variety of retail outlets. Differences exist in the distribution
mix for mens, womens, and childrens items. For example, more womens apparel than mens is purchased in
specialty and department stores. Mens apparel is more prevalent in discount stores and general merchandise
chains. In the childrens segment, a
considerably higher portion of apparel is
APPAREL STORE vs. DEPARTMENT STORE SALES
(In billions of dollars)
purchased in discount stores: because
children quickly outgrow their clothing,
200
parents are less inclined to spend a lot of
180
money on a single item and are thus more
160
inclined to shop at discount stores.
140
120
100
CHART H06 APPAREL

STORE vs. DEPARTMENT
STORE SALES
80
60
40
20
0
2001
02
03
04
05
06
07
08
09
10
Apparel stores
Discount department stores
Conventional and national chain department stores
11
2012
Fashion is increasingly responsive to the

styles sought by the preteen and teen
markets, whose influence is rising. When
promoting a product, however,
manufacturers and retailers must not only
take the user into account, but the shopper
as well. For example, many mens apparel
items actually are purchased by women.
Direct to consumer: Internet and catalog

Total e-commerce sales grew 15.8% in
2012, according to the Census Bureau of
the US Department of Commerce, which
compares with the 5% growth rate for total retail sales. The Internet has benefits for both consumers and
manufacturers. It allows consumers to shop from anywhere at any time they wish and to make easy price
comparisons, conveniences they seem to appreciate. Manufacturers use Internet sites for marketing and
informational purposes, as well as to make sales. The Internet enables apparel and footwear brands to
customize merchandise to shoppers specific needs, which enables firms to achieve better pricing and to
develop a more emotional bond with the consumer. Both Nike Inc. and Polo Ralph Lauren are at the
forefront of this strategy.
INDUSTRY SURVEYS
23
Selling by catalog is another important method of distribution. Before the advent of the Internet, it was the
primary way to shop at home. Today, however, most retail apparel brands combine catalog sales with ecommerce sales under the moniker direct to consumer. This is part of an overall branding strategy of meeting
consumers needs 24/7, thereby strengthening the emotional bond that is part of the branding experience.
Catalogs are a form of advertising or direct marketing, bringing the product to the consumer. Many retailers
report that receipt of the catalog spurs shoppers to the Internet or the store for the purchase occasion.
KEY INDUSTRY RATIOS AND STATISTICS

Gross domestic product (GDP). Reported quarterly by the US Department of Commerce, GDP tracks the
market value of all goods and services produced by labor and capital in the United States; it is, thus, the
broadest measure of aggregate economic activity. As the economy expands and contracts with the business
cycle, economic growth is measured by changes in inflation-adjusted (or real) GDP. Two consecutive
quarters of decline in real GDP generally signal that the economy is in a recession.
Real GDP rose 3.1% in 2005, 2.8% in 2006, 2.0% in 2007, and 0.4% in 2008; it then declined 2.4% in
2009 before rebounding to 2.9% in 2010, 1.8% in 2011, and 2.2% in 2012. As of April 2013, Standard &
Poors Economics (which operates separately from S&P Capital IQ) was projecting that real GDP would
increase 2.7% in 2013 and 3.1% in 2014.
Disposable personal income. Each month, the US Department of Commerce reports this measure of
consumers after-tax personal income, adjusted for inflation. Disposable income influences the level of
expected consumer spending. When incomes are rising, consumers are willing to spend more than
previously, which bodes well for apparel and footwear sales. Conversely, when incomes are declining,
consumers are more likely to defer spending and save their money.
In 2012, nominal disposable personal income increased 3.3%, following increases of 3.8% in 2011, 3.6%
in 2010, 0.7% in 2009, 3.9% in 2008, 5.7% in 2007, 5.9% in 2006, and 4.1% in 2005. As of April 2013,
Standard & Poors Economics was projecting that nominal disposable personal income would rise 2.5% in
2013 and 5.6% in 2014.
Consumer confidence. The Conference Board, a private research organization, conducts a monthly poll
of 5,000 representative US households to gauge consumer sentiment and compiles an index of consumer
confidence based on the results. The index is a measure of how Americans feel about the strength of the
economy, business trends, their job
CONSUMER CONFIDENCE INDEX
security or employment prospects, and
(1985=100)
their future earnings prospects.
120
High consumer confidence usually is

accompanied by increased spending and
borrowing. Conversely, when consumer
confidence is low (usually due to
uncertainty about the future), personal
expenditures are likely to be cut back or
postponed. Because consumer spending
accounts for about two-thirds of US
economic activity, consumer confidence is
a widely watched measure.
CHART ConsConf
CONSUMER
CONFIDENCE
100
80
60
40
20
2001 02
03
04
05
06
07
08
09
10
11
12 2013
In 2007, the Conference Boards

consumer confidence index remained
above 100 through August, reaching
111.9 in July, its highest level in nearly six years (the previous peak was 114.0 in August 2001). However,
the index then fell each month through December (when it rose a bit) on what the Conference Board
Source: The Conference Board.
24
INDUSTRY SURVEYS
believed were consumers perceptions of weaker business conditions and a less favorable job market; concerns
over declines in home prices and the stock market may have been contributing factors.
In the early months of 2008, the consumer confidence index deteriorated significantly, reflecting consumers
unease over lackluster business and job conditions, and rising gasoline prices, according to the Conference
Board. From 87.3 in January 2008, the index traced a jagged decline throughout the year and ended at 38.6
in December 2008. Confidence continued to fall in early 2009: the index (which began in 1967) hit at an alltime record low of 25.3 in February. It rebounded through 2009 and stood at 53.6 in December. Readings
bounced around in 2010, from the mid-40s to the low 60s. The index stood at 60.3 in January 2011, up
from 53.3 in December 2010 and the highest level since May 2010. The stronger-than-expected report
indicated greater consumer optimism, on both income and jobs, as 2011 began. However, the index traced
a downward course for most of 2011.
In 2012, the index rose sharply from 61.6 in January to 71.6 in February, but dropped to 64.9 by May. It
then increased to 73.1 in October before falling to 58.4 in January 2013. The most recent reading (for April
2013) for the index showed an improvement to 68.1 from 61.9 in March, with the present situation index
increasing slightly to 60.4 (from 59.2 in March) and the expectations index improving to 73.3 (from 63.7 in
March). The Conference Board said, Consumer confidence improved in April, as consumers expectations
about the short-term economic outlook and their income prospects improved. However, consumers
confidence has been challenged several times over the past few months by such events as the fiscal cliff, the
payroll tax hike and the sequestration. Thus, while expectations appear to have bounced back, it is too soon
to tell if confidence is actually on the mend.
Consumer price index (CPI). Released monthly by the Bureau of Labor Statistics (BLS), this index
measures the average change over time in the prices paid by urban consumers for a market basket of
consumer goods and services. The core CPI smoothes out the index by removing the volatile food and
energy categories. The BLS also releases specific price indices for both the apparel and footwear industries.
APPAREL PRICE INDEXES
(1982-84=100)
240
215
190
165
140
CHART H03
APPAREL PRICE
INDEXES
Inflation rates reflect and influence pricing

decisions of apparel and footwear
companies and their suppliers. Most
companies try to pass on cost increases to
the consumer. When these increases are
large, however, consumers, stunned by
high prices, may hold back on spending
a condition known as sticker shock.
While prices for many products and

services tend to rise over time, that trend
90
does not hold for apparel: prices fell each
2001 02
03
04
05
06
07
08
09
10
11
12 2013
year from 1998 through 2005. In 2009,
the CPI-U for apparel rose 1.9% from
Men's and boys' apparel
Women's and girls' apparel
December 2008 to December 2009, to
Footwear
CPI - Total
end the year at 119.4. In 2010, for the 12
months ended December, this metric
CPI-Consumer price index.
Source: Bureau of Labor Statistics.
dropped 1.1% to 118.1. Reflecting higher
input costs, the CPI-U for apparel
climbed 4.6% to 123.5 for the 12 months ended December 2011, and 1.8% to 125.7 for the 12 months
ended December 2012.
115
Overall inflation, as measured by the CPI, rose 2.1% in 2012, 3.1% in 2011 and 1.6% in 2010 (after
declining 0.3% in 2009), versus gains of 3.8% in 2008, 2.9% in 2007, and 3.2% in 2006. As of April 2013,
Standard & Poors Economics was projecting CPI increases of 1.4% and 1.8% for 2013 and 2014,
respectively.
INDUSTRY SURVEYS
25
Interest rates. The level of interest rates influences management decisions regarding business acquisitions,
capital expenditures, dividends, and stock repurchases. High or rising interest rates increase the cost of
borrowing, making companies less likely to expand facilities or to make other capital outlays. At such times,
apparel and footwear manufacturers may postpone or cancel plans to upgrade or expand manufacturing
capacity. The level of interest rates also affects consumers purchasing decisions. Higher interest rates can
curb consumer spending, as people begin to pay down their credit cards and rein in their expenses.
The Federal Reserve Board (the Fed) sets monetary policy and can take actions that directly affect shortterm interest rates in the US banking system. The most recent cycle of rate hikes began in late June 2004,
with a 25-basis-point increase to 1.25%. By October 2006, the Fed had raised the fed funds rate a total of
17 times, to 5.25%. Despite these increases, interest rates remained low on a historical basis, and
particularly so compared with rates in the late 1970s and 1980s.
In September 2007, on concerns of tighter credit conditions intensifying the housing downturn and
restraining economic growth, the Fed began easing, cutting both the federal funds rate and the discount rate
by half a point, to 4.75%. The interest rate reductions continued at subsequent Fed meetings in late 2007
and in 2008. In late December 2008, the Federal Open Market Committee (FOMC) established a target
range for the Fed funds of a record-low 0%0.25% on recession and financial market concerns, where it
has remained. As of April 2013, Standard & Poors Economics was projecting the Fed funds rate at 0.12%
for both 2013 and 2014.
The interest rate on Treasury bills (a proxy for short-term interest rates) fell to an average 0.1% for 2012,
2011, and 2010 from the 0.2% average in 2009, versus the average 1.4% in 2008, and 4.4% in 2007. As of
April 2013, Standard & Poors Economics was projecting the rate to remain at 0.1% in 2013 and 2014.
The yield on 10-year Treasury notes (a proxy for long-term interest rates) averaged 1.8% in 2012, 2.8% in
2011, and 3.2% in 2010, versus 3.3% in 2009, 3.7% in 2008, and 4.6% in 2007. As of April 2013,
Standard & Poors Economics was projecting that the T-note rate would increase to 2.1% in 2013 and
2.6% in 2014.
HOW TO ANALYZE AN APPAREL COMPANY

While there are substantial differences in operating a branded apparel/accessories company and a specialty
apparel retailer, there are many similarities, particularly in the factors that affect them. Lets start there.
A good starting point is to assess the current macroeconomic environment, with emphasis on trends in
employment, and consumer income and spending. The state of the economy in general, and consumer
income and spending in particular, influence the amount of money consumers are willing or able to spend
on clothing and accessories. Demographic and lifestyle trends also can be important determinants of
consumer demand.
At the macroeconomic level, we begin by asking questions about the overall economy. Is the economy
expanding? Or is it slowing and heading for a recession? Are new jobs being created? If so, at what pace?
What is the trend in the unemployment rate? Changes in trendsincremental growth or declinecan be
more meaningful than the absolute numbers. Are consumer spending and overall retail sales growing or
contracting? Are consumer incomes rising, and are consumer debt levels too high relative to income?
On a more micro level, its useful to determine whether consumers are spending more or less on apparel and
accessories relative to other goods. Are apparel and accessories prices rising or falling relative to other
discretionary goods? What are the dominant fashion trends in these product categories and how rapidly is
the fashion silhouette changing? How are the nations changing demographics influencing demand for
apparel, accessories, and footwear?
Once the industrys outlook has been evaluated, the analyst then can evaluate the prospects of a specific
company, be it an apparel brand or an apparel retailer. Analysts evaluating apparel brands and retailers
26
INDUSTRY SURVEYS
have the added advantages of being able to test merchandise quality, compare it with alternatives, and
assess the selling environment in terms of customer service and visual accoutrements.
When visiting a retail location, things to note include how much square footage a store devotes to selling
particular products compared with competitors, whether merchandise appears to be selling at full or
discounted prices, merchandise display formats, and how complete (or broken) collections appear. Also
important are overall traffic trends and the average age of the typical shopper. One also should observe the
degree of merchandise differentiation from competing brands across distribution channels because
consumers shop multiple channelsdiscount, specialty, luxury retailers, and mass merchandisers. Although
the operations in one or two stores may not be indicative of the entire chain, the analyst can get a general
understanding of a retailers store concept and how effectively it is being implemented.
QUALITATIVE FACTORS
The following discussion explains several qualitative factors used to analyze apparel or accessories branded
companies and specialty apparel retailers.
Evaluating a companys competitive stance
Because of the glut of apparel and accessories offerings, any characteristic that favorably distinguishes a
company and its products gives it a competitive advantage in the marketplace. Such traits can include the
following:
Brand names. In the apparel and accessories industries, a strong and recognizable brand name is the key
to success and drives store (and website) traffic. Through marketing efforts, companies try to create a wellknown brand name that consumers will identify with a high-quality or fashionable product. Brand loyalty is
built over time as companies support advertising and promote brand awareness.
For example, through meticulous positioning and aggressive promotional support over the years, Quiksilver
Inc. has transformed itself from a niche brand of board shorts into a leader in the youth-oriented, casuallifestyle apparel and accessories segment. This apparel brand/specialty retailer promotes brand awareness
through its store windows, which are refreshed as often as weekly with new displays of its fashion products.
Product differentiation. A company also can create a competitive advantage by differentiating its product
line from that of its competitors. Differentiation allows a company to charge higher prices and generate
brand loyalty among consumers. This practice is gaining in importance as basic merchandise becomes
increasingly indistinguishable to consumers.
In reality, a company does not have to create a markedly different product, but it must create a perception of
difference. Companies can cultivate an aura of difference through marketing, using advertising to create a
brand image. For example, while Juicy Coutures terry warm-up suits are similar to other makes, this Fifth &
Pacific (formerly Liz Claiborne Inc.) unit has used marketing to help differentiate its brand, creating strong
demand for its goods.
Customer demographics and target market. The growth potential of an apparel brand or specialty retailer
depends primarily on three factors: the size of the target market for the companys products, the markets
growth rate, and the companys market share. It is important to identify the firms target customers and assess
whether the company is successfully addressing their needs and wants from both a marketing and design
standpoint. If the firm targets a narrow demographic group, such as senior citizens or teenagers, it is also
crucial to evaluate the ramifications of expected changes in the segments population growth.
Because a small group of consumers typically provides a large share of a specialty retailers revenues, a
successful company must know its core customers and understand their purchasing habits. At Chicos FAS
Inc., for example, the target market is 35- to 55-year-old females with an annual household income of
$75,000 or more.
INDUSTRY SURVEYS
27
For category-dominant companies in an established segment, sales growth is typically driven by gains in
market share rather than by overall market growth. Retailers operating in emerging or fast-growing
segments often benefit from growth in total sector sales. Coach Inc., for example, has benefited from both
market share and overall market growth since its initial public offering (IPO) in 2000.
Distribution. What distribution channels does the company useits own retail outlets, mail-order
catalogs, department stores, specialty chains, off-price outlets, the Internet, or other methods? Has it
recently expanded or narrowed its distribution system? If it has consolidated its distribution infrastructure,
has it realized any operating synergies by doing so?
Expanding the channels of distribution can reduce an apparel or footwear manufacturers reliance on any
particular channel. Companies must choose channels with some thought to the targeted consumer groups,
and the desired price points and brand images. For example, a company trying to sell first-quality designer
clothes in a mass-market outlet could dilute its brand irreparably.
New product development. For apparel and accessory companies, sales drivers are new fashion trends,
new silhouettes, and new fabrications (fabrics that have been processed with chemicals and provide new
functionality), which may meet consumers needs better than existing designs.
For footwear companies, new products are crucial to drive growth in the short term. In the athletic
footwear segment, new product development centers mainly on technology, with manufacturers aiming
their extensive research and development efforts at improving the performance and endurance of athletic
sneakers. Similarly, sports apparel brands develop fabrics with improved functionality in an effort to
expand their market.
Assessing management. In the apparel and accessories branded and retail businesses, as in most
industries, a company with a superior management team can distinguish itself from its peers by creating
successful competitive strategies. For apparel and accessories companies, in addition to top management,
lead designers and merchandising and procurement officers should also be evaluated.
When evaluating a management teams ability to create, recognize, analyze, and act on market
opportunities, we ask several questions. What is managements financial and operating philosophy? How
long have the senior managers been with the company? What are the managers track records, both
individually and working as a team? If managers have taken control recently, what was their previous
experience? Has the company been adept at integrating acquisitions? Do growth strategies make sense in
light of the current environment and the companys particular situation? Are managements interests aligned
with those of its shareholders?
Manufacturing costs. Despite technological advances, apparel remains a labor-intensive industry. Thus,
most domestic apparel and footwear companies manufacture products in low-labor-cost regions, including
the Far East, the Caribbean basin, and Latin America. China is a particularly large exporter, representing
nearly 38% of all apparel imported into the US in 2011 and nearly 75% of all footwear, according to the
Office of Textiles and Apparel, part of the US Department of Commerce.
Moreover, most of the larger domestic industry participants do no manufacturing at all, but rather source
their merchandise in the aforementioned locales by developing strategic relationships with garment and
footwear factories there. A growing number of apparel firms perform only the entrepreneurial functions
involved in apparel manufacturingbuying raw materials, creating designs, preparing samples, arranging
for production and distribution, and marketing the finished product. A notable exception is VF Corp.,
which manufactures a portion of its branded merchandise.
What drives success in retailing?
In addition to the aforementioned factors, specific areas of analysis for a specialty apparel retailer with
regards to its business strategy include real estate, inventory, same-store sales, and technology.
28
INDUSTRY SURVEYS
Real estate. Location, location, location, a maxim of the real estate business holds true for retailers.
Factors that affect the potential profitability of a store include the areas demographic profile (age and
income) and population growth. Growing populations and wealth accumulation can bolster a companys
long-term viability in a region. Ideally, a store should be located in an area with a demographic profile that
closely matches the stores target demographic.
There are many specialty retail concepts and formats, with locations ranging from mall stores to strip center
outlets to lifestyle centers. Analysts should evaluate the availability of transportation and other factors
governing a locations accessibility to its target customer.
Pay attention to specialty chains with concentrated geographic exposure, for it will then be necessary to
evaluate the economic environment or other characteristics (such as weather patterns) of those regions,
along with their influence on apparel and accessories demand. Geographic concentration can increase a
retailers risk profile in cases such as regional power outages, earthquakes, and hurricanes, or civil unrest.
Most specialty apparel retailers lease their stores, a practice that provides financial flexibility that companies
in other industries may not have. Leases eventually expire, which gives retailers the option to relocate or
close units. However, competition in the industry and pressure to increase earnings sometimes forces retailers
close unprofitable units with unexpired leases. Doing so creates a contingent liability that they have to account
for: they may take a reserve for store closings, pay off the entire lease, and then write off that amount.
Inventory: a retailers crucial asset. For retailers, having the right merchandise in the right place at the
right time is key. Thus, merchandise held in inventory is a retailers most important asset. Although
buildings, property, and equipment usually exceed its value in dollar terms, inventory is what generates
sales, making it the primary determinant of success or failure, profit or loss. While other variables such as
price, location, and service may influence consumers decisions to buy, the actual merchandise in the store
must meet customers expectations and reward their loyalty over time.
The importance of the planning, buying, and controlling of merchandise inventory cannot be overstated. An
analyst should consider inventory growth and inventory turns to determine how well the company is
managing its inventory. (Issues related to industry operations are discussed in more detail in the How the
Industry Operates section of this Survey.)
Same-store or comparable-store sales. This is the most closely watched quantitative indicator for
retailers. Defined as the change in sales from the preceding year at stores open for a certain period (usually
at least 12 months, but sometimes as long as 24 months, depending on the company), this measure is a
barometer of basic demand. Many companies release these numbers on the first or second Thursday of each
month for the preceding month.
Because the same-store sales number excludes growth from newly opened stores, we see it as a better indicator
of organic growth. Looking only at total sales gains can be misleading, as a company that aggressively
opens new units can generate strong sales gains even if its stores are generally unprofitable. Same-store sales
trends also give a better indication of the state of business than a single months numbers do.
Technology. Well-designed information systems can give a retailer a competitive edge over its peers by
providing valuable data on the preferences and buying patterns of its customers. Organizations must be
adept at gathering, understanding, and using information collected at the store level, and analyzing that
data to improve merchandise assortments, store allocation, distribution, expand customer service, and
increase their market share. IT can shorten the supply chain between supplier and vendor networks as well
as integrate internal systems and thereby streamline workflow and reduce expenses.
QUANTITATIVE FACTORS
After getting a grasp on the companys competitive position, the next step is to analyze its financial
statementsthe income statement, the balance sheet, the statement of cash flows, and various components
INDUSTRY SURVEYS
29
of each. Although these are three separate financial statements, they are very much interrelated and need to
be analyzed together. The analyst should also scrutinize the companys earnings quality.
Income statement
The income statement records the financial operations of a firm over a given time period. Among the major
items on an apparel or footwear companys income statement that the analyst should examine are trends in
revenues, gross profit margin, and operating margin.
Revenues or sales. As in most other industries, an income statement analysis for an apparel brand or
retailer begins with the top line: sales. A companys sales growth should be compared with that of its
competitors and the overall market. It is important to determine what is driving sales growth. Is it pricing,
volume gains, or acquisitions, or for the retailer, same store sales gains? Is the sales growth broad-based or
driven by only a few categories? Is the company gaining market share or just riding the markets overall
growth? All things being equal, a more conservative revenue recognition policy is desirable. With apparel and
accessories brands, any trends in discounts and allowances given to retailers also should be considered.
Gross profit margin. A companys gross margin is calculated as net sales minus the cost of goods sold,
expressed as a percentage of gross sales. It generally reflects a companys sales volumes, product mix,
pricing, sourcing, and operational (including manufacturing) efficiency. The cost-of-goods-sold line may
comprise a number of items other than merchandise, including costs of purchasing, warehousing,
distribution, freight, occupancy, and insurance. Gross margin should be evaluated on both an absolute basis
and a relative basis. If a companys gross margin is high compared with its peers, the company may possess
a competitive advantage.
An analyst also should look for trends in gross margin. Are any industrywide factors, such as overcapacity,
cutting into gross margins? Excessive merchandise inventories and competitive pressures tend to induce a
higher level of promotional selling and markdowns, which, in turn, will reduce gross margins. Conversely,
does a particular company have a product in high demand, allowing it to charge a premium price as
demand exceeds supply? If possible, determine what is causing fluctuations in gross margin and whether
those trends will persist.
Comparable-store sales can explain gross margin trends for retail operations. Other relevant indicators for
apparel and accessories brands and retailers include average selling prices (ASPs), initial markups (IMUs),
units per transaction (UPT), average ticket (AT), and inventory turns (discussed later).
Operating profit margin. This figure is derived by dividing the operating profit (gross profit minus
selling, general, and administrative expenses) by sales revenues. The operating margin indicates the
efficiency and profitability of the entire enterprisenot just the manufacturing operations, but also the
corporate, selling, and distribution operations. Nonrecurring items should be excluded from margin
calculations to give the analyst a baseline for comparing results going forward.
Because the operating margin reflects costs that can be managed to some degree (salaries, commissions,
advertising, etc.), it usually is easier to control than the gross margin. The company may derive a certain
degree of expense leverage from increased sales levels, thereby improving operating margins. Thus, an
increase in the operating margin typically indicates that management is using its resources more efficiently,
allowing fixed costs to be spread across greater volumes. On the other hand, a trend of narrowing operating
margins may be a warning sign that management is not operating at its most efficient level.
Balance sheet
The balance sheet reports major categories and the stated values of assets, liabilities, and stockholders
equity at a specific point in time.
Cash and equivalents. A companys cash position needs to be analyzed concurrently with its ability to
generate cash. If a company continually operates with net cash outflows because of working capital needs and
capital spending, one should look at the level of cash and marketable securities on the balance sheet to
determine how long the company can fund operations before it will need to tap the capital markets.
30
INDUSTRY SURVEYS
Inventory. Inventory management is crucial to retailers and manufacturers alike. They must have the right
products on hand in the right amounts; failure to do so could lead to fashion misses or being caught short
during an important selling season. Having too much inventory raises costs and ties up capital. It also may
signal impending gross margin declines, in cases where the products must be discounted in order to sell them
before they go out of style.
INVENTORY/SALES RATIORETAIL APPAREL
2.8
2.7
2.6
CHART H02
INVENTORY/
SALES RATIO
2.5
2.4
Inventory levels are generally available

from a companys balance sheet. The
effectiveness of inventory management can
be measured by the inventory turnover
ratio. This ratio, calculated by dividing the
cost of goods sold by its average
inventory, should be reviewed for trends
and compared with peer averages.
2.3
Inventory turnover ratios for apparel and

footwear companies, while generally
2.2
2001 02 03 04 05 06 07 08 09 10 11 12 2013
comparable, could vary widely from
company to company. A high turnover
rate indicates that goods are selling well
relative to the average amount of
inventory kept in stock. Conversely, a low turnover rate indicates that goods are not moving rapidly.
Inventory buildup is less of a concern for basic merchandise, which can be sold throughout the year, than it
is for fashion-oriented products.
Statement of cash flows
It is necessary to estimate cash inflows (or sources) and outflows (uses) to determine the net cash flow
generated (or used) by a companys operations. How does the company plan to raise and utilize its cash?
The cash flow statement has three sections: operating, investing, and financing.
The operating section reflects cash generated from, or used in, operations, after adjusting for noncash items
(such as depreciation and amortization), and including changes in working capital components. For example,
if a manufacturer anticipates higher sales from seasonal activity, it may need cash to build inventory levels.
The investing and financing sections capture other sources and uses of cash outside the companys
operations. Possible sources include the issuance of debt, or equity capital and dividends received from
affiliated companies. Potential uses include repurchasing shares of common stock, paying dividends,
reducing debt, or reinvesting in the business via either capital expenditures or acquisitions.
Other factors
In addition to the income statement and balance sheet items outlined earlier, several other factors are
important to consider when analyzing an apparel or footwear company. For example, a companys order
backlog indicates what its sales will be like over the next few months. Although this information is not
included in the financial statements, some apparel and footwear companies report it separately.
Certain companies in the athletic footwear and apparel segment report worldwide futures orders. This
measure covers products scheduled for delivery between certain dates, usually over the next three to six
months, and is another way to project revenues. In the apparel industry, deliveries scheduled for future
seasons are reported as bookings.
EQUITY VALUATION AND TARGET PRICES

One method for investors to value a retailer is by forecasting forward 12-month sales, margins, and
earnings, and comparing its price-to-earnings (P/E) multiple to that of its historical range, its competitors,
and a peer-group average. Investors can also look up securities analysts earnings per share (EPS) estimates
and P/E multiples at Yahoo! Finance and other online resources. For a well-run retailer with a solid sales
INDUSTRY SURVEYS
31
and earnings history and strong growth prospects, a low P/E multiple relative to peers could signal a buying
opportunity. By comparison, a retailer losing business due to heightened competitive pressures and an
ineffective growth strategy could deserve to trade at a lower P/E multiple than its peers. The investor will
have to make this decision.
Coming up with a target price is the next step. A target price assigns a fair value to the shares. To arrive
at a peer-based target price for a retailer, you need to multiply the EPS estimate by the peer-average P/E
multiple. For example, assume that you have calculated (or looked up) a 2013 EPS estimate of $2.00 for
Shop Me Inc. and a peer-average P/E multiple of 12. By multiplying these two values, you come up with a
target price of $24.
32
INDUSTRY SURVEYS
GLOSSARY
Allowance from vendorsPrice adjustment to a buyer for damaged merchandise or for the return of unsatisfactory
merchandise.
Assortment planThe range of merchandise in a category that managers intend to keep in a store at a certain inventory level.
Basic itemApparel with a style and demand that are generally constant, and which must remain in stock to satisfy
customers.
BrandA name that identifies the goods of one seller.
Business-to-business (B2B) exchangesOnline marketplaces that enable trading partners to conduct real-time business
transactions.
BuyerThe person responsible for the merchandising operations of a retail outlet or a specific department.
Carryover merchandiseGoods left over from a preceding season that are offered for sale in the following season.
Cash discountA price reduction given by a supplier to customers paying their invoices before the end of a stated discount
period.
Centralized buyingA practice among retail chains in which merchandise is purchased by staff from corporate headquarters.
Co-op moneyA vendors contribution to a retailer for the promotion of merchandise.
Diffusion brandA lower-priced designer line launched to reach a different channel (usually mass market) but still convey a
message of exclusivity or prestige.
Direct buyingBuying straight from the manufacturer without going through an intermediary.
Electronic data interchange (EDI)A computer network linking retailers, manufacturers, and the entire retail distribution
pipeline.
FactoringThe practice of selling manufacturers and wholesalers account receivables to financial institutions.
Fashion cycleThe life span of a clothing style, from its rise in popularity to its decline.
Fashion/specialty centerA strip center with mainly upscale apparel shops, boutiques, and craft shops carrying high-end
fashion or unique merchandise. It is usually found in high-income trade areas.
Fashion trendA style that has moved from limited to wide acceptance.
Fast fashionTerm used to describe stores like H&M that turn over styles quickly, encouraging the customer to buy now
because the product will be gone tomorrow.
Gross marginThe difference between net sales and the total cost of goods sold, expressed as a percentage of net sales.
Gross profitNet sales minus the cost of goods sold.
JobberA middleman who buys from a manufacturer and sells to a wholesaler.
KnockoffAn item that is an exact or similar reproduction of goods made by another manufacturer.
INDUSTRY SURVEYS
33
Lifestyle centerOften located near affluent residential neighborhoods, a strip center that typically includes at least 50,000
square feet of space occupied by upscale, national-chain specialty stores. It also features restaurants, entertainment, and,
frequently, one or more conventional or fashion specialty department stores as anchors.
MarkdownA reduction in the retail price of an item, expressed as a percentage of the original price of the merchandise.
MarkonThe difference between the cost as billed (before deductions for cash discount) and the retail price.
MarkupAn increase in an items price.
Merchandise vendor allowances or vendor allowancesWholesalers and manufacturers provide retailers with multiple
forms of support to enable the swift movement of goods through the channel. The forms of support include cooperative
advertising, payroll reimbursements, and markdown reimbursement programs, all of which have an adverse impact on
wholesalers and manufacturers profit margins, although they may in fact increase retailers profits.
NetA vendors billing term signifying that no cash or trade discount is allowed.
Open to buyThe amount of money that a retailer is willing to invest in inventory for future sales; it is affected by current sales
trends.
Out of stockThe absence of merchandise in certain styles, sizes, and/or colors in a stores inventory.
Outlet centerA strip center, mall, or cluster of stores, usually located in a rural or tourist location, that consists mainly of
manufacturers outlet stores selling their own brands at a discount. There are no anchor stores.
Point-of-sale (POS) terminalElectronic devices at store checkout counters that read the universal product code (UPC) on
product labels in order to tally each customers sale. POS terminals collect other data that enable stores to track sales trends and
to assess the effectiveness of promotions.
Price pointThe price range at which a line of merchandise is offered for sale.
Private labelMerchandise designed by a retailer that carries the stores own brand name.
Quick responseA partnership between a vendor and retailer through which orders are automatically replenished via
computer links.
Ready-to-wearAny article of apparel manufactured for sale in a retail store (that is, not custom made).
Same-store salesThe measure of year-on-year sales growth or decline for a store or chain of stores. The figure excludes
new and closed stores, which can skew results. Also referred to as comparable-store sales.
ScanningThe electronic reading of a bar code that yields such product information as price, color, and size.
ShrinkageLoss of inventory due to accounting errors, misdirected shipments, mistakes in ringing up charges or pricing goods,
bookkeeping errors, spoilage, breakage, and thefts by employees, vendors, or customers.
Stockkeeping unit (SKU)A single item of merchandise, as measured for inventory management purposes.
Stock turnoverThe number of times during the year that inventory is sold out. The figure is derived by dividing total cost of
goods sold by average inventory value.
34
INDUSTRY SURVEYS
INDUSTRY REFERENCES
PERIODICALS
Apparel
http://www.apparelmag.com
Monthly; aimed at apparel industry executives, with a
focus on technology, new products, and business strategy.
Footwear News
http://www.footwearnews.com
Weekly; covers trends and issues in the footwear industry.
MensWeek
http://www.wwd.com/menswear-news
Weekly; focuses on the mens apparel industry.
WWD (Womens Wear Daily)
http://www.wwd.com
Daily; focuses on the womens apparel industry.
TRADE ASSOCIATIONS
American Apparel & Footwear Association (AAFA)
http://www.apparelandfootwear.org
Provides apparel and footwear manufacturers with industry
statistics and other demographic information.
Cotton Incorporated
http://www.cottoninc.com
A worldwide organization funded by cotton growers and
importers that provides research and promotional support
to increase demand for and the profitability of cotton;
publishes Lifestyle Monitor, a newsletter about consumer
attitudes and behavior.
LIMA (International Licensing Industry
Merchandisers Association)
http://www.licensing.org
A worldwide organization that works with licensors and
licensees for the advancement of professionalism in
licensing through research, national and international
seminars, trade events, and publications.
Sports & Fitness Industry Association (SFIA)

http://www.sfia.org
Provides manufacturers, producers, and distributors with
information and statistics related to the global sports
apparel, athletic footwear, and sporting goods equipment
industries; formerly called SGMA.
US Association of Importers of Textiles & Apparel
http://www.usaita.com
Nonprofit industry association representing textile- and
apparel-importing firms before the US government, the
business community, and the public.
MARKET RESEARCH FIRMS
BIGresearch LLC
http://www.bigresearch.com
Provides online market intelligence and Internet-powered
marketing research; surveys consumers regarding their
retail shopping behavior and purchase intentions.
comScore Inc.
http://www.comscore.com
Maintains proprietary databases that provide a continuous,
real-time measurement of the myriad ways in which the
Internet is used and the wide variety of activities that are
occurring online.
The Conference Board
http://www.conference-board.org
A not-for-profit, non-advocacy business membership and
research organization that calculates and disseminates
leading economic indicators and an index of consumer
confidence.
The NPD Group Inc.
http://www.npd.com
A market research and consulting organization providing
global sales and marketing perspectives; combines
consumer information with point-of-sale data collected
from retailers and other distribution channels.
National Sporting Goods Association (NSGA)

http://www.nsga.org
Represents more than 22,000 sporting goods retailer/dealer
outlets and 3,000 product manufacturers, suppliers, and
sales agents.
INDUSTRY SURVEYS
35
Planalytics Inc.
http://www.planalytics.com
A consulting firm that helps companies make more
effective and profitable decisions by forecasting weatherdriven changes in supply, demand, and prices for products
and services.
CORPORATE INFORMATION
TRU
http://www.teenresearch.com
A market research firm specializing in the teen
demographic; provides qualitative and quantitative
research.
In addition, most apparel and footwear companies operate

their own websites. Heres a sample:
GOVERNMENT AGENCIES
Bureau of Labor Statistics (BLS)
http://stats.bls.gov
This division of the US Department of Labor is the principal
fact-finding agency of the federal government in the broad
fields of labor, economics, and statistics. Its major
programs include the consumer price index, the producer
price index, the employment cost index, and the national
compensation survey.
US Department of Commerce
http://www.doc.gov
This cabinet-level department is responsible for various
government agencies that monitor and regulate US
commerce. Among its many divisions is the Census Bureau,
which publishes population statistics and projections.
36
Many corporate filings with the federal Securities and

Exchange Commission, including 10-Ks and 10-Qs, are
available through its Edgar website:
http://www.sec.gov/edgar/searchedgar/webusers.htm
Abercrombie & Fitch: www.abercrombie.com

Aropostale Inc.: www.aeropostale.com
American Eagle Outfitters: www.ae.com
Bebe Stores Inc.: www.bebe.com
Carters Inc.: www.carters.com
Coach Inc.: www.coach.com
Columbia Sportswear: www.columbia.com
Deckers Outdoor Corp.: www.deckers.com
Fifth & Pacific Companies, Inc.: www.fifthandpacific.com
Fossil Inc.: www.fossil.com
Gap Inc.: www.gapinc.com
Guess Inc.: www.guess.com
Hanesbrands Inc.: www.hanesbrands.com
L Brands Inc.: www.limitedbrands.com
LVMH Mot Hennessy Louis Vuitton: www.lvmh.com
Nike Inc.: www.nikebiz.com
Polo Ralph Lauren Corp.:
www.ralphlauren.com/home/index.jsp
Quiksilver Inc.: www.quiksilver.com
Skechers USA Inc.: www.skechers.com
Timberland Co.: www.timberland.com
TJX Companies Inc.: www.tjx.com
Under Armour Inc.: www.underarmour.com
Urban Outfitters Inc.: www.urbn.com
VF Corp.: www.vfc.com
Wolverine World Wide Inc.:
www.wolverineworldwide.com
INDUSTRY SURVEYS
COMPARATIVE COMPANY ANALYSIS

Operating Revenues
Million $
Ticker
Company
Yr. End
2012
2011
2010
APPAREL,
CRI
COH
[]
PERY
FNP
FOSL
[]
ACCESSORIES & LUXURY GOODS

CARTER'S INC
COACH INC
ELLIS PERRY INTL INC
FIFTH & PACIFIC COS INC
FOSSIL INC
DEC
JUN
# JAN
DEC
DEC
2,419.0
4,763.2
969.6
1,505.1 A
2,858.2 A
2,147.0 A
4,158.5
980.6
1,518.7 D
2,567.8
1,786.8
3,607.6
790.3 A
2,500.1 D
2,031.2
HBI
ICON
MFB
MOV
OXM
HANESBRANDS INC
ICONIX BRAND GROUP INC
MAIDENFORM BRANDS INC
MOVADO GROUP INC
OXFORD INDUSTRIES INC
DEC
DEC
DEC
# JAN
# JAN
4,525.7 D
353.8
600.3
510.4
872.0
4,632.1
369.8
606.3
465.8
775.7
PVH
ZQK
RL
TRLG
UA
[]
[]
PVH CORP
QUIKSILVER INC
RALPH LAUREN CORP
TRUE RELIGION APPAREL INC
UNDER ARMOUR INC
6,043.0 A
2,013.2
6,944.8
467.3
1,834.9
VFC
[] VF CORP
JAN
OCT
# MAR
DEC
DEC
DEC
10,879.9
2009
CAGR (%)
2008
2007
1,626.1
3,230.5
754.2
3,011.9
1,548.6
1,528.2
3,180.8
851.3
3,984.9 D
1,583.7
1,443.0
2,612.5 D
863.9
4,577.3 D
1,433.4
4,326.7
332.6
556.7
382.2 D
619.4 A,C
3,891.3
221.3 C
466.3
378.4
813.7 F
4,248.8
216.8 A
413.5
460.9
964.8 F
4,474.5
160.0 A
422.2
574.5
999.7 H
5,890.6
1,953.1 A
6,859.5
419.8
1,472.7
4,636.8 A
1,837.6
5,660.3 A
363.7 A
1,063.9
2,398.7
1,977.5
4,978.9 A
311.0
856.4
2,491.9
2,264.6 D
5,018.9 A
270.0
725.2
9,459.2 A
7,702.6
7,220.3
2002
Index Basis (2002 = 100)
10-Yr.
5-Yr.
1-Yr.
2012
2011
2010
2009
2008
15.2
20.8
12.2
(8.6)
15.7
10.9
12.8
2.3
(19.9)
14.8
12.7
14.5
(1.1)
(0.9)
11.3
411
662
317
40
430
365
578
321
41
387
304
501
258
67
306
277
449
247
81
233
260
442
278
107
239
NA
156.5 C
NA
300.1
764.6
NA
8.5
NA
5.5
1.3
0.2
17.2
7.3
(2.3)
(2.7)
(2.3)
(4.3)
(1.0)
9.6
12.4
**
226
**
170
114
**
236
**
155
101
**
212
**
127
81
**
141
**
126
106
NA
138
NA
154
126
2,425.2 A
2,426.0 D
4,880.1 C
173.3
606.6
1,405.0
705.5 A
2,439.3
NA
NA
15.7
11.1
11.0
NA
NA
20.0
(3.7)
7.3
21.9
24.8
2.6
3.1
1.2
11.3
24.6
430
285
285
**
**
419
277
281
**
**
330
260
232
**
**
171
280
204
**
**
177
321
206
NA
NA
7,642.6 C
7,219.4 A
5,083.5 D,F
7.9
8.5
15.0
214
186
152
142
150
587.9
719.4
305.8
3,717.5
663.9
APPAREL RETAIL
ANF
[] ABERCROMBIE & FITCH -CL A
ARO
AEROPOSTALE INC
AEO
AMERN EAGLE OUTFITTERS INC
ANN
ANN INC
ASNA
ASCENA RETAIL GROUP INC
#
#
#
#
JAN
JAN
JAN
JAN
JUL
4,510.8
2,386.2
3,475.8 D
2,375.5
3,353.3 A,C
4,158.1
2,342.3
3,159.8
2,212.5
2,914.0
3,468.8
2,400.4
2,967.6 D
1,980.2
2,374.6 A
2,928.6 D
2,230.1
2,990.5
1,828.5
1,494.2
3,540.3
1,885.5
2,988.9
2,194.6
1,444.2
3,749.8
1,590.9
3,055.4
2,396.5
1,426.6
1,595.8
550.9
1,463.1
1,382.8
717.1
11.0
15.8
9.0
5.6
16.7
3.8
8.4
2.6
(0.2)
18.6
8.5
1.9
10.0
7.4
15.1
283
433
238
172
468
261
425
216
160
406
217
436
203
143
331
184
405
204
132
208
222
342
204
159
201
BWS
BKE
CATO
CHS
PLCE
BROWN SHOE CO INC

BUCKLE INC
CATO CORP -CL A
CHICOS FAS INC
CHILDRENS PLACE RETAIL STRS
#
#
#
#
#
JAN
JAN
JAN
JAN
JAN
2,598.1
1,124.0
944.0 F
2,581.1
1,809.5
2,582.8 A,C
1,062.9
931.5 F
2,196.4
1,715.9
2,504.1
949.8
925.5 F
1,905.0
1,674.0
2,242.0
898.3
884.0 F
1,713.2
1,643.6
2,276.4
792.0
857.7 F
1,582.4
1,630.3 D
2,359.9 A
619.9
846.4 F
1,714.3 D
2,162.6
1,841.4
401.1
748.3 F
531.1
671.4
3.5
10.9
2.4
17.1
10.4
1.9
12.6
2.2
8.5
(3.5)
0.6
5.7
1.4
17.5
5.5
141
280
126
486
270
140
265
124
414
256
136
237
124
359
249
122
224
118
323
245
124
197
115
298
243
CBK
CWTR
FINL
FL
FRAN
CHRISTOPHER & BANKS CORP

COLDWATER CREEK INC
FINISH LINE INC -CL A
FOOT LOCKER INC
FRANCESCAS HOLDINGS CORP
# JAN
# JAN
# FEB
# JAN
# JAN
430.3
742.5
1,443.4
6,182.0
296.4
412.8 H
761.2
1,369.3 A
5,623.0
204.2
448.1
981.1
1,229.0
5,049.0
135.2
455.4
1,038.6
1,169.8 D
4,854.0
79.4
530.7 D
1,024.2
1,262.3
5,237.0
NA
575.8
1,151.5
1,277.2 D
5,437.0
NA
338.8
473.2 H
757.2
4,509.0
NA
2.4
4.6
6.7
3.2
NA
(5.7)
(8.4)
2.5
2.6
NA
4.2
(2.5)
5.4
9.9
45.2
127
157
191
137
**
122
161
181
125
**
132
207
162
112
**
134
219
154
108
**
157
216
167
116
NA
GPS
GCO
GES
HOTT
JOSB
[]
GAP INC
GENESCO INC
GUESS INC
HOT TOPIC INC
JOS A BANK CLOTHIERS INC
#
#
#
#
#
JAN
JAN
JAN
JAN
JAN
15,651.0 A
2,604.8
2,541.5 F
741.7
1,049.3
14,549.0
2,292.0 A
2,566.6 F
697.9
979.9
14,197.0
1,574.4 A
2,031.1 F
736.7
770.3
14,526.0
1,551.6
1,993.1 F
761.1
695.9
14,454.7
828.3
544.1 F
443.3
243.4
0.8
12.1
16.7
5.3
15.7
(0.1)
11.6
8.9
0.4
11.7
7.6
13.6
(1.0)
6.3
7.1
108
314
467
167
431
101
277
472
157
403
101
216
436
160
353
98
190
373
166
316
100
187
366
172
286
LTD
MW
ROST
RUE
SSI
[]
[]
L BRANDS INC
MENS WEARHOUSE INC
ROSS STORES INC
RUE21 INC
STAGE STORES INC
#
#
#
#
#
JAN
JAN
JAN
JAN
JAN
10,459.0
2,488.3
9,721.1
901.9
1,645.8
10,364.0
2,382.7
8,608.3
760.3
1,511.9
2.2
6.7
10.7
NA
6.5
0.7
3.3
10.2
24.9
1.3
0.9
4.4
12.9
18.6
8.9
124
192
275
**
188
123
184
244
**
173
114
162
223
**
168
102
147
203
**
164
107
152
184
NA
173
SMRT
TJX
URBN
ZUMZ
[]
[]
STEIN MART INC

TJX COMPANIES INC
URBAN OUTFITTERS INC
ZUMIEZ INC
#
#
#
#
JAN
JAN
JAN
JAN
1,232.4 F
25,878.4
2,794.9
669.4 A
1,160.4 F
23,191.5
2,473.8
555.9
(1.3)
8.0
20.8
NA
(3.3)
6.8
13.1
11.9
6.2
11.6
13.0
20.4
87
216
661
**
82
194
585
**
84
183
538
**
87
169
458
**
94
159
434
NA
INDUSTRY SURVEYS
14,664.0
1,789.8
2,372.1 F
708.2
858.1
9,613.0
2,102.7 A
7,866.1
634.7
1,470.6
1,181.5 F
21,942.2
2,274.1
478.8
8,632.0
1,909.6
7,184.2
525.6
1,431.9
1,219.1 F
20,288.4
1,937.8
407.6
9,043.0
1,972.4
6,486.1
391.4
1,515.8
1,326.5 F
18,999.5 D
1,834.6
408.7
15,763.0 D
1,502.1 A
1,659.2 A,F
728.1
604.0
10,086.0
2,112.6 A
5,975.2
296.9
1,545.6
1,457.6 F
18,647.1
1,507.7
381.4
8,445.0 A,C
1,295.0
3,531.3
NA
875.6
1,408.6
11,981.2
422.8
NA
37
Operating Revenues
Million $
Ticker
Company
FOOTWEAR
CROX CROCS INC
DECK DECKERS OUTDOOR CORP
SHOO MADDEN STEVEN LTD
NKE
[] NIKE INC -CL B
SKX
SKECHERS U S A INC
WWW
WOLVERINE WORLD WIDE
Yr. End
2012
DEC
DEC
DEC
# MAY
DEC
1,123.3
1,414.4
1,243.3
NA
1,560.3
DEC
1,640.8 A
OTHER COMPANIES WITH SIGNIFICANT APPAREL OPERATIONS

BEBE
BEBE STORES INC
JUN
530.8
COLM
COLUMBIA SPORTSWEAR CO
DEC
1,683.3
2011
1,000.9
1,377.3 A
987.3
24,128.0
1,606.0
2010
789.7
1,001.0
658.0
20,862.0
2,006.9
2009
645.8
813.2 A
523.5
19,014.0
1,436.4
CAGR (%)
2008
721.6
689.4 A
471.3
19,176.1
1,440.7
2007
847.3 A
448.9
449.4
18,627.0
1,394.2
2002
10-Yr.
5-Yr.
1-Yr.
2012
2011
2010
2009
2008
NA
99.1 A
332.7
10,697.0
943.6
NA
30.5
14.1
NA
5.2
5.8
25.8
22.6
NA
2.3
12.2
2.7
25.9
NA
(2.8)
**
1,427
374
NA
165
**
1,390
297
226
170
**
1,010
198
195
213
**
821
157
178
152
NA
696
142
179
153
1,409.1
1,248.5
1,101.1
1,220.6
1,199.0
827.1
7.1
6.5
16.4
198
170
151
133
148
493.3 D
1,709.7
509.0
1,491.5
603.0
1,252.4
687.6
1,323.8
670.9
1,361.2
316.4
816.3
5.3
7.5
(4.6)
4.3
7.6
(1.5)
168
206
156
209
161
183
191
153
217
162
Note: Data as originally reported. CAGR-Compound annual growth rate. S&P 1500 index group. []Company included in the S&P 500. Company included in the S&P MidCap 400. Company included in the S&P SmallCap 600. #Of the following calendar year.
**Not calculated; data for base year or end year not available. A - This year's data reflect an acquisition or merger. B - This year's data reflect a major merger resulting in the formation of a new company. C - This year's data reflect an accounting change.
D - Data exclude discontinued operations. E - Includes excise taxes. F - Includes other (nonoperating) income. G - Includes sale of leased depts. H - Some or all data are not available, due to a fiscal year change.
38
INDUSTRY SURVEYS
Net Income
Million $
Ticker
Company
Yr. End
2012
APPAREL,
CRI
COH
[]
PERY
FNP
FOSL
[]

CARTER'S INC
COACH INC
FOSSIL INC
DEC
JUN
# JAN
DEC
DEC
161.1
1,038.9
14.8
(59.5)
343.4
HBI
ICON
MFB
MOV
OXM
HANESBRANDS INC
MOVADO GROUP INC
DEC
DEC
DEC
# JAN
# JAN
PVH
ZQK
RL
TRLG
UA
[]
[]
PVH CORP
QUIKSILVER INC
RALPH LAUREN CORP
UNDER ARMOUR INC
# JAN
OCT
# MAR
DEC
DEC
VFC
[] VF CORP
2011
CAGR (%)
2010
2009
2008
2007
2002
10-Yr.
5-Yr.
1-Yr.
2012
2011
2010
2009
2008
114.0
880.8
25.5
144.7
294.7
146.5
734.9
24.1
(220.1)
255.2
115.6
623.4
13.2
(293.4)
139.2
77.9
783.0
(12.9)
(813.6)
138.1
(70.6)
636.5
28.2
(370.0)
123.3
19.3
85.8
10.8
231.2
58.9
23.7
28.3
3.2
NM
19.3
NM
10.3
(12.1)
NM
22.7
41.3
18.0
(42.0)
NM
16.5
837
1,210
137
(26)
583
592
1,026
236
63
500
761
856
223
(95)
433
601
726
122
(127)
236
405
912
(119)
(352)
234
232.4
109.4
33.5
57.1
31.3
266.7
126.1
33.2
32.0
29.2
211.3
98.8
45.3
(21.2)
16.2
51.3
75.1
37.0
(54.6)
14.6
127.2
70.2
24.7
2.3
(265.8)
126.1
63.8
34.2
60.8
38.5
NA
(3.9)
NA
20.1
20.3
NA
NM
NA
11.0
4.4
13.0
11.4
(0.4)
(1.3)
(4.1)
(12.8)
(13.2)
0.8
78.4
7.1
**
NM
**
285
154
**
NM
**
160
144
**
NM
**
(106)
80
**
NM
**
(272)
72
NA
NM
NA
12
(1,308)
433.8
(10.8)
750.0
46.0
128.8
317.9
(21.3)
681.0
45.0
96.9
53.8
(11.5)
567.6
43.5
68.5
161.9
(73.2)
479.5
47.3
46.8
91.8
65.5
406.0
44.4
38.2
183.3
(98.6)
419.8
27.8
52.6
30.4
37.6
174.2
NA
NA
30.4
NM
15.7
NA
NA
18.8
NM
12.3
10.6
19.6
36.5
NM
10.1
2.3
32.9
1,425
(29)
430
**
**
1,044
(57)
391
**
**
177
(31)
326
**
**
532
(195)
275
**
**
302
174
233
NA
NA
DEC
1,086.0
888.1
571.4
461.3
602.7
613.2
364.4
11.5
12.1
22.3
298
244
157
127
165
APPAREL RETAIL
ANF
ARO
AEROPOSTALE INC
AEO
ANN
ANN INC
ASNA ASCENA RETAIL GROUP INC
#
#
#
#
JAN
JAN
JAN
JAN
JUL
237.0
34.9
264.1
102.6
171.8
126.9
69.5
151.7
86.6
170.5
150.3
231.3
181.9
73.4
133.4
79.0
229.5
169.0
(18.2)
69.7
272.3
149.4
179.1
(333.9)
74.1
475.7
129.2
400.0
97.2
101.2
194.9
31.3
88.7
80.2
37.9
2.0
1.1
11.5
2.5
16.3
(13.0)
(23.0)
(8.0)
1.1
11.2
86.8
(49.8)
74.1
18.5
0.8
122
112
298
128
453
65
222
171
108
449
77
739
205
92
352
41
733
190
(23)
184
140
478
202
(417)
195
BWS
BKE
CATO
CHS
PLCE
BROWN SHOE CO INC

BUCKLE INC
CATO CORP -CL A
CHICOS FAS INC
#
#
#
#
#
JAN
JAN
JAN
JAN
JAN
27.5
164.3
61.7
180.2
63.2
8.9
151.5
64.8
140.9
77.2
37.2
134.7
57.7
115.4
83.6
9.5
127.3
45.8
69.6
88.8
(133.2)
104.4
33.6
(19.1)
73.9
60.4
75.2
32.3
91.1
(59.6)
45.2
32.1
45.8
66.8
8.9
(4.8)
17.8
3.0
10.4
21.6
(14.6)
16.9
13.8
14.6
NM
208.1
8.5
(4.9)
27.9
(18.1)
61
512
135
270
708
20
472
141
211
864
82
420
126
173
936
21
397
100
104
994
(295)
326
73
(29)
828
CBK
CWTR
FINL
FL
FRAN

COLDWATER CREEK INC
FOOT LOCKER INC
#
#
#
#
#
JAN
JAN
FEB
JAN
JAN
(16.1)
(81.8)
71.5
397.0
47.1
(71.1)
(99.7)
84.8
278.0
22.5
(22.2)
(44.1)
68.9
169.0
16.9
0.2
(56.1)
50.8
47.0
10.6
(8.1)
(26.0)
4.0
(79.0)
NA
17.0
(2.5)
(48.5)
49.0
NA
38.5
9.4
25.0
162.0
NA
NM
NM
11.1
9.4
NA
NM
NM
NM
52.0
NA
NM
NM
(15.7)
42.8
109.2
(42)
(875)
285
245
**
(185)
(1,065)
339
172
**
(58)
(471)
275
104
**
0
(600)
203
29
**
(21)
(277)
16
(49)
NA
GPS
GCO
GES
HOTT
JOSB
[]
GAP INC
GENESCO INC
GUESS INC
HOT TOPIC INC
#
#
#
#
#
JAN
JAN
JAN
JAN
JAN
1,135.0
111.0
178.7
19.5
79.7
833.0
83.0
265.5
(1.8)
97.5
1,204.0
54.5
289.5
(8.2)
85.8
967.0
158.1
213.6
19.7
58.4
867.0
8.5
186.5
16.0
50.2
477.5
36.4
(11.3)
34.6
10.9
9.0
11.8
NM
(5.6)
22.0
5.5
67.2
(0.8)
4.0
9.7
36.3
33.8
(32.7)
NM
(18.3)
238
305
NM
56
728
174
228
NM
(5)
891
252
150
NM
(24)
784
231
80
NM
34
650
203
434
NM
57
534
LTD
MW
ROST
RUE
SSI
[]
[]
L BRANDS INC
MENS WEARHOUSE INC
ROSS STORES INC
RUE21 INC
STAGE STORES INC
#
#
#
#
#
JAN
JAN
JAN
JAN
JAN
753.0
131.7
786.8
43.9
38.2
850.0
120.6
657.2
39.0
31.0
805.0
67.7
554.8
30.2
37.6
448.0
45.5
442.8
22.0
28.7
220.0
58.8
305.4
12.6
(65.5)
718.0
147.0
261.1
9.1
53.1
496.0
42.4
201.2
NA
54.4
4.3
12.0
14.6
NA
(3.5)
1.0
(2.2)
24.7
36.9
(6.4)
(11.4)
9.2
19.7
12.7
23.3
152
311
391
**
70
171
284
327
**
57
162
160
276
**
69
90
107
220
**
53
44
139
152
NA
(120)
SMRT
TJX
URBN
ZUMZ
[]
[]
STEIN MART INC

TJX COMPANIES INC
ZUMIEZ INC
#
#
#
#
JAN
JAN
JAN
JAN
25.0
1,906.7
237.3
42.2
19.8
1,496.1
185.3
37.4
48.8
1,339.5
273.0
24.2
23.6
1,213.6
219.9
9.1
(71.3)
914.9
199.4
17.2
(4.5)
771.8
160.2
25.3
20.7
578.4
27.4
NA
1.9
12.7
24.1
NA
NM
19.8
8.2
10.7
26.2
27.4
28.1
12.9
121
330
866
**
96
259
676
**
236
232
996
**
114
210
802
**
(345)
158
727
NA
INDUSTRY SURVEYS
1,102.0
29.1
242.8
11.9
71.2
39
Net Income
Million $
Ticker
Company
FOOTWEAR
CROX CROCS INC
NKE
[] NIKE INC -CL B
SKX
SKECHERS U S A INC
WWW
Yr. End
2012
2011
DEC
DEC
DEC
# MAY
DEC
131.3
128.9
119.6
NA
9.5
112.8
199.1
97.3
2,223.0
(67.5)
DEC
80.7
123.3
11.7
99.9
4.1
103.5

BEBE
BEBE STORES INC
JUN
COLM
DEC
2010
67.7
158.2
75.7
2,133.0
136.1
104.5
(5.2)
77.0
CAGR (%)
2009
2008
2007
2002
10-Yr.
5-Yr.
1-Yr.
2012
2011
2010
2009
2008
(42.1)
116.8
50.1
1,906.7
54.7
(185.1)
73.9
28.0
1,486.7
55.4
168.2
66.4
35.7
1,883.4
75.7
NA
1.6
19.8
740.1
47.0
NA
NM
19.7
NA
(14.8)
(4.8)
14.2
27.4
NA
(34.0)
16.5
(35.3)
22.9
NA
NM
**
NM
603
**
20
**
NM
490
300
(143)
**
NM
382
288
289
**
NM
253
258
116
NA
4,565
141
201
118
61.9
95.8
92.9
47.9
5.4
(2.8)
(34.6)
168
257
218
129
200
12.6
67.0
63.1
95.0
77.3
144.5
26.5
102.5
(7.8)
(0.3)
(31.4)
(7.1)
189.0
(3.5)
44
97
15
101
(20)
75
48
65
238
93
Note: Data as originally reported. CAGR-Compound annual growth rate. S&P 1500 index group. []Company included in the S&P 500. Company included in the S&P MidCap 400. Company included in the S&P SmallCap 600.
#Of the following calendar year. **Not calculated; data for base year or end year not available.
40
INDUSTRY SURVEYS
Return on Revenues (%)
Return on Assets (%)
Return on Equity (%)
Ticker
Company
Yr. End
2012
2011
2010
2009
2008
2012
2011
2010
2009
2008
2012
2011
2010
2009
2008
APPAREL,
CRI
COH
[]
PERY
FNP
FOSL
[]

CARTER'S INC
COACH INC
FOSSIL INC
DEC
JUN
# JAN
DEC
DEC
6.7
21.8
1.5
NM
12.0
5.3
21.2
2.6
9.5
11.5
8.2
20.4
3.1
NM
12.6
7.1
19.3
1.7
NM
9.0
5.1
24.6
NM
NM
8.7
10.6
36.2
2.0
NM
19.7
8.6
34.5
3.6
13.1
18.9
11.9
29.2
3.9
NM
18.6
10.3
25.8
2.3
NM
11.8
7.7
33.2
NM
NM
12.5
18.0
57.6
4.0
NA
29.4
15.3
56.5
7.6
NA
27.4
23.7
45.9
8.5
NM
25.4
23.9
38.8
5.1
NM
15.8
19.6
45.7
NM
NM
17.5
HBI
ICON
MFB
MOV
OXM
HANESBRANDS INC
MOVADO GROUP INC
DEC
DEC
DEC
# JAN
# JAN
5.1
30.9
5.6
11.2
3.6
5.8
34.1
5.5
6.9
3.8
4.9
29.7
8.1
NM
2.6
1.3
33.9
7.9
NM
1.8
3.0
32.4
6.0
0.5
NM
6.1
4.7
8.1
11.1
5.9
6.8
6.1
8.9
6.7
5.5
5.9
5.3
12.7
NM
3.3
1.5
4.7
11.3
NM
3.3
3.6
5.1
8.6
0.4
NM
29.6
9.2
14.0
14.0
14.4
42.9
11.3
16.0
8.6
15.2
47.1
10.2
25.3
NM
11.4
19.7
9.9
25.8
NM
14.8
53.7
12.3
22.5
0.5
NM
PVH
ZQK
RL
TRLG
UA
[]
[]
PVH CORP
QUIKSILVER INC
RALPH LAUREN CORP
UNDER ARMOUR INC
# JAN
OCT
# MAR
DEC
DEC
7.2
NM
10.8
9.8
7.0
5.4
NM
9.9
10.7
6.6
1.2
NM
10.0
12.0
6.4
6.7
NM
9.6
15.2
5.5
3.7
2.9
8.1
16.4
5.3
6.0
NM
13.8
12.0
12.4
4.7
NM
13.1
13.7
12.2
1.2
NM
11.8
16.5
11.2
7.1
NM
10.6
23.9
9.1
4.2
2.7
9.3
31.7
8.7
15.0
NM
20.2
14.5
17.7
13.3
NM
19.6
16.4
17.1
3.1
NM
17.7
19.5
15.3
14.9
NM
16.4
27.8
12.8
9.4
8.8
15.8
37.4
12.5
VFC
[] VF CORP
DEC
10.0
9.4
7.4
6.4
7.9
11.5
11.3
8.8
7.1
9.4
22.5
21.2
14.9
12.5
16.9
APPAREL RETAIL
ANF
ARO
AEROPOSTALE INC
AEO
ANN
ANN INC
#
#
#
#
JAN
JAN
JAN
JAN
JUL
5.3
1.5
7.6
4.3
5.1
3.1
3.0
4.8
3.9
5.9
4.3
9.6
6.1
3.7
5.6
2.7
10.3
5.7
NM
4.7
7.7
7.9
6.0
NM
5.1
7.9
4.7
14.2
11.2
7.4
4.2
9.2
7.9
9.5
9.8
5.2
29.6
9.1
8.0
9.6
2.8
31.6
8.2
NM
6.5
10.1
25.5
9.3
NM
7.4
12.9
8.5
20.0
27.4
13.8
6.8
16.5
11.0
22.0
15.7
8.1
53.4
12.4
17.5
16.2
4.3
58.1
11.3
NM
11.8
15.7
54.1
13.0
NM
13.9
BWS
BKE
CATO
CHS
PLCE
BROWN SHOE CO INC

BUCKLE INC
CATO CORP -CL A
CHICOS FAS INC
#
#
#
#
#
JAN
JAN
JAN
JAN
JAN
1.1
14.6
6.5
7.0
3.5
0.3
14.2
7.0
6.4
4.5
1.5
14.2
6.2
6.1
5.0
0.4
14.2
5.2
4.1
5.4
NM
13.2
3.9
NM
4.5
2.3
32.6
11.4
12.0
7.1
0.8
29.5
12.1
9.9
9.1
3.4
27.4
11.5
8.4
9.8
0.9
26.7
10.0
5.5
9.9
NM
22.8
7.9
NM
7.6
6.6
50.3
17.3
17.1
10.3
2.2
42.7
18.7
13.6
12.7
9.1
38.5
18.7
11.3
14.0
2.4
36.8
16.5
7.4
15.6
NM
30.9
13.2
NM
14.5
CBK
CWTR
FINL
FL
FRAN

COLDWATER CREEK INC
FOOT LOCKER INC
#
#
#
#
#
JAN
JAN
FEB
JAN
JAN
NM
NM
5.0
6.4
15.9
NM
NM
6.2
4.9
11.0
NM
NM
5.6
3.3
12.5
0.0
NM
4.3
1.0
13.4
NM
NM
0.3
NM
NA
NM
NM
10.1
12.4
50.9
NM
NM
12.3
9.4
34.2
NM
NM
10.8
5.9
37.4
0.1
NM
8.4
1.7
NA
NM
NM
0.7
NM
NA
NM
NM
13.6
17.7
105.8
NM
NM
16.6
13.4
NA
NM
NM
14.8
8.5
NA
0.1
NM
11.7
2.4
NA
NM
NM
1.0
NM
NA
GPS
GCO
GES
HOTT
JOSB
[]
GAP INC
GENESCO INC
GUESS INC
HOT TOPIC INC
#
#
#
#
#
JAN
JAN
JAN
JAN
JAN
7.3
4.3
7.0
2.6
7.6
5.7
3.6
10.3
NM
9.9
8.2
3.0
12.2
NM
10.0
7.8
1.8
12.0
1.6
9.2
6.7
10.2
10.7
2.6
8.4
15.2
8.6
10.0
7.0
9.3
11.5
7.5
15.0
NM
13.2
16.0
6.0
18.0
NM
14.1
14.2
3.4
17.5
3.2
13.6
12.6
19.5
17.6
5.6
12.5
40.2
14.6
15.8
10.9
12.7
24.4
12.5
23.8
NM
18.3
26.8
9.1
27.9
NM
19.6
23.8
5.7
27.0
4.4
19.9
22.3
36.8
29.8
8.0
20.0
LTD
MW
ROST
RUE
SSI
[]
[]
L BRANDS INC
MENS WEARHOUSE INC
ROSS STORES INC
RUE21 INC
STAGE STORES INC
#
#
#
#
#
JAN
JAN
JAN
JAN
JAN
7.2
5.3
8.1
4.9
2.3
8.2
5.1
7.6
5.1
2.0
8.4
3.2
7.1
4.8
2.6
5.2
2.4
6.2
4.2
2.0
2.4
3.0
4.7
3.2
NM
12.4
9.1
22.6
11.7
5.0
13.5
8.8
20.5
12.8
4.0
11.8
5.3
18.9
13.5
4.7
6.3
3.8
17.3
13.4
3.7
3.1
4.8
12.9
10.4
NM
NA
12.5
48.3
27.0
8.7
105.4
12.1
46.5
31.2
6.9
44.0
7.2
44.6
35.7
7.8
22.1
5.2
41.1
51.3
6.2
10.8
7.1
31.1
104.7
NM
SMRT
TJX
URBN
ZUMZ
[]
[]
STEIN MART INC

TJX COMPANIES INC
ZUMIEZ INC
#
#
#
#
JAN
JAN
JAN
JAN
2.0
7.4
8.5
6.3
1.7
6.5
7.5
6.7
4.1
6.1
12.0
5.1
1.9
6.0
11.3
2.2
NM
4.8
10.9
4.2
5.2
21.4
14.5
10.9
4.4
18.4
11.3
11.3
11.6
17.4
15.9
8.6
5.5
17.8
14.8
3.7
NM
14.3
16.1
7.7
10.1
55.5
19.6
14.6
7.8
47.4
15.0
15.0
21.1
44.7
20.2
11.5
11.7
48.3
18.7
4.9
NM
42.9
20.9
10.3
INDUSTRY SURVEYS
41
Return on Revenues (%)

Ticker
Company
Yr. End
2012
2011
2010
2009
Return on Assets (%)

2008
2012
2011
2010
Return on Equity (%)
2009
2008
2012
2011
2010
2009
2008
FOOTWEAR
CROX
CROCS INC
DEC
11.7
11.3
8.6
NM
NM
17.2
18.1
14.1
NM
NM
23.7
26.0
20.4
NM
NM
DECK
DECKERS OUTDOOR CORP
DEC
9.1
14.5
15.8
14.4
10.7
11.6
20.4
22.5
21.6
17.3
16.4
26.7
27.7
26.7
21.7
SHOO
MADDEN STEVEN LTD
NKE
[] NIKE INC -CL B
DEC
9.6
9.9
11.5
9.6
5.9
16.6
17.9
19.6
16.4
10.2
21.7
23.4
24.2
21.1
13.3
# MAY
NA
9.2
10.2
10.0
7.8
NA
14.6
14.5
13.8
11.6
NA
22.0
21.8
20.7
SKX
18.0
SKECHERS U S A INC
DEC
0.6
NM
6.8
3.8
3.8
0.7
NM
11.8
5.8
6.5
1.1
NM
16.5
7.7
WWW
8.6
DEC
4.9
8.7
8.4
5.6
7.9
4.7
15.1
14.0
9.0
14.7
13.2
22.0
20.4
13.6
21.1
2.2
5.9
0.8
6.1
NM
5.2
2.1
5.4
9.2
7.2
2.6
7.0
0.8
7.7
NM
6.1
2.2
5.7
10.5
8.2
3.3
8.9
1.1
10.0
NM
7.7
2.7
6.9
12.7
9.9

BEBE
BEBE STORES INC
JUN
COLM
DEC
Note: Data as originally reported. S&P 1500 index group. []Company included in the S&P 500. Company included in the S&P MidCap 400. Company included in the S&P SmallCap 600. #Of the following calendar year.
42
INDUSTRY SURVEYS
Current Ratio
Debt as a % of
Net Working Capital
Debt / Capital Ratio (%)
Ticker
Company
Yr. End
2012
2011
2010
2009
2008
2012
2011
2010
2009
2008
2012
2011
2010
2009
2008
APPAREL,
CRI
COH
[]
PERY
FNP
FOSL
[]

CARTER'S INC
COACH INC
FOSSIL INC
DEC
JUN
# JAN
DEC
DEC
3.9
2.5
2.6
1.1
2.8
5.1
2.4
3.6
1.3
3.2
3.9
2.5
3.2
1.1
3.4
4.0
3.0
2.8
1.4
3.9
3.6
3.1
4.0
1.7
3.7
14.5
0.0
30.9
138.1
5.4
20.4
1.4
34.0
133.3
0.5
22.9
1.6
42.1
98.2
0.4
33.2
1.5
34.9
68.0
0.5
39.0
0.2
47.5
53.7
0.6
26.1
0.1
63.8
NM
10.2
37.5
2.7
67.9
305.8
0.7
44.3
3.1
91.3
NM
0.6
65.5
2.7
76.6
211.2
0.6
92.9
0.3
94.8
146.6
0.9
HBI
ICON
MFB
MOV
OXM
HANESBRANDS INC
MOVADO GROUP INC
DEC
DEC
DEC
# JAN
# JAN
2.3
3.6
4.0
5.9
1.8
2.5
0.8
4.1
5.0
1.8
2.6
2.3
3.9
6.0
1.8
2.1
2.1
3.2
6.5
1.9
2.8
1.3
3.3
3.3
2.1
59.8
38.2
19.3
0.0
29.1
72.6
18.6
21.5
0.0
30.2
78.0
31.8
24.4
0.0
41.3
83.8
35.7
31.3
2.6
52.4
91.8
45.5
37.8
0.0
60.8
114.4
323.5
29.3
0.0
110.6
129.4
NM
33.9
0.0
105.8
151.0
435.3
41.5
0.0
120.7
183.1
384.2
54.2
3.1
165.5
156.4
NM
72.4
0.0
159.9
PVH
ZQK
RL
TRLG
UA
[]
[]
PVH CORP
QUIKSILVER INC
RALPH LAUREN CORP
UNDER ARMOUR INC
# JAN
OCT
# MAR
DEC
DEC
2.1
2.5
2.6
6.5
3.6
1.7
2.6
3.1
7.3
3.8
2.0
2.6
3.0
7.7
3.7
2.7
2.3
3.0
8.8
3.7
2.5
1.9
3.1
7.1
3.0
36.5
55.3
1.0
0.0
6.1
36.3
54.3
7.8
0.0
10.0
44.5
53.5
9.0
0.0
1.8
22.9
66.6
9.2
0.0
2.7
25.3
56.8
14.9
0.0
3.8
173.5
131.3
2.1
0.0
8.1
263.6
124.7
16.0
0.0
14.0
262.0
130.4
20.2
0.0
2.2
63.2
162.3
21.0
0.0
3.3
77.6
125.2
34.9
0.0
5.0
VFC
[] VF CORP
DEC
2.0
1.9
2.5
2.4
2.6
20.6
27.0
19.5
19.4
24.2
83.2
120.4
54.5
61.1
69.6
APPAREL RETAIL
ANF
ARO
AEROPOSTALE INC
AEO
ANN
ANN INC
#
#
#
#
JAN
JAN
JAN
JAN
JUL
1.9
2.2
2.6
1.5
1.5
2.1
2.3
3.2
1.7
2.0
2.6
2.2
3.0
2.0
2.0
2.8
2.2
2.9
1.8
1.6
2.4
2.2
2.3
1.4
1.3
3.4
0.0
0.0
0.0
18.7
3.0
0.0
0.0
0.6
0.0
3.4
0.0
0.0
0.8
2.3
3.7
0.0
0.0
0.4
4.0
5.1
0.0
0.0
1.1
4.6
10.4
0.0
0.0
NM
90.9
7.4
0.0
0.0
1.1
0.0
7.8
0.0
0.0
1.3
6.9
9.1
0.0
0.0
0.7
12.7
15.7
0.0
0.0
3.8
27.2
BWS
BKE
CATO
CHS
PLCE
BROWN SHOE CO INC

BUCKLE INC
CATO CORP -CL A
CHICOS FAS INC
#
#
#
#
#
JAN
JAN
JAN
JAN
JAN
1.6
2.1
2.4
2.0
2.8
1.6
2.9
2.7
2.1
3.6
1.6
2.7
2.4
3.4
3.7
1.7
2.9
2.2
3.1
3.1
1.7
3.2
2.1
3.3
2.5
31.2
0.0
0.0
0.0
0.0
30.9
0.0
0.0
0.0
0.0
26.0
0.0
0.0
0.0
0.0
27.2
0.0
0.0
0.0
0.0
27.2
0.0
0.0
0.0
9.1
65.5
0.0
0.0
0.0
0.0
68.4
0.0
0.0
0.0
0.0
50.6
0.0
0.0
0.0
0.0
51.0
0.0
0.0
0.0
0.0
53.7
0.0
0.0
0.0
17.6
CBK
CWTR
FINL
FL
FRAN

COLDWATER CREEK INC
FOOT LOCKER INC
#
#
#
#
#
JAN
JAN
FEB
JAN
JAN
1.9
1.2
3.7
3.7
3.2
1.9
1.4
4.0
3.8
1.9
2.9
1.5
4.0
4.0
1.7
3.6
1.5
3.9
4.1
3.7
2.8
1.5
3.6
4.2
NA
0.0
62.8
0.0
5.3
0.0
0.0
18.4
0.0
6.0
56.6
0.0
5.8
0.0
6.3
271.2
0.0
4.5
0.0
6.6
0.0
0.0
4.5
0.0
6.8
NA
0.0
265.4
0.0
7.7
0.0
0.0
49.0
0.0
8.8
125.6
0.0
15.0
0.0
9.5
664.4
0.0
11.6
0.0
10.3
0.0
0.0
14.3
0.0
10.5
NA
GPS
GCO
GES
HOTT
JOSB
[]
GAP INC
GENESCO INC
GUESS INC
HOT TOPIC INC
#
#
#
#
#
JAN
JAN
JAN
JAN
JAN
1.8
2.5
2.9
2.0
4.4
2.0
2.0
3.0
2.4
4.0
1.9
2.2
2.7
2.9
4.3
2.2
2.7
3.3
3.6
4.0
1.9
2.9
2.7
2.7
3.2
30.1
5.3
0.8
0.0
0.0
36.8
4.2
0.9
0.0
0.0
0.0
0.0
1.1
0.0
0.0
0.0
0.0
1.3
0.0
0.0
0.0
21.0
1.8
0.0
0.0
69.7
11.1
1.2
0.0
0.0
73.6
11.0
1.2
0.0
0.0
0.0
NM
1.7
0.0
0.0
0.0
NM
1.8
NM
0.0
0.0
45.7
2.6
0.0
0.0
LTD
MW
ROST
RUE
SSI
[]
[]
L BRANDS INC
MENS WEARHOUSE INC
ROSS STORES INC
RUE21 INC
STAGE STORES INC
#
#
#
#
#
JAN
JAN
JAN
JAN
JAN
1.4
2.9
1.4
1.6
2.2
1.6
2.9
1.4
1.6
2.1
1.7
2.9
1.5
1.4
2.4
2.5
3.2
1.5
1.2
2.3
2.3
2.9
1.4
1.0
2.2
122.3
0.0
7.5
0.0
2.3
91.6
0.0
8.6
0.0
7.7
59.9
0.0
9.5
0.0
4.7
53.2
4.6
10.7
0.0
7.3
58.1
6.9
12.1
48.9
9.1
671.2
0.0
24.6
0.0
4.5
413.4
NM
25.9
0.0
16.7
230.4
NM
21.7
0.0
9.5
141.2
9.0
27.0
0.0
15.8
179.7
15.3
41.8
NM
22.7
SMRT
TJX
URBN
ZUMZ
[]
[]
STEIN MART INC

TJX COMPANIES INC
ZUMIEZ INC
#
#
#
#
JAN
JAN
JAN
JAN
1.7
1.5
3.5
3.6
2.0
1.7
2.6
4.6
2.0
1.6
3.8
4.4
1.9
1.7
4.3
4.4
2.5
1.3
4.4
4.6
0.0
16.2
0.0
0.6
0.5
18.0
0.0
0.0
0.0
19.1
0.0
0.0
0.0
20.4
0.0
0.0
34.9
14.5
0.0
0.0
0.0
39.7
0.0
1.3
0.9
37.9
0.0
0.0
0.0
40.0
0.0
0.0
0.0
41.4
0.0
0.0
48.5
44.7
0.0
0.0
INDUSTRY SURVEYS
43
Current Ratio
Ticker
Company
Yr. End
2012
2011
2010
Debt as a % of
Net Working Capital
Debt / Capital Ratio (%)

2009
2008
2012
2011
2010
2009
2008
2012
2011
2010
2009
2008
FOOTWEAR
CROX
CROCS INC
DEC
3.9
3.4
2.8
3.1
2.1
0.7
0.0
0.2
0.3
0.0
1.0
0.0
0.3
0.5
0.0
DECK
DECKERS OUTDOOR CORP
DEC
2.6
3.5
4.9
5.2
4.3
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
SHOO
MADDEN STEVEN LTD
NKE
[] NIKE INC -CL B
DEC
3.3
2.6
2.9
3.7
2.7
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
# MAY
NA
3.0
2.9
3.3
3.0
NA
2.1
2.7
4.4
4.8
NA
3.0
3.8
5.9
SKX
6.8
SKECHERS U S A INC
DEC
3.2
2.9
3.2
3.4
3.2
12.8
8.2
5.4
2.1
2.4
19.8
13.2
7.8
2.8
3.9
WWW
DEC
3.4
4.3
4.1
3.8
2.5
58.0
0.0
0.1
0.2
0.0
161.4
0.0
0.1
0.3
0.0
5.1
4.5
5.6
3.9
2.3
3.9
4.7
5.1
3.2
5.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0

BEBE
BEBE STORES INC
JUN
COLM
DEC
44
INDUSTRY SURVEYS
Price / Earnings Ratio (High-Low)

Ticker
Company
Yr. End
2012
APPAREL,
CRI
COH
[]
PERY
FNP
FOSL
[]

CARTER'S INC
COACH INC
FOSSIL INC
DEC
JUN
# JAN
DEC
DEC
21 - 14
22 - 13
23 - 14
NM - NM
25 - 11
HBI
ICON
MFB
MOV
OXM
HANESBRANDS INC
MOVADO GROUP INC
DEC
DEC
DEC
# JAN
# JAN
PVH
ZQK
RL
TRLG
UA
[]
[]
PVH CORP
QUIKSILVER INC
RALPH LAUREN CORP
UNDER ARMOUR INC
# JAN
OCT
# MAR
DEC
DEC
VFC
[] VF CORP
16 14 18 17 31 -
2011
9
9
12
8
21
20 - 12
NM - NM
22 - 16
21 - 11
50 - 29
2009
2008
2012
2011
2010
2009
2008
0
27
99
NM
0
0
23
0
0
0
0
16
0
NM
0
0
4
0
NM
0
0
0
NM
NM
0
0.0 2.0 7.3 0.0 0.0 -
0.0
1.2
4.3
0.0
0.0
0.0 1.5 0.0 0.0 0.0 -
0.0
1.0
0.0
0.0
0.0
0.0 1.1 0.0 0.0 0.0 -
0.0
0.6
0.0
0.0
0.0
0.0 0.7 0.0 0.0 0.0 -
0.0
0.2
0.0
0.0
0.0
0.0 0.0 0.0 15.4 0.0 -
0.0
0.0
0.0
1.0
0.0
12 15 22 15 26 -
8
8
12
9
13
14 - 10
15 9
15 7
NM - NM
30 - 15
49 - 10
16 6
10 5
NM - NM
28 3
28 6
19 4
16 6
NM - 66
NM - NM
0
0
0
64
32
0
0
0
9
29
0
0
0
NM
45
0
0
0
NM
40
0
0
0
322
NM
0.0 0.0 0.0 8.1 1.5 -
0.0
0.0
0.0
3.9
1.0
0.0 0.0 0.0 1.1 2.3 -
0.0
0.0
0.0
0.6
1.1
0.0 0.0 0.0 0.0 2.9 -
0.0
0.0
0.0
0.0
1.5
0.0 0.0 0.0 0.0 11.5 -
0.0
0.0
0.0
0.0
1.4
0.0 0.0 0.0 4.9 20.1 -
0.0
0.0
0.0
1.1
3.0
17 - 11
NM - NM
22 - 14
21 - 11
46 - 28
88 - 47
NM - NM
20 - 12
19 - 10
45 - 18
14 4
NM - NM
17 7
15 4
35 - 13
17 -
13
#
#
#
#
JAN
JAN
JAN
JAN
JUL
19 52 18 19 20 -
10
27
9
10
13
54 31 21 20 16 -
30
11
13
11
11
34 13 22 22 17 -
17
8
12
9
11
BROWN SHOE CO INC

BUCKLE INC
CATO CORP -CL A
CHICOS FAS INC
#
#
#
#
#
JAN
JAN
JAN
JAN
JAN
31 15 15 18 24 -
13
10
11
10
16
79 15 14 20 19 -
29
11
10
12
12
23 14 15 25 19 -
12
8
9
13
10

COLDWATER CREEK INC
FOOT LOCKER INC
#
#
#
#
#
JAN
JAN
FEB
JAN
JAN
GPS
GCO
GES
HOTT
JOSB
[]
GAP INC
GENESCO INC
GUESS INC
HOT TOPIC INC
#
#
#
#
#
JAN
JAN
JAN
JAN
JAN
16 17 18 23 19 -
8
11
11
14
14
LTD
MW
ROST
RUE
SSI
[]
[]
L BRANDS INC
MENS WEARHOUSE INC
ROSS STORES INC
RUE21 INC
STAGE STORES INC
#
#
#
#
#
JAN
JAN
JAN
JAN
JAN
20 16 20 19 23 -
15
10
13
11
11
16 16 17 23 21 -
10
10
10
13
12
14 23 14 30 18 -
SMRT
TJX
URBN
ZUMZ
[]
[]
STEIN MART INC

TJX COMPANIES INC
ZUMIEZ INC
#
#
#
#
JAN
JAN
JAN
JAN
16 18 25 31 -
11
12
14
13
25 17 33 25 -
13
11
18
13
10 14 25 41 -
INDUSTRY SURVEYS
2008
16 9
17 6
NM - NM
NM - NM
20 6
10
NM - NM
NM - NM
18 - 12
14 9
34 - 15
2009
15 7
19 6
19 3
NM - NM
16 5
18 -
CBK
CWTR
FINL
FL
FRAN
2010
14 9
25 - 14
16 8
NM - NM
19 8
13
2011
14
15
7
3
14
17 -
BWS
BKE
CATO
CHS
PLCE
Dividend Yield (High-Low, %)
2012
21 23 19 629 -
DEC
APPAREL RETAIL
ANF
ARO
AEROPOSTALE INC
AEO
ANN
ANN INC
Dividend Payout Ratio (%)
2010
NM - NM
NM - NM
15 9
14 9
57 - 29
NM - NM
NM - NM
15 8
18 - 10
NA - NA
15 - 10
18 - 10
17 9
NM - NM
16 - 11
14 9
18 9
16 - 10
NM - NM
15 8
19 -
11
47 - 19
13 5
24 - 10
NM - NM
20 6
56 14 15 40 12 -
9
7
8
9
5
NM - NM
NM - NM
14 4
43 - 24
NA - NA
27 21 20 17 60 -
7
2
8
5
20
3
NM
19
44
0
3
NM
11
0
0
18
NM
8
0
0
5
NM
6
0
0
8
0
5
0
0
0.2 0.0 1.2 4.0 0.0 -
0.1
0.0
0.9
2.1
0.0
0.3 0.0 0.8 0.0 0.0 -
0.2
0.0
0.5
0.0
0.0
0.4 0.0 0.7 0.0 0.0 -
0.2
0.0
0.4
0.0
0.0
1.1 0.0 0.9 0.0 0.0 -
0.3
0.0
0.4
0.0
0.0
1.2 0.0 0.6 0.0 0.0 -
0.3
0.0
0.2
0.0
0.0
15 -
31
32
46
57
42
2.4 -
1.8
3.2 -
1.8
3.5 -
2.7
5.1 -
3.0
6.1 -
2.8
26 4
17 6
27 8
NM - NM
15 5
24
0
152
0
0
48
0
56
0
0
41
0
102
0
0
78
0
49
NM
0
22
0
46
NM
0
2.4 0.0 16.4 0.0 0.0 -
1.3
0.0
8.6
0.0
0.0
1.6 0.0 4.4 0.0 0.0 -
0.9
0.0
2.7
0.0
0.0
2.3 0.0 8.2 0.0 0.0 -
1.2
0.0
4.7
0.0
0.0
4.1 0.0 4.8 0.0 0.0 -
1.7
0.0
2.0
0.0
0.0
5.1 0.0 5.7 0.0 0.0 -
0.9
0.0
1.7
0.0
0.0
NM - NM
19 6
17 - 10
NM - NM
17 6
44
153
141
19
0
140
94
40
24
0
33
113
37
25
0
127
93
43
0
0
NM
119
57
NM
0
3.4 - 1.4
14.6 - 10.2
12.7 - 9.2
2.0 - 1.1
0.0 - 0.0
4.8 9.0 4.0 2.1 0.0 -
1.8
6.4
2.8
1.2
0.0
2.8 14.3 3.9 1.9 0.0 -
1.4
8.2
2.4
1.0
0.0
13.7 13.6 5.2 0.0 0.0 -
2.3
6.7
2.8
0.0
0.0
6.5 20.1 5.8 0.0 0.0 -
1.5
6.1
3.4
0.0
0.0
NM
NM
NM
NM
NA
4.8 0.0 1.6 5.4 NA -
2.1
0.0
0.9
3.0
NA
7.4 0.0 3.4 8.5 NA -
2.7
0.0
1.0
4.6
NA
9.8 0.0 6.1 16.4 NA -
1.8
0.0
0.7
3.3
NA
NM
NM
21
NM
NA
NM
NM
18
27
0
NM
NM
13
36
0
NM
NM
13
56
NA
NM
NM
14
200
NA
NM
NM
129
NM
NA
0.0 0.0 1.4 3.1 0.0 -
0.0
0.0
1.0
1.9
0.0
8.4 0.0 1.4 4.0 0.0 -
2.5
0.0
0.9
2.6
0.0
16 520 21 13 -
7
1
4
9
5
21
0
97
70
0
29
0
28
NM
0
21
0
85
NM
0
21
0
17
0
0
25
0
16
0
0
2.8 0.0 8.9 5.0 0.0 -
1.3
0.0
5.4
3.0
0.0
3.0 0.0 3.1 5.5 0.0 -
1.9
0.0
1.7
3.2
0.0
2.4 - 1.5
0.0 - 0.0
8.8 - 5.2
27.9 - 12.9
0.0 - 0.0
3.6 0.0 3.5 0.0 0.0 -
1.5
0.0
1.0
0.0
0.0
3.6 0.0 3.5 0.0 0.0 -
1.6
0.0
0.8
0.0
0.0
25.1 - 13.0
2.0 - 1.2
1.5 - 1.0
0.0 - 0.0
2.5 - 1.4
10.0 3.0 1.6 0.0 3.6 -
3.0
1.0
0.9
0.0
1.3
8.7 3.4 1.8 NA 5.7 -
2.7
1.0
0.9
NA
1.1
0.0 2.5 0.0 0.0 -
0.0
1.2
0.0
0.0
0.0 2.4 0.0 0.0 -
0.0
1.1
0.0
0.0
15 22 17 51 13 -
6
8
5
19
5
7
14
9
16
10
14 32 14 32 20 -
4
11
8
24
7
34 - 10
24 7
18 9
NA - NA
NM - NM
192
28
16
0
32
136
21
15
0
35
185
28
14
0
25
43
33
12
0
26
91
25
16
NA
NM
13.0 2.8 1.2 0.0 3.0 -
9.5
1.8
0.8
0.0
1.4
13.5 2.0 1.5 0.0 2.9 -
8.4
1.3
0.9
0.0
1.7
5
11
18
14
25 14 27 56 -
2
7
10
18
NM - NM
17 8
32 - 10
41 8
175
17
0
0
0
18
0
0
45
17
0
0
0
16
0
0
NM
19
0
0
16.6 - 10.7
1.4 - 0.9
0.0 - 0.0
0.0 - 0.0
0.0 1.7 0.0 0.0 -
0.0
1.1
0.0
0.0
8.5 1.6 0.0 0.0 -
4.5
1.2
0.0
0.0
45
Price / Earnings Ratio (High-Low)

Ticker
Company
FOOTWEAR
CROX CROCS INC
NKE
[] NIKE INC -CL B
SKX
SKECHERS U S A INC
WWW
Yr. End
2012
2011
DEC
DEC
DEC
# MAY
DEC
15 8
26 8
17 - 11
NA - NA
NM - 59
26 - 11
23 - 14
18 - 11
20 - 14
NM - NM
DEC
29 -
20

BEBE
BEBE STORES INC
JUN
68 COLM
DEC
20 -
25
15
17 -
2010
12
NM - NM
23 - 13
Dividend Payout Ratio (%)
2009
2008
NM - NM
12 4
16 5
17 - 10
25 4
NM - NM
28 8
19 9
23 - 14
21 8
Dividend Yield (High-Low, %)
2012
2011
2010
2009
2008
2012
2011
0
0
0
NA
0
0
0
0
35
NM
0
0
0
26
0
NM
0
0
26
0
NM
0
0
31
0
0.0 0.0 0.0 NA 0.0 -
0.0
0.0
0.0
NA
0.0
0.0 0.0 0.0 2.4 0.0 -
0.0
0.0
0.0
1.7
0.0
0.0 0.0 0.0 1.9 0.0 -
0.0
0.0
0.0
1.3
0.0
0.0 0.0 0.0 2.7 0.0 -
0.0
0.0
0.0
1.6
0.0
0.0 0.0 0.0 2.2 0.0 -
0.0
0.0
0.0
1.4
0.0
1.6 -
1.1
1.9 -
1.3
3.3 -
1.6
2.7 -
1.4
19.9 - 12.5
2.1 - 1.2
2.3 5.9 -
1.2
3.6
4.4 2.7 -
2.1
1.4
4.4 2.5 -
1.4
1.3
25 21 17 21 16 -
7
8
9
14
7
15 -
11
22 -
10
16 -
29
19
20
35
22
1.4 -
1.0
NM - NM
27 - 17
68 23 -
33
12
20 18 -
7
9
71
30
NM
28
NM
98
143
33
29
23
2.9 2.0 -
1.0
1.5
2010
2009
2008
46
INDUSTRY SURVEYS
Earnings per Share ($)
Tangible Book Value per Share ($)
Share Price (High-Low, $)
Ticker
Company
Yr. End
2012
2011
2010
2009
2008
2012
2011
2010
2009
2008
2012
2011
APPAREL,
CRI
COH
[]
PERY
FNP
FOSL
[]

CARTER'S INC
COACH INC
FOSSIL INC
2010
2009
2008
DEC
JUN
# JAN
DEC
DEC
2.73
3.60
1.01
(0.54)
5.63
1.96
2.99
1.71
1.53
4.66
2.50
2.36
1.84
(2.34)
3.83
2.03
1.93
1.04
(3.13)
2.09
1.37
2.20
(0.89)
(8.69)
2.05
8.28
5.64
7.23
(2.73)
15.73
5.30
4.41
7.04
(2.26)
16.74
4.13
4.01
2.85
(2.67)
15.13
1.93
4.41
4.85
(0.15)
13.37
(0.60)
3.73
3.41
2.65
10.99
57.62 79.70 23.28 15.39 139.20 -
38.66
48.24
13.75
8.25
62.77
41.70 69.20 32.84 9.18 134.98 -
26.50
45.70
12.22
4.02
66.05
34.24 58.55 28.97 9.72 74.34 -
22.19
32.96
14.20
3.90
31.31
29.49 37.36 19.30 7.88 34.18 -
13.86
11.41
3.31
1.61
11.00
22.39 37.64 29.27 22.78 40.74 -
11.94
13.19
3.40
1.46
11.51
HBI
ICON
MFB
MOV
OXM
HANESBRANDS INC
MOVADO GROUP INC
DEC
DEC
DEC
# JAN
# JAN
2.35
1.57
1.45
2.26
1.89
2.73
1.72
1.45
1.28
1.77
2.19
1.37
1.99
(0.86)
0.98
0.54
1.35
1.14
1.21
1.62
1.10
(2.23)
0.09
0.90 (17.00)
3.39
(12.15)
6.83
16.60
2.91
0.80
(8.05)
5.38
15.59
1.35
(0.48)
(7.68)
3.93
14.12
(0.21)
(1.29)
(7.22)
2.72
14.87
(2.01)
(3.04)
(10.17)
0.67
16.19
(2.70)
37.04 22.49 26.37 37.31 59.36 -
21.96
14.27
16.94
17.98
39.12
33.36 26.05 32.19 19.66 46.66 -
21.74
14.36
17.00
10.93
22.48
31.45 20.55 30.48 17.09 29.50 -
20.95
12.06
14.01
9.50
15.00
26.61 18.30 17.00 15.56 25.62 -
5.14
6.73
7.39
4.65
3.14
37.73 22.80 17.59 26.50 29.88 -
8.54
5.11
6.25
5.94
4.48
PVH
ZQK
RL
TRLG
UA
[]
[]
PVH CORP
QUIKSILVER INC
RALPH LAUREN CORP
UNDER ARMOUR INC
# JAN
OCT
# MAR
DEC
DEC
5.98
(0.07)
8.21
1.83
1.23
4.46
(0.13)
7.35
1.81
0.94
0.82
(0.09)
5.91
1.78
0.68
3.14
(0.58)
4.85
1.97
0.47
1.78
0.52
4.09
1.89
0.40
(17.66)
1.03
27.38
12.94
7.76
(27.25)
1.23
24.70
11.76
6.10
(32.06)
0.84
20.11
9.83
4.82
0.20
(0.16)
17.99
7.84
3.92
(2.32)
1.22
14.31
5.82
3.30
117.22 - 70.39
4.89 2.09
182.48 - 134.29
37.82 - 20.22
60.96 - 35.13
76.04 - 51.15
5.58 2.61
164.55 - 102.33
37.76 - 19.70
43.70 - 25.89
72.42 6.09 115.45 34.17 30.07 -
38.25
1.98
71.12
17.50
11.86
44.85 3.83 83.50 28.90 16.66 -
14.09
0.91
31.64
7.80
5.97
47.94 10.67 82.02 31.82 23.58 -
13.04
0.80
31.22
9.83
8.02
VFC
[] VF CORP
DEC
9.89
8.13
5.25
4.18
5.52
1.16
(4.58)
10.75
7.90
7.54
169.82 - 128.92
142.50 -
80.40
89.74 -
69.24
79.79 -
46.06
84.60 -
38.22
APPAREL RETAIL
ANF
ARO
AEROPOSTALE INC
AEO
ANN
ANN INC
#
#
#
#
JAN
JAN
JAN
JAN
JUL
2.89
0.44
1.35
2.13
1.12
1.46
0.86
0.78
1.66
1.09
1.71
2.52
0.91
1.26
0.93
0.90
2.30
0.82
(0.32)
0.58
3.14
1.49
0.87
(5.82)
0.62
22.79
4.87
6.08
8.26 J
1.90
21.38
5.07
7.04
7.31
4.78
21.67
5.12
6.89
7.58
3.85
20.78
4.62
7.58
7.10
3.24
21.06
3.54
6.81
7.27
2.63
54.10 23.05 23.94 39.78 22.62 -
28.64
11.76
12.50
22.14
14.75
78.25 26.83 16.37 32.49 17.63 -
44.22
9.16
10.00
19.00
12.00
58.50 32.24 19.64 28.24 15.29 -
29.88
21.26
11.35
11.59
10.39
42.31 29.90 19.86 17.50 11.81 -
16.95
10.78
8.31
2.41
3.75
82.06 24.93 23.84 29.23 8.97 -
13.66
8.35
6.98
3.74
3.08
BWS
BKE
CATO
CHS
PLCE
BROWN SHOE CO INC

BUCKLE INC
CATO CORP -CL A
CHICOS FAS INC
#
#
#
#
#
JAN
JAN
JAN
JAN
JAN
0.64
3.47
2.11
1.09
2.63
0.20
3.23
2.21
0.82
3.03
0.85
2.92
1.96
0.65
3.09
0.22
2.79
1.55
0.39
3.12
(3.21)
2.30
1.16
(0.11)
2.52
5.57
6.03
11.79
4.46
26.82
5.07
7.66
12.57
3.85
24.67
6.46
7.33
11.04
5.22
23.25
7.58
7.64
9.85
4.75
21.44
7.33
7.35
8.91
4.33
18.59
19.64 51.74 32.32 19.76 62.24 -
8.20
36.33
23.46
10.48
42.21
15.77 47.97 30.77 16.50 57.55 -
5.85
33.97
21.61
9.57
36.96
19.96 40.35 29.93 16.57 57.63 -
9.98
23.00
18.53
8.22
31.41
12.33 39.09 23.17 15.43 37.68 -
2.04
19.15
12.76
3.37
17.09
18.44 44.57 19.38 10.92 43.40 -
4.34
13.57
11.30
1.72
14.92
CBK
CWTR
FINL
FL
FRAN

COLDWATER CREEK INC
FOOT LOCKER INC
#
#
#
#
#
JAN
JAN
FEB
JAN
JAN
(0.45)
(2.69)
1.42
2.62
1.08
(2.00)
(3.96)
1.62
1.81
0.52
(0.63)
(1.92)
1.28
1.08
0.39
0.00
(2.44)
0.92
0.30
0.24
(0.23)
(1.16)
0.07
(0.52)
NA
2.04
1.22
10.59
14.61
1.64
2.48
3.83
10.13
12.61
0.39
4.61
8.35
9.36
11.69
(1.37)
5.39
10.22
8.32
10.89
(2.42)
5.65
12.38
7.83
10.76
NA
5.68 5.85 26.16 37.65 37.09 -
1.01
1.78
17.41
23.48
16.34
7.12 12.88 23.64 25.50 29.75 -
2.15
3.20
14.96
16.66
15.22
11.60 35.00 19.48 19.96 NA -
5.05
10.84
10.57
11.10
NA
9.02 36.80 12.77 12.95 NA -
3.25
5.68
3.77
7.09
NA
13.18 33.24 12.43 18.19 NA -
2.46
3.64
1.48
3.65
NA
GPS
GCO
GES
HOTT
JOSB
[]
GAP INC
GENESCO INC
GUESS INC
HOT TOPIC INC
#
#
#
#
#
JAN
JAN
JAN
JAN
JAN
2.35
4.70
2.06
0.46
2.86
1.57
3.56
2.88
(0.04)
3.51
1.89
2.34
3.14
(0.18)
3.11
1.59
1.35
2.63
0.27
2.59
1.35
8.21
2.31
0.45
2.14
5.57
18.41
12.09
4.29
23.87
5.32
14.73
12.67
4.35
21.02
6.64
16.93
11.01
4.87
17.47
6.96
16.68
10.51
6.25
14.29
6.04
14.35
7.94
5.88
11.73
37.85 78.97 37.15 10.73 54.99 -
17.75
50.33
22.48
6.44
39.54
23.73 64.00 48.00 8.74 57.14 -
15.08
35.12
25.99
5.05
39.85
26.34 41.20 51.53 9.96 47.36 -
16.62
21.00
30.53
4.58
26.33
23.36 29.69 45.00 13.87 32.61 -
9.56
11.31
12.90
5.25
13.07
21.89 38.74 45.21 9.40 27.81 -
9.41
10.37
10.26
3.90
10.25
LTD
MW
ROST
RUE
SSI
[]
[]
L BRANDS INC
MENS WEARHOUSE INC
ROSS STORES INC
RUE21 INC
STAGE STORES INC
#
#
#
#
#
JAN
JAN
JAN
JAN
JAN
2.60
2.56
3.59
1.81
1.20
2.80
2.32
2.91
1.60
0.93
2.49
1.27
2.36
1.25
1.00
1.39
0.86
1.80
0.91
0.76
0.66
1.14
1.18
0.52
(1.71)
(9.50)
19.14
7.99
7.82
14.06
(5.72)
17.47
6.57
6.01
13.07
(1.77)
15.99
5.63
4.19
13.02
0.46
16.00
4.70
2.78
12.13
(0.41)
14.96
3.90
0.83
11.49
52.50 40.97 70.82 33.65 27.42 -
38.45
25.97
47.05
19.69
12.81
45.45 36.44 49.15 37.33 19.97 -
28.05
24.06
30.08
20.61
11.21
35.48 29.62 33.29 37.63 17.77 -
18.34
17.66
21.15
20.28
10.00
20.08 27.67 25.25 29.50 14.85 -
5.98
9.38
14.04
22.26
5.49
22.16 27.65 20.78 NA 17.99 -
6.90
8.33
10.61
NA
3.52
SMRT
TJX
URBN
ZUMZ
[]
[]
STEIN MART INC

TJX COMPANIES INC
ZUMIEZ INC
#
#
#
#
JAN
JAN
JAN
JAN
0.57
2.60
1.63
1.37
0.44
1.97
1.20
1.22
1.10
1.67
1.64
0.81
0.55
1.45
1.31
0.31
(1.72)
1.09
1.20
0.59
5.34
4.63
9.28
7.25
5.95
4.06
7.37
8.31
5.57
3.75
8.59
6.93
5.03
3.31
7.69
5.93
4.37
2.37
6.28
5.58
9.34 46.67 40.65 41.96 -
6.02
31.72
23.42
17.93
10.95 32.75 39.26 30.90 -
5.65
21.27
21.47
15.85
10.99 24.25 40.84 33.13 -
5.90
17.88
29.03
11.67
13.75 20.32 35.84 17.43 -
1.00
9.58
13.63
5.70
6.71 18.76 38.40 24.30 -
0.99
8.90
12.33
4.80
INDUSTRY SURVEYS
47
Earnings per Share ($)

Ticker
Company
Tangible Book Value per Share ($)
Share Price (High-Low, $)
Yr. End
2012
2011
2010
2009
2008
2012
2011
2010
2009
2008
DEC
DEC
DEC
# MAY
DEC
1.46
3.49
2.78
NA
0.19
1.27
5.16
2.30
2.41
(1.39)
0.78
4.10
1.83
2.24
2.87
(0.49)
2.99
1.24
1.97
1.18
(2.24)
1.89
0.68
1.53
1.20
6.29
14.95
8.66
NA
17.35
4.93
16.06
6.99
10.53
17.22
3.75
16.28
6.57
9.78
18.69
2.94
12.11
5.76
9.40
15.82
2.97
9.17
4.34
8.27
14.36
22.59 92.27 46.56 57.40 22.37 -
12.00
28.53
31.25
42.55
11.21
32.47 118.90 41.42 49.13 23.66 -
14.20
71.18
24.83
34.72
11.75
19.54 87.88 31.79 46.24 44.90 -
5.80
31.11
17.04
30.44
19.00
8.20 34.84 20.21 33.31 30.00 -
1.00
12.41
5.96
19.12
5.20
39.29 52.34 12.89 35.30 25.20 -
0.79
15.42
5.94
21.34
9.25
DEC
1.67
2.54
2.15
1.26
1.96
(13.19)
10.82
9.92
8.52
7.85
47.99 -
33.30
43.36 -
30.31
33.00 -
23.51
28.31 -
13.15
31.21 -
16.24

BEBE
BEBE STORES INC
JUN
0.14
COLM
DEC
2.95
0.05
3.06
(0.06)
2.28
0.14
1.98
0.70
2.75
4.28
32.70
4.23
30.36
4.29
28.12
5.30
28.38
5.46
26.70
9.58 58.47 -
3.48
43.26
8.58 70.64 -
5.41
41.13
10.05 62.25 -
5.36
38.26
9.50 46.35 -
4.59
24.63
13.83 49.49 -
4.57
26.07
FOOTWEAR
CROX CROCS INC
NKE
[] NIKE INC -CL B
SKX
SKECHERS U S A INC
WWW
2012
2011
2010
2009
2008
J-This amount includes intangibles that cannot be identified.
The analysis and opinion set forth in this publication are provided by S&P Capital IQ Equity Research and are prepared separately from any other analytic activity of Standard & Poors.
In this regard, S&P Capital IQ Equity Research has no access to nonpublic information received by other units of Standard & Poors.
The accuracy and completeness of information obtained from third-party sources, and the opinions based on such information, are not guaranteed.
48
INDUSTRY SURVEYS

Apparel and Footwear

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Industry Surveys

Apparel & Footwear: Retailers & Brands

Current Environment ............................................................................................ 1

Comparative Company Analysis ...................................................................... 37

INQUIRIES & CLIENT RELATIONS

This issue updates the one dated October 25, 2012.

Topics Covered by Industry Surveys

Environmental & Waste Management

Natural Gas Distribution

Financial Services: Diversified

Oil & Gas: Equipment & Services

Alcoholic Beverages & Tobacco

Foods & Nonalcoholic Beverages

Oil & Gas: Production & Marketing

Apparel & Footwear:

Paper & Forest Products

Autos & Auto Parts

Healthcare: Products & Supplies

Publishing & Advertising

Heavy Equipment & Trucks

Real Estate Investment Trusts

Broadcasting, Cable & Satellite

Computers: Commercial Services

Insurance: Life & Health

Lodging & Gaming

Movies & Entertainment

Foods & Beverages: Europe

Global Industry Surveys

Oil & Gas: Europe

Food Retail: Europe

S&P Capital IQ Industry Surveys

A SSOCIATE E DITOR : C HARLES M AC V EIGH

S TATISTICIAN : S ALLY K ATHRYN N UTTALL

C LIENT S UPPORT : 1-800-523-4534. ISSN 0196-4666.

APPAREL & FOOTWEAR: RETAILERS & BRANDS / MAY 2013

COMPANIES FOCUS ON GROWTH OPPORTUNITIES

S P ECIALTY AP P AREL RETAILERS

Abercrombie & Fitch

TABLE B05: RETAIL

- - - MIL. SQ. FEET - - - - - % CHANGE - 201120122011

O FF- P RICE RETAILERS

APPAREL & FOOTWEAR: RETAILERS & BRANDS / MAY 2013

APPAREL & FOOTWEAR: RETAILERS & BRANDS / MAY 2013

APPAREL & FOOTWEAR: RETAILERS & BRANDS / MAY 2013

The Warnaco Group, Inc.

The Talbots, Inc.

Perry Ellis International

J.C. Penney Co.

Gores Group, LLC

Bluestar Alliance LLC

Source: Company reports.

81.25% interest in Liz Claiborne's

Strategies are similar to

APPAREL & FOOTWEAR: RETAILERS & BRANDS / MAY 2013

NEAR-TERM SUB-INDUSTRY OUTLOOKS

APPAREL & FOOTWEAR: RETAILERS & BRANDS / MAY 2013

APPAREL & FOOTWEAR: RETAILERS & BRANDS / MAY 2013

Chart H05 APPAREL &

Source: Bureau of Labor Statistics.

APPAREL & FOOTWEAR'S SHARE OF TOTAL

Source: US Department of Commerce.

US employment levels in apparel and

APPAREL & FOOTWEAR: RETAILERS & BRANDS / MAY 2013

$5.51 billion in 2012, up 7.0% from