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The consumer, who accounts for approximately two-thirds of the U.S. economy, is your best tool in measuring the health of apparel retail. Consumers find themselves in interesting times right now, as gasoline prices are rising significantly in the midst of a decent economy. Yet the public is showing the same tenacity in filling up their cars that they show in maxing out their credit cards. The American consumers natural instinct is to spend, which is the main asset for the apparel industry.
But the U.S. consumer isnt the main reason that Zacks Equity Research has a positive outlook for the apparel industry. The U.S. market is expected to grow slowly, but international sales of athletic footwear and apparel are showing unprecedented strength. According to Nick Raichs Weekly Earnings and Sector Update, the shoes and related apparel industry has a Zacks Industry Rank of 2.75, which places it 46th out of more than 200 industries.
Currency influences are pushing revenues and profit margins higher, benefiting from the weaker dollar. Another interesting trend in the space is that pricing pressure is pushing more sourcing outside the U.S, which is expected to continue.
The apparel industry is an immense spaces with dozens of niche players. Investors need to be aware that macro-economic trends could have a different impact on these sectors. Furthermore, the product itself and the price are also paramount. The economy may be encouraging at the moment, but consumers are still unsure whats driving it and how long it will last. Therefore, many are looking for bargains, which is evidence by the sudden rise in auto purchases as that industry has rolled out a slate of new incentives. As a result of this volatility, investors need to be selective in the space.
Skechers USA, Inc. (NYSE: SKX ) designs, develops and markets a diverse range of footwear for men, women and children under 12 unique brand names. The company has also granted select third-party licenses for Skechers-branded apparel, swimwear and hosiery. Last month, Skechers USA reported second quarter net earnings per share of 38 cents on net sales of $263.9 million. The earnings result jumped 81% from last years 21 cents and topped the consensus by more than 46%. Net sales advanced 12.5% year-over-year, marking the companys highest second quarter revenues in history. It also marks the sixth straight quarter of year-over-year top-line quarterly increases.
Our record second quarter net sales were the result of growth in key Skechers mens, womens and childrens lines, and our new fashion brands, including 310 Motoring and Red by Marc Ecko both of which experienced their first full year of shipping, said Chief Financial Officer David Weinberg. The growth from all our key divisions and our improved margins give us continued confidence as we head into the second half of the year. To further research Skechers USA, Inc., click SKX .
Gildan Activewear, Inc. (NYSE: GIL ) is a vertically-integrated manufacturer and marketer of premium quality branded basic activewear for sale principally in the wholesale imprinted activewear segment of the Canadian, U.S., European and other international markets. Gildan Activewear posted fiscal third quarter sales of $198.9 million earlier this month, marking an 18.1% year-over-year advance. Net earnings reached 57 cents per share, which was a solid gain from a year earlier. Compared to last year, the company said the earnings increase was driven by continuing strong growth in unit volume sales, more favorable product-mix, and lower costs of cotton.
Looking forward, Gildan Activewear remains comfortable with its enhanced fiscal 2005 earnings per share guidance from July 12. Furthermore, the company plans to spend about $105 million for its capital expenditure program in fiscal 2006. Gildan Activewear intends to construct two additional facilities. One will manufacture existing products, while the other will be for production of athletic socks, which the company believes will be a significant growth opportunity. To further research Gildan Activewear, Inc., click GIL .
Polo Ralph Lauren Corporation (NYSE: RL ) is a leader in the design, marketing and distribution of premium lifestyle products in four categories: apparel, home, accessories and fragrances. Polo Ralph Lauren is experiencing strong customer response to its brands, which helped put together a solid fiscal first quarter performance. Earnings per share reached 48 cents, which topped the consensus by almost 30%. Net revenues reached $752 million, a rise of 24% from last years $606 million. Polo Ralph Lauren stated that the strength of its business is shown through the breadth and depth of its brands across all product categories distributed through multiple channels and in multiple geographies.
Analysts were also encouraged by the companys outlook for the future. Polo Ralph Lauren raised its earnings per share guidance for fiscal 2006 to between $2.85 and $2.92. The company believes this year will be significant for business, as it continues to invest in the rollout of its international expansion, further develops its luxury accessories business, and expands its global specialty stores. To further research Polo Ralph Lauren Corporation, click RL .
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