First spring sprouts for fashion market

Thursday, 10 February 2011
After two weeks struggling in red territory, the FashionUnited Top 100 Index is recovering the lost time – and power, and taking off above other international indexes. The international fashion index closed Wednesday at 1.246.75 thanks to a final rise of 4.72 points.

The decline for the major indexes responds to a reaction to recent increases in prices for food commodities -- especially wheat, as well as higher oil and gasoline prices. Food prices in the United Kingdom rose at the fastest pace in 19 months in January, the British government said Wednesday. In the same vein, inflation is what everyone is talking about at Federal Reserve Chairman Ben Bernanke's appearance today before the House Budget Committee.

However, international fashion companies over-performed worldwide. Part of Wednesday impulse in the apparel market was to be found in Polo Ralph Lauren’s fiscal third-quarter earnings, that rose 52% as the clothing and home-furnishings maker reported higher wholesale shipments and stronger retail sales. Net revenue climbed 24% to a record $1.55 billion. The company in November expected revenue growth in the high teens on a percentage basis. Polo stock rallied on Wednesday, rising more than 9% in New York Stock Exchange composite trading to about $126.25 a share, a historic high for the company.

On a conference call on Wednesday morning, Polo executives remarked that pricing will increase "responsibly" through the company's product line. Mr. Farah declined to specify how much, citing volatile futures markets. Across the board in the apparel industry, "I don't think prices will be going down in the near term," he said. Within the fashion benchmark, Polo ended the session with a final gain of 1.29%.

Separately, Jones Group Inc.'s fourth-quarter loss narrowed amid fewer charges, though rising costs contributed to sharply lower margins and the apparel company said it expects to raise prices significantly this year. Fourth quarter’s improvement was backed by sales growth in the company's core brands. Adjusted earnings per share declined, but topped market projections.

Regarding the ahead fiscal 2011, the New York-based company projects challenges of continued cost pressures and consumer reaction to higher prices. However, the company's brands are expected to achieve growth throughout 2011.

Jones Group, whose brands include Nine West and Jones New York, sees its average prices rising by single-digit percentages in the first half of this year and by double digits in the second, Chief Executive Wesley Card said in an interview. For the fourth quarter, net loss available to common shareholders was $38.3 million or $0.47 per share, compared to loss of $124.9 million or $1.53 per share last year. "Cost pressures are just too great," Mr. Card said.

Still in the Wall Street screens, Columbia Sportswear was one of yesterday's notable stocks on the rise, up 2.2% to $64.83 at a time when S&P was trading 0.5% lower to 1,318 and the Dow Jones Industrial Average was trading fractionally lower to 12,211.

Finally, there also were some stocks dragged by the uncertain macro-economic atmosphere, such as JD Sports Fashion, which dropped by 2.11%, or German Triumph, which had the dubious honor of being the biggest loser of the day, with a cut of -10.3%.

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