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Keeping Ahead of the Squeeze

NEW YORK — As middle-income Americans stagger under the corporate scandals that have caused the stock market to plummet, pension plans to dwindle and consumer confidence to weaken, moderate and better sportswear makers aren’t counting on...

NEW YORK — As middle-income Americans stagger under the corporate scandals that have caused the stock market to plummet, pension plans to dwindle and consumer confidence to weaken, moderate and better sportswear makers aren’t counting on a robust second half.

Most do not forecast a brighter outlook until at least spring 2003. Keeping a close watch on inventory levels and being able to react quickly to hot trends remain critical, industry executives contended.

“Business will be tough and very promotional,” said Marshal Cohen, co-president of NPDFashionworld, the Port Washington, N.Y.-based national consumer tracking firm. “Those manufacturers in a quick-turn position are going to be the ones to benefit because if something gets hot the retailers are not in a position to capitalize — the manufacturers will have to be.”

One thing is certain: Everyone seems to be looking for a bargain.

“The lower the price, the better the chances the products will do well,” Cohen said. “The consumer has gotten incredibly value-conscious and there are two messages here: They want fashions that last, with more traditional items, and then they want the latest fashions — but on sale.”

Along this vein, Heather Pech, group president for Jones New York Sport, Easy Spirit and Rena Rowan at Jones Apparel Group, said the company has evaluated its retail prices and in some cases lowered them to increase the price-value relationship.

“There’s increased value in our better brands, which we think will translate into better sell-throughs,” Pech said.

For the three months ended April 6, income at Jones Apparel Group fell to $70.7 million from $96.4 million in the year-ago quarter. Pech said plans continue to be conservative, and the company sees the overall climate improving.

The company shortened its delivery cycles in the second quarter to be able to turn product more quickly and Pech said this has already led to improved sales.

Lynne Fish, president of Jones’ moderate sportswear division said: “Stores are continuing to keep their inventories in line. Business will continue on a steady base and anything that is trend-right is really what’s happening [in moderate].”

Fish said it’s all about value and giving the customer good product for her money.

For spring and summer, Fish said Jones’ top-performing moderate brands have included Norton McNaughton and Nine & Co. She expects those two brands to continue to perform well, while remaining optimistic about Joneswear Sport and Evan-Picone, the latter which will introduce a plus-size line this fall.

If first-quarter earnings are any indication of the future, things look bright for Liz Claiborne Inc. Net income for the three months ended March 30 was $50.9 million — above the $45.5 million in the year-ago quarter. Sales rose 8 percent to $892.9 million.

At the company’s annual meeting in May, Paul R. Charron, chairman and chief executive officer, said he is somewhat optimistic about the second half of the year but not overly exuberant. “You don’t see me clicking my heels,” Charron said.

Still, the company’s retail plans are getting more aggressive after a six-month lag last year following the economic slowdown, he said. Store expansions include two Sigrid Olsen stores slated to open, with one in Boston and another to be announced soon, and another 18 Lucky Brand Dungarees store openings this year — bringing the total to 69 by the beginning of 2003, he said.

At Ninety, a moderate label with a contemporary look, vice president of sales Jamie Gorman said business remains consistent.

“We are finding a lot of people looking for quick domestic turn and we are up by 20 percent from last year,” Gorman said.

While saying that Kellwood Co.’s divisions have experienced a good spring and summer season at retail, particularly with Sag Harbor, women’s wear division president Stephen Ruzow said they are planning business flat for fall and holiday.

“We haven’t seen the strong sell-throughs at retail translate into increased orders for fall or holiday,” Ruzow said. “But fortunately, because there’s so much capacity offshore, we can chase lead times and we’ve shortened them from seven months to five months.”

Kellwood’s financial performance saw 2001 sales fall 3 percent to $2.28 billion. Net earnings fell by 38 percent to $37.7 million. Women’s apparel — Kellwood’s biggest division — saw the sharpest decline, with sales down 7 percent to $1.52 billion.

“If you look at the comp-store sales, it’s not a pretty picture,” Ruzow said. “Until business starts to increase at retail, it’s not going to change, and with the stock market down, there’s not a lot of consumer confidence out there. Other than the designer customer, customers are buying clothes when they need clothes.”

Kellwood’s Bice and Melrose brands will launch updated sportswear lines for spring. To build the Sag Harbor brand, a new test-marketing initiative with Belk Stores will launch in the fourth quarter, in a 16-page catalog directly mailed to the stores’ best customers, Ruzow said. The catalog will feature Sag Harbor suits, dresses, sportswear and sport.

At Harvé Benard, president Bernard Holtzman said he’s planning fall and holiday business flat, even though sales are above plan now. The firm should do about $105 million in volume this year, with the second half accounting for about $65 million.

“Retailers are trying to chase the business, [ordering] conservatively and waiting to see how sales manifest themselves,” Holtzman said. Over the next three months, Holtzman said the company will launch two casual-based lines after just introducing Nero, an all-black, bottoms-driven business. “We’ve already booked 300,000 units,” he said, projecting that business to do between $8 million and $10 million a year.

Retail orders have been consistent at AK Anne Klein, the better sportswear label which was refocused last spring to reflect a younger lifestyle and image, said Wendy Chivian, president of Anne Klein.

“Based on the events of last year and 9/11, we’re looking for a different story. It wasn’t a regular year at retail and it really changed the face of last year,” Chivian said. “We’re very optimistic and we’re looking at better regular-priced sell throughs than a year ago. Last year, we were very much about suited separates, and this year, we’re very much about sportswear separates, which are the roots of Anne Klein.”

August Silk president Lou Breuning, said: “We have had some bright spots this spring, but overall our business will take somewhat of a change from spring-summer and into fall-holiday. That change will occur in diversification of the product mix.”

He said the firm will expand from primarily 12-gauge knits into other silk-blended yarns and tape yarns.

“Everybody talks about ‘novel,’ and whatever that is, you’re going to see a lot more of it when it comes to fall and holiday,” said Breuning. He is planning business flat to about 2 to 3 percent ahead. “Quick response has been more of an integral part of our business,” he added.

Also sounding optimistic, Tommy Bahama ceo Tony Margolis said business has started to pick up the last 60 days.

“Post-Sept. 11, everything slid, and our business is very much hooked into resort communities and resort living and in general, people weren’t traveling — they were at home nesting,” Margolis said. “So for the first four months or so, things were not good. But in early spring, it started to get tolerable and by mid-to-late April, business and comp stores started getting healthy.”

Fall and holiday bookings are strong, said Margolis, projecting business to be up in the high single digits.