Despite the dismal economy, some fashion firms have managed to achieve growth by reining in expenses, reducing debt and of course, delivering a good product. Return on Equity is a measure of a company’s profitability, calculated as net income...
Despite the dismal economy, some fashion firms have managed to achieve growth by reining in expenses, reducing debt and of course, delivering a good product. Return on Equity is a measure of a company’s profitability, calculated as net income divided by shareholder’s equity. However, it’s only one indicator. Many variables can affect ROE, including debt; new credit, or any charges or dividends that might negatively affect earnings. Note: Revenue and net income is for the fiscal year ended 12/31/01, unless otherwise noted. Parentheses indicate a loss. Asterisks denote companies with the same ROE. Stock symbols follow company names.
The 10 Fashion Vendor Issues With the Highest Return on Equity
Columbia Sportswear Co., COLM
Return on Equity: 26.8 percent; 2001 Net income: $88.8 million; 2001 Revenue: $779.6 million
Columbia Sportswear, one of the leading outerwear manufacturers in the world and a top maker of ski wear in the U.S., is expanding its European distribution, which includes opening a second licensed store in Moscow, and developing existing merchandise categories.
Liz Claiborne Inc., LIZ
Return on Equity: 26.5 percent; 2001 Net income: $192.1 million; 2001 Revenue: $3.4 billion
Having tightened up its businesses and balance sheets, Liz Claiborne is in a position to be aggressive in acquiring or investing in new companies, as evidenced by its recent purchase of Ellen Tracy. Some of the company’s other brands include Dana Buchman, Elisabeth, Laundry by Shelli Segal, Lucky Brand and Sigrid Olsen.
Nike Inc., NKE
Return on Equity: 18.1 percent; Net income (fiscal year ending 5/31/02): $663 million; Revenue: $9.9 billion
Nike is trying to keep expenses down with the goal of long-term sustainable profit growth. Analysts cite potential in women’s apparel, but consumer demand for high-end basketball sneakers with a sticker price of $185 appears to be waning.
Hampshire Group, HAMP
Return on Equity: 17.1 percent; 2001 Net income: $11.1 million; 2001 Revenues: $236.5 millionHampshire Group made this list because of its purchase of Item-Eyes Inc., a privately held sportswear company that accounted for $44 million in net sales in 2000 — virtually the entire margin of sales increases.
Polo Ralph Lauren Corp., RL
Return on Equity: 15.7 percent; Net income (fiscalyear ending 3/30/02): $172.5 million; Revenues: $2.3 billion
Polo Ralph Lauren’s productivity is largely driven by the retail division. According to analysts, full-price stores do an average of $1,000 per square foot and "upwards of an estimated $650 per square foot" for outlet stores.
Reebok International, RBK
Return on Equity: 15.1 percent; 2001 Net income: $102.7 million; 2001 Revenue: $3 billion
Reebok is the number-two athletic shoe maker in the U.S. behind Nike. Its latest marketing strategy is to position itself as a fashion-forward company and improve its earnings per share by 15 percent in 2003.
Kenneth Cole Productions, KCP
Return on Equity: 13.2 percent; 2001 Net income: $16.6 million; 2001 Revenue: $386.1 million
Kenneth Cole’s cost-cutting efforts are beginning to pay off. What’s more, the company’s efforts at product diversification and marketing contributed to better-than-expected second quarter results. On the wholesale side, sell-through remains strong.
Return on Equity: 12.2 percent; Net income (fiscal year ending 10/31/01): $28 million; Revenue: $615.5 million
Quiksilver produces casual clothing for young women and men under the Quiksilver, Roxy, Raisins, Radio Fiji, Hawk Clothing and Gotcha (Europe) labels. The company’s retail division is continuing to expand in California, and in September signed a lease to open a Boardriders Club store in Times Square.
Jones Apparel Group, JNY
Return on Equity: 12.1 percent;2001 Net income: $236.2 million; 2001 Revenue: $4.1 billion
This year, Jones has added the LEI brand of junior moderate jeans and the Gloria Vanderbilt jeans lines, including the junior Glo brand, to its jeans stable, which also includes Polo Jeans Co. The company’s other brands include Joneswear, Evan-Picone, Norton McNaughton, Miss Erika, Energie, Currants, Jamie Scott and Nine & Co.
Perry Ellis International, PERY
Return on Equity: 9.9 percent; Net income (fiscal year ending 1/31/02): $6.6 million; Revenues: $279.7 million
Perry Ellis has been lowering its costs and boosting profits in recent years — not a bad formula. The company is banking on the relaunch of its licensed women’s collection this spring to contribute $50 million to the bottom line by the end of 2004.
The 10 Fashion Vendor Issues With the Lowest Return on Equity
Fila Holdings, FLH
Return on Equity: (199.7 percent); 2001 Net loss: ($134.9 million); 2001 Revenue: $940.6 million
Parent company Holding di Partecipazioni Industriali has been trying to sell Fila and its approximately $300 million in debt for more than a year. Last quarter, Fila’s bottom line suffered the greatest damage from a $14.5 million write-off on goodwill.
Russell Corp., RML
Return on Equity: (7.9 percent); 2001 Net loss: ($55.5 million); 2001 Revenue: $1.16 billion
The international apparel company specializing in activewear, casualwear and athletic uniforms, forecasts strong sales, based in part on new and expanded fleece programs at J.C. Penney and Sam’s Club.
Tarrant Apparel Group, TAGS
Return on Equity: (4.2 percent); 2001 Net loss: ($2.9 million); 2001 Revenue: $330 million
Tarrant, a provider of private label casual apparel that primarily serves specialty retailers and mass merchants, is taking the final step towards vertical integration. It has agreed in principle to purchase a twill mill factory with an annual capacity of 18 million yards.
Return on Equity: (4.2 percent); 2001 Net income: $6.2 million; 2001 Revenue: $677.6 million
Earlier this month, Guess announced that it had entered into a new $85 million asset-based secured-credit facility, arranged by Wachovia Securities. The new four-year agreement replaces an existing facility with JP Morgan Chase.
G-III Apparel Group, GIII
Return on Equity: (4.1 percent); 2001 Net income (fiscal year ending 1/31/02): $2.4 million; Revenue: $201.4 million
G-III designs, manufactures, imports and markets leather and nonleather apparel under private retail and licensed labels. Last quarter, the company’s net income plummeted 85.2 percent to $576,000, as revenues shriveled 36.4 percent to $40 million.
LVMH Moët Hennessy Louis Vuitton, LVMHY
Return on Equity: 0.1 percent; 2001 Net income: $8.7 million at then current exchange rates; 2001 Revenue: $11.9 billion LVMH reported a total net loss of $1.05 billion due to accounting changes, specifically the U.S. GAAP adjustment in connection with a goodwill writedown at DFS.In April, Standard and Poor’s rated LVMH’s creditworthiness, giving it a "BBB-plus," a single notch below an "A" rating.
Return on Equity: 2.7 percent; 2001 Net loss: ($10 million); 2001 Revenue: $188.9 million
Tefron Ltd. manufactures seamless intimate apparel sold by Victoria’s Secret, Gap, Banana Republic, Target, Nike and DKNY. In the first half of the year, the company took an $18.8 million one-time, after-tax accounting adjustment.
Movie Star Inc., MSI
Return on Equity: 3.4 percent; Net income (fiscal year ending 6/30/02): $547,000; Revenue: $54.4 million
Movie Star designs, manufactures, markets and sells ladies’ sleepwear, robes, leisurewear, loungewear, panties and daywear. Last year’s results included a pre-tax loss of nearly $1.2 million, related to the closure of a distribution facility and offset by an income tax benefit of $888,000.
Gildan Activewear Inc., GIL
Return on Equity: 3.7 percent; Net income (fiscal year ending 9/30/01): $500,000; Revenue: $520.6 million
Gildan, which manufactures and sells basic activewear principally for the wholesale imprinted sportswear market, raised its earnings per share for the full fiscal year to between $1.35 and $1.39 per diluted share.
Nautica Enterprises Inc., NAUT
Return on Equity: 4 percent; Net income (fiscal year ending 3/2/03):$17.3 million; Revenue: 692.1 million
Charges in the third quarter will impact profitability; Nautica expects to take an after-tax charge of $6 million to $6.5 million for closing its Rockefeller Plaza store in Manhattan.The company is terminating its licensing agreement with swimwear manufacturer Apparel Ventures Inc. in June.
@tradesy is turning the concept of a showroom upside down with its new space in Santa Monica. Here, the company plans to hold events, art exhibits and a showcase rare fashion pieces like this Louis Vuitton boxing set. Get all the details on Tradesy’s first showroom on WWD.com. #wwdnews
Spotted last night at the @erdem x @hm launch event: Kate Bosworth, Rashida Jones, Kirsten Dunst and Selma Blair. The party, which took place in LA, also marked the opening of their pop-up shop. “I was interested in creating a collection that wasn’t in any way disposable. It was about pieces you’d create and keep forever, things that have a permanence to it,” designer Erdem Moralioglu said. #wwdeye (📷: Katie Jones)
Renee Zellweger in yellow in 2001 and again in 2017. Chosen as one of the 12 @pantone Leading Spring Colors (and dubbed “Meadowlark”), it only makes sense that the bright hue stands the test of time and is making a resurgence this season, seen already on stars like @blakelively and @gigihadid. (📷: Donato Sardello & @rexfeatures) #wwdfashion #tbt
Dior’s 70th anniversary celebration continues with a new exhibition at the Royal Ontario Museum in Toronto. “Christian Dior,” which is scheduled to run through March 18, takes a look at the founders tenure from 1947 to 1057 and feature 40 designs. Pictured here is an evening gown from the Ailée, fall 1948-49 haute couture collection. #wwdfashion (📷: Brian Boyle)
As one of the most recognizable models in the world, Christy Turlington Burns has an insider’s view of the fashion industry and the allegations of sexual harassment swirling around it. “I can say that harassment and mistreatment have always been widely known and tolerated in the industry. The industry is surrounded by predators who thrive on the constant rejection and loneliness so many of us have experiences at some point in our careers,” Turlington told WWD, along with her suggestions for how the modeling world should protect younger women and men. Read more on WWD.com. Link in bio. (📷: Tony Palmieri) #wwdnews
@asics America has tapped a new brand ambassador: famed DJ/record producer @steveaoki. This initiative is intended to set the tone for the new brand identity and philosophy and will include partnerships with influencers and in-store and off-line activations that will continue into next year. This is Asics’ most significant marketing effort in two decades, and is expected to attract younger consumers to the brand. #wwdfashion
24-year-old Jean Prounis is redefining the rules of jewelry. Formerly a studio assistant to Jemima Kirke and a design apprentice at Ghuran, she focuses on handcrafted subtleties and ancient goldsmithing techniques. “There was a really sterile feel in the environment and I wanted to have jewelry with character that shapes how you wear it everyday,” Prounis said. Each piece is hand made in New York, either by Prounis or three other jewelers in the district. #wwdfashion
“These collections continue to build on that vision, empowering differently abled adults to express themselves through fashion,” said @tommyhilfiger of his line of adaptive apparel, which launches today. The line consists of 37 men’s and 34 women’s styles based upon the pieces from the spring Tommy Hilfiger sportswear collection. #wwdnews