KTA SEMINAR ADVISED TO SEEK FOREIGN SALES
Byline: Michael McNamara
NEW YORK — “Maybe you are an exception, but foreign sales have just not been meaningful for most knitters, and this must change.”
That was the challenge from veteran Wall Street analyst Jay Meltzer, to more than 90 domestic knit executives, who gathered Tuesday at an economic forecast breakfast meeting at Butler’s Restaurant here, sponsored by the Knitted Textile Association.
Meltzer, a familiar speaker at textile industry meetings, retired in November as a vice president in Goldman Sachs equity research department, after 45 years of both working in and analyzing the textile and apparel businesses. He spent the first part of his career at a family-owned company, the former Meltzer Textiles, and later he moved to Goldman, Sachs.
Meltzer told the group that as rising raw material costs, escalating imports and uncertain retail sales threaten to hamper sustained growth for knitters next year, GATT, the North American Free Trade Agreement and even the newly proposed Free Trade Area of the Americas offer knitters a tremendous chance for growth.
“I know it is a touchy, many-sided subject, but I suggest that the probability of a more level worldwide playing field may be as much or more of an opportunity than it is a threat,” he said. “NAFTA has created an exciting trading bloc to the north and south, and a World Trade Organization should help break other overseas restrictions and tariffs.
“Furthermore, the dollar has devalued just as the huge economies of Europe and Japan are turning favorable,” Meltzer added. “Are you ready for that? Are you there? What percentage of your sales are overseas?”
Looking to knit business generally in 1995, Meltzer said, increased demand and reductions in inventories should be of benefit. A pickup is evident in currently better performances by key knitters — including Alamac and Guilford — he said.
Meltzer also pointed to domestic noncellulosic fiber shipments as another area for optimism, noting that for the first 10 months of 1994, fiber shipments rose 5.3 percent, “and if we take out those targeted for carpet and industrial markets, poundage headed for apparel and home furnishings is up an astounding 6.7 percent.
“Next year [for knitters] probably won’t be sensational, but it should be positive,” he said. “I see domestic noncellulosics up another 1 to 2 percent, and an environment allowing [knitters] that are set right to do reasonably well.”
The retail front was the topic of two other speakers, Ed Johnson, director of Johnson Redbook Service, and Steve Kernkraut, a managing director and senior retail analyst of Bear Stearns.
Johnson told the knitters that despite the poor showing at retail in the early part of December, due in part to the generally warm weather that has hurt outerwear sales — the current Christmas season should be better for retail apparel than last year, registering a 6.4 to 8.6 percent increase.
“There has been a strong trend toward concentrated sales growth toward the end of December in every year since 1983, as consumers buy closer to the time of need and hold off for bargains,” Johnson said. He also noted that this year will be helped by an extra Saturday of shopping during the season.
While Johnson focused on the Christmas season at retail, Kernkraut focused on the longer term. Among his key projections, he said sales of branded merchandise will continue to rise as consumers equate brands with quality, and the home shopping distribution channel will continue to gain share from catalogs.
“Over the next three to four years, taking into consideration factors such as postage costs, consumers will turn to home shopping as a viable buying tool,” Kernkraut said.
As for the entire textile, apparel and retail industry, Kernkraut said, “It’s a situation where the strong are getting stronger. Branding will continue to be important. Align yourselves with key branded products.”