Challenging year for US specialty apparel retailers - Fitch

Wednesday, 16 November 2011 00:03 - - {{hitsCtrl.values.hits}}

It has been a challenging year for many U.S. specialty apparel retailers. According a Standard & Poor’s Ratings Services report published this week commodity price inflation (especially the quick escalation in cotton prices) has put margins under pressure.

Meanwhile, the fragile recovery and worries over the longer-term health of the economy have hurt consumer confidence. At several large U.S. specialty apparel retailers, including Gap Inc. and J. Crew, same-store sales were flat or down modestly for the first six months of 2011.

Still, a few specialty apparel companies, such as Limited Brands Inc. and Express Inc., posted strong positive same-store sales in the past couple of quarters, reflecting an ability to keep up with fashion trends and to pass on higher costs. But while commodity prices have stabilized somewhat, margin pressures have not eased.

The report, titled “Specialty Apparel Retailers Face High Commodity Costs And Wary Consumers,’’ looks at recent credit trends in the U.S. specialty apparel retail sector, and at what some companies are doing--or can do--to preserve credit measures.