Apparel Manufacturers Worth Trying On
Apparel wholesalers have been pinched, but some are worth consideration.
Apparel manufacturers have had a rough year because a deteriorating consumer spending environment exacerbated issues stemming from already-tough industry dynamics. Although we expect the macroeconomic pressures to eventually subside, we believe that the firms with the most potential to rebound after the downturn have adapted well to secular changes in the industry by keeping their brands relevant and consumers engaged.
Top- and Bottom-Line Pressure
Several changes have occurred in apparel retail in recent years, which has negatively affected wholesalers. Apparel makers' brands, once the dominant merchandise at department stores, began to feel the pinch in the mid-2000s as a wave of department store consolidation resulted in a number of store closures and increased buying power from wholesalers' main retail customers. In an effort to differentiate products from competitors, department stores also pushed branded apparel aside in favor of private- or exclusive-label merchandise. We believe the increased popularity of specialty retailers among shoppers also negatively affected department stores and apparel manufacturers in turn.
Michelle Chang does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.