COVER STORY

t’s fair to say that no company went Iuntouched during the past year of sweeping changes and economic crises. Still, sudden collapse of the market in fall 2008 did not impact all equally.

Some, already struggling, were driven to declare bankruptcy and in some cases completely remove their shingles: Mervyn’s, Filene’s Basement, S&K Famous Brands and Gottschalks are first to come to mind. Yet others continued to rack up sales and profits despite the collective boom of wallets shutting. The Buckle, for example, shows no signs of letting up.

In short, each apparel company on the Top 50 list has its own story to tell, but common themes will out: Apparel companies across the board are in many highly populated regions experiencing triple-digit sales working diligently to generate strong of the country have opened up new increases. This will continue to be a cash flow, pay down debt by tightly possibilities for retailers looking to focus, along with finding new and managing inventory and expenditures expand. interesting ways to engage the and reduce overall company cost consumer. One observation on this structure. Topping the list of priorities Collectively, retailers are expected to subject: More companies than ever — is a focus on streamlining brands open 4,000 stores in the United States and not just the youth-oriented brands while improving merchandise this year and close 3,600 (according to — are going social. Even Perry Ellis assortments and allocation. the CoStar Group), while a heady mix wants to be on your Facebook page. of plans for international expansion Apparel companies continue to close include store openings across Europe, Starting with True Religion, Apparel’s under-performing stores and store Asia and the Middle East. Top 50 report explores some of the concepts — just last month, strategies that landed each on the list. Abercrombie & Fitch announced plans E-commerce has been a virtually to shutter its Ruehl stores — while universal bright spot of growth and plunging real estate and store closings excitement, with many companies

6 JULY 2009 • www.apparelmag.com While the economy is taking its toll on the industry, it’s clear that when the dust clears, some apparel players will emerge stronger than ever before.

#1 True Religion Topping Apparel’s list for the second year in a row, this premium denim brand continues to find favor with its customers, who even in this tough economy are willing to shell out big bucks for the company’s distinctive stylings. The average sales prices in the company’s full-price retail stores in 2008? Those would be $207 (women’s products) $202 (men’s products) and $106 (kid’s products), with some of its best sellers made with the Super Big-T stitch, a dis- tinctive thread-stitch process patented by the com- pany in 2007. Other highlights of 2008 are the newly introduced jean collections “XXX” and “Stealth,” while “Disco” received a makeover with gold crystals. True Religion’s Consumer Direct segment generated net sales of $75.3 million, or 27.9 percent of total net sales. At the end of 2008 the company operated 42 branded retail stores, and expects to add 25 this year.

Consumers continue to shell out big bucks for True Religion’s distinctive stylings.

#2 The Buckle #3 lululemon athletica Growing from 222 stores in 1999 to 387 stores in 39 With a lengthy manifesto that includes statements ranging from states at the end of 2008, this retailer of casual the instructive “dance, sing, floss and travel” to the philosophical apparel, based in … wait for it … Kearney, “jealousy works the opposite way you want it to,” this yoga- Nebraska, has thrived in a retail environment domi- inspired technical athletic apparel brand has grown in just over nated by much larger, vertical operations. The 10 years from a single storefront in Vancouver to more than 113 Buckle’s successful formula includes selling a combi- locations and what might be described as a cult following that nation of national brands such as Big Star, MEK, stems from its community-based, grassroots approach to brand Affliction, Sinful, Lucky Brand Dungarees, Silver, building, and from its focus on women. (It also sells men’s Hurley, Billabong, Fossil, Quiksilver/Roxy, Miss Me, apparel.) Partnerships with local fitness practitioners, or “ambas- 7 Diamonds, OBEY and Ed Hardy, as well as its own sadors,” in lululemon lingo, drive customers to the retailer, private label, BKE, which comprised 28 percent of its (ambassadors get free swag and publicity for their classes), while sales in 2008. Known for extreme personalized in-store community boards and classes make each store a truly attention to its customers, The Buckle educates each unique place, and a magnet for those seeking a lifestyle of health, salesperson on product details and how to create a fun, personal achievement — and $54 tanks. Each retail loca- complete look for the customer by helping each tion’s dedicated community coordinator organizes fitness or phil- individual find the best fit and presenting merchan- anthropic events in the community, while “educators” are given dise as coordinating outfits. The company reported exhaustive training on the technical and design aspects of each earnings up 44 percent in the first quarter 2009. product, and are coached to develop a personal connection with each “guest.”

www.apparelmag.com • JULY 2009 7 THE TOP 50

#4 Urban Outfitters #5 Guess? With an eclectic mix of apparel, accessories and home items, Already one of fashion’s most well-known brands, Guess’ the company says its core strategy is to provide unified store near-ubiquitous presence is poised to expand as the com- environments that establish emotional bonds with the cus- pany eyes Europe and Asia as key growth priorities. The tomer. If its web site is any indicator, that mission has crossed company opened 168 international stores in all brand con- to the online environment where the use of social media is in cepts combined in fiscal 2009 with its international licensees full play, with blogs touching on everything from art and music as key strategic partners, and has plans to open approxi- to tech and film around the globe. Somewhere between the mately 126 new stores in fiscal 2010 outside of the United Frank Lloyd Wright legos and the Sticky Fingers bakery in States and Canada. The company’s European segment, Washington, DC is an Urban Outfitters sensibility that cus- which includes both wholesale and retail operations in tomers are clearly tapping into. April 2008 saw the company Europe and the Middle East, generated 34.3 percent of net add to its Urban Outfitters, Anthropologie and Free People revenues. Guess credits its global sourcing and product retail banners with the launch of the first “greenhouse- development platform for its strategic role in significantly inspired” Terrain store, offering lifestyle home and garden reducing costs and lead times. In e-commerce, the com- products, antiques, live plants and flowers. The company also pany’s seven brand web sites are enhancing brand identity — launched Liefsdottir, a wholesale division for the Anthropolo- and also racking up sales. Fiscal 2009 saw the combined sites gie brand that is also sold through luxury department stores continue to grow, generating net sales in excess of the top including Nordstrom and Neiman Marcus. retail GUESS? store in the chain.

#6 Nike The Nike Free shoe offers a The company continues to just do it, driving competitors to seek out barefoot experience coupled with product niches to avoid head-on competition with this athletic-wear the protection and traction of a lightweight performance shoe. behemoth. As the largest company on the Top 50 with sales approach- Inset: Nike Shox offer impact ing $19 billion, Nike continues to grow and innovate. 2008 saw the protection. 100-year anniversary and best year ever of the Converse brand, and record growth for the Hurley and Cole Haan brands and the Nike GOLF portfolio. The company sold its Starter and Bauer businesses, and acquired Umbro. Ever serious about its role as a corpo- rate citizen, Nike launched The Human Race, the world’s biggest single running event in history, raising funds along the way, and expanded the recent debut of Considered Design, products that combine sustain- able principles with innovations in sport, to include all six of the com- pany’s key categories: running, basketball, soccer, men’s training, women’s training and sportswear.

#7 Gymboree #8 bebe Stores Fiscal 2008 marks a milestone event in the company’s 30+ While profits have started to mimic its apparel fit models year history, with revenues reaching the $1 billion plateau. (extremely slim) since bebe’s fiscal year end in July 2008 (profit Acknowledging challenging times ahead, CEO Matthew margins for the nine months and three months ending in April McCauley says Gymboree is well positioned for long-term 2009 were 2.7% and -4.0%, respectively), the company’s commit- growth with a cash balance of $140 million and no long- ment to updating its technology infrastructure should position it term debt. Churning out season after season of truly well for future growth. Last year saw the culmination of a three- adorable kids’ clothes doesn’t hurt either. The company year information systems and technology strategic plan with the has also planned carefully, opting for pay cuts for corpo- implementation of a product lifecycle management system to its rate and distribution center personnel and the elimination supply chain, fully integrated with its production system. Previous of the cash bonus program for senior management over investments focused on infrastructure upgrades, a new production layoffs. Capitalizing on the soft real estate market, the management system, upgraded planning and allocation systems company plans to expand with 75 stores, focusing heavily and the new clubbebe loyalty program. on its new lower-priced concept, Crazy 8.

8 JULY 2009 • www.apparelmag.com A ranking of U.S. publicly traded apparel companies with at least $100M+ THE TOP in annual sales by profit margins for their most recent fiscal years. SALES NET INCOME %% % Profit Profit Last Most % Most Change Margin, Margin, 2009 Year’s Recent Previous Change Recent Previous Net Most Previous RANK Rank Company50 FY FY FY Sales FY FY Income Recent FY FY 1 1 True Religion Dec. $270.0 $173.3 55.80 $44.4 27.80 59.71 16.44 16.04 2 New The Buckle Jan. $792.0 $619.9 27.76 $104.4 $75.2 38.83 13.18 12.13 3 5 lululemon athletica Feb. $353.5 $269.9 30.97 $39.4 $30.8 27.92 11.15 11.41 4 8 Urban Outfitters Jan. $1,834.6 $1,507.7 21.68 $199.4 $160.2 24.47 10.87 10.63 5 6 Guess? Dec. $2,093.4 $1,750.0 19.62 $213.6 $186.5 14.53 10.20 10.66 6 10 Nike May $18,627.0 $16,325.9 14.09 $1,883.4 $1,491.5 26.28 10.11 9.14 7 12 Gymboree Jan. $1,000.7 $920.8 8.68 $93.5 $80.3 16.44 9.34 8.72 8 4 bebe Stores July $687.6 $671.0 2.47 $63.1 $77.3 (18.37) 9.18 11.52 9 11 Cintas Corp. May $3,937.9 $3,706.9 6.23 $335.4 $334.5 0.27 8.52 9.02 10 15 Jos. A. Bank Clothiers Jan. $695.9 $604.0 15.22 $58.4 $50.2 16.33 8.39 8.31 11 14 Polo Ralph Lauren Mar. $5,018.9 $4,880.1 2.84 $406.0 $419.8 (3.29) 8.09 8.60 12 Back Delia’s Jan. $215.6 $201.6 6.94 $17.2 ($2.3) 847.83 7.98 (1.14) 13 17 Aeropostale Jan. $1,885.5 $1,590.9 18.52 $149.4 $129.2 15.63 7.92 8.12 14 16 VF Jan. $7,642.6 $7,219.4 5.86 $602.8 $591.6 1.89 7.89 8.19 15 3 Abercrombie & Fitch Jan. $3,540.3 $3,749.9 (5.59) $272.3 $475.7 (42.76) 7.69 12.69 16 7 Columbia Sportswear Dec. $1,317.8 $1,356.0 (2.82) $95.1 $144.5 (34.19) 7.22 10.66 17 26 Gap Jan. $14,526.0 $15,763.0 (7.85) $967.0 $833.0 16.09 6.66 5.28 18 New Volcom Dec. $334.3 $268.6 24.46 $21.7 $33.3 (34.83) 6.49 12.40 19 2 American Eagle Outfitters Jan. $2,988.9 $3,055.4 (2.18) $179.1 $400.0 (55.23) 5.99 13.09 20 18 Maidenform Brands Jan. $413.5 $422.2 (2.06) $24.7 $34.2 (27.78) 5.97 8.10 21 29 UniFirst Aug. $1,023.2 $902.1 13.42 $61.0 $45.2 34.96 5.96 5.01 22 13 Under Armour Dec. $725.2 $606.6 19.55 $38.2 $52.6 (27.38) 5.27 8.67 23 9 Levi Strauss Nov. $4,400.9 $4,360.9 0.92 $229.3 $460.4 (50.20) 5.21 10.56 24 22 Dressbarn July $1,444.2 $1,426.6 1.23 $74.1 $101.2 (26.78) 5.13 7.09 25 37 Wet Seal Jan. $593.0 $611.2 (2.98) $30.2 $23.2 30.17 5.09 3.80 26 33 The Children’s Place Jan. $1,630.3 $1,520.3 7.24 $82.4 ($59.6) 238.26 5.05 (3.92) 27 Back Carter’s Jan. $1,490.0 $1,412.3 5.50 $75.1 ($70.6) 206.37 5.04 (5.00) 28 19 Nordstrom Jan. $8,272.0 $8,828.0 (6.30) $401.0 $715.0 (43.92) 4.85 8.10 29 25 Zumiez Jan. $408.7 $381.4 7.16 $17.2 $25.3 (32.02) 4.21 6.63 30 36 Cato Jan. $857.7 $846.4 1.34 $33.6 $32.3 4.02 3.92 3.82 31 50 J. Crew Jan. $1,428.0 $1,334.7 6.99 $54.1 $97.1 (44.28) 3.79 7.28 32 21 Phillips-Van Heusen Feb. $2,491.9 $2,425.2 2.75 $91.8 $183.3 (49.92) 3.68 7.56 33 41 Citi Trends Jan. $488.2 $437.5 11.59 $17.4 $14.2 22.54 3.56 3.25 34 44 Timberland Dec. $1,364.6 $1,436.5 (5.01) $42.9 $40.0 7.25 3.14 2.78 35 43 Hanesbrands Jan. $4,248.8 $4,474.5 (5.04) $127.2 $126.1 0.87 2.99 2.82 36 24 Men’s Wearhouse Jan. $1,972.4 $2,112.6 (6.64) $58.8 $147.0 (60.00) 2.98 6.96 37 45 Hot Topic Jan. $761.1 $728.1 4.53 $19.7 $16.0 23.13 2.59 2.20 38 New American Apparel Dec. $545.1 $387.0 40.85 $14.1 15.50 (9.03) 2.59 4.01 39 23 Limited Brands Jan. $9,043.0 $10,134.0 (10.77) $220.0 $718.0 (69.36) 2.43 7.09 40 34 The Warnaco Group Dec. $2,065.0 $1,819.6 13.49 $47.3 $79.1 (40.20) 2.29 4.35 41 30 Charlotte Russe Sept. $823.3 $740.9 11.12 $18.2 $36.3 (49.86) 2.21 4.90 42 46 Superior Uniform Group Dec. $123.8 $120.5 2.74 $2.1 $2.5 (16.00) 1.70 2.07 43 Back Hampshire Group Dec. $240.9 $257.0 (6.26) $0.0 $0.0 0.00 0.00 0.00 44 47 Delta Apparel June $322.0 $312.4 3.07 ($0.5) $6.3 (107.94) (0.16) 2.02 45 Back Destination Maternity Sept. $564.6 $581.4 (2.89) ($1.4) ($0.4) (250.00) (0.25) (0.07) 46 28 Chico’s FAS Jan. $1,582.4 $1,714.3 (7.69) ($19.1) $88.9 (121.48) (1.21) 5.19 47 40 Perry Ellis International Jan. $851.3 $863.9 (1.46) ($12.9) $28.2 (145.74) (1.52) 3.26 48 27 Tween Brands Jan. $995.1 $1,014.0 (1.86) ($17.2) $52.6 (132.70) (1.73) 5.19 49 Back New York & Company Jan. $1,139.9 $1,194.9 (4.60) ($19.8) ($4.9) (304.08) (1.74) (0.41) 50 38 G-III Apparel Group Jan. $711.1 $518.9 37.04 ($14.0) $17.5 (180.00) (1.97) 3.37

*NOTES: New = The company is appearing in the Apparel Top 50 for the first time. Back = The company has been ranked in the Apparel Top 50 in previous years but was not ranked last year because of its performance, because it was not publicly traded, etc. Dollar amounts are in millions of U.S. dollars. Levi Strauss & Co. is a privately held company that releases financial data publicly. Apparel does not include department stores in its Top 50 rankings. Nordstrom files with the SEC under “Retail - Family Clothing Stores” (SIC code 5651). THE TOP 50

#9 Cintas You probably know this company as the largest provider of corporate uni- forms, but did you know it also offers business solutions ranging from jan- itorial services to fire protection equipment? Reporting its 39th consecutive year of growth in sales and profits, the company expanded into international markets with the acquisition of an information manage- ment company in the Netherlands and the launch of fashion uniform sales and service offices in Hong Kong and Macau. The ownership-driven com- pany — most company executives have the majority of their net worths invested in Cintas stock — saw Cintas purchase another 5.2 million shares in the company.

Cintas uniforms go to work with more than five million people every day.

#10 Jos. A. Bank Clothiers Inc. #11 Polo Ralph Lauren Offering “Three Levels of Luxury,” one level of quality — and one level The World of Ralph Lauren expands with last year’s of focus on its business (intense), this men’s tailored and casual clothing opening of its second Paris store and largest retailer, with 441 stores in 42 states, plans to open 10 to 15 stores this women’s store in the world, on the famous Avenue year, while economic conditions have put under evaluation plans to Montaigne, and an 11,000-square-foot spot on Los grow the chain to 600 stores by 2012. Meanwhile, customers are show- Angeles’ hot shopping street Robertson Boulevard. ing confidence in purchasing traditional business attire online: suits rep- In March, the company will debut a newly con- resented approximately 25 percent of orders in its Direct Marketing structed 30,000-square-foot store in New York City segment (includes catalog), which accounted for approximately 9 per- across from its flagship Rhinelander Mansion loca- cent of net sales in fiscal 2008. Strong growth in online sales over the tion, dedicated to women’s wear and home prod- past five fiscal years (more modest in 2008) are helped by its 3,800 active ucts. Its largest and fast-growing “store,” affiliate arrangements, and likely by its online style tips — did you know RalphLauren.com, averaged 2.9 million unique visi- that a cummerbund is always worn with folds pointing up, and that tors monthly and acquired approximately 350,000 socks should always match the trouser, not the shoe? Extreme focus on new customers, resulting in 1.7 million total cus- creating a customer-friendly site continues this year with plans to tomers in fiscal 2009, while August 2008 saw the replace the existing Internet infrastructure to meet increasing capacity launch of Rugby.com, the company’s second needs and enhance the shopping experience. e-commerce web site.

#12 dELiA*s #13 Aeropostale The direct marketer and retailer derives Once a Macy’s private label, this 25+-year-old brand targeting sales from a mix of national brands and its teens ages 14-17 now operates 903 stores and continues to two proprietary brands, dELiA*s and Alloy, buck economic trends, continuing 11 consecutive years of targeted to girls ages 12 to 19, a demo- same-store sales growth with an impressive 8 percent increase graphic representing approximately in 2008. CEO Julian Geiger attributes the company’s success in 33 million and reportedly among the part to adhering to its strategic goal of — tell me if you’ve fastest growing in the United States. It’s heard this one before — listening to the customer. Easier said also one that dELiA*s knows a lot about. than done, but Aeropostale walks the talk, taking direction Its strategy is continually developed and from focus groups, surveys and consumer feedback. It credits refined based on its comprehensive its unique promotional specialty store model, which enables teenager databases, approximately 10.9 the company to spur demand on an item and classification million people strong, with information basis, with helping create a dynamic and exciting shopping on age, purchasing history, stated inter- With a database experience. Although shuttering its 11-store Jimmy’Z chain, ests, online behavior, educational level 10.9 million strong, last month the company launched its new “P.S. from Aéro- and socioeconomic factors. dELiA*s knows its postale” concept for elementary school kids ages seven to 12. teenage customers.

10 JULY 2009 • www.apparelmag.com THE TOP 50

#14 VF Ending 2008 well poised to face a tough economy with $382 million in cash, $1.3 billion of borrowing capacity and a huge portfolio of well-established brands, VF will continue to focus on its strongest retail concepts, with a stated goal of generating 22 percent of its sales from its retail and e-commerce A Nautica jacket, pictured businesses by 2012. The company here, represents just one of the company’s huge opened 89 retail stores in 2008 for a portfolio of brands. total of 698; plans call for opening 70 more this year. Online, new web sites were launched for its The North Face®, Nautica® and Kipling® brands, likely con- tributing to the increase in direct-to-consumer revenues of 15 percent, accounting for 16 percent of total revenues, up from 14 percent the previous year. Plans to acquire the remaining shares of women’s sportswear brands Splendid® and Ella Moss® will strengthen its newest coalition, Contemporary Brands.

#15 Abercrombie & Fitch Despite its high positioning on the Top 50, sales, income and profits are significantly down from the previous year, and the retailer, usually in the press for its sexually charged marketing, has more recently been faulted for its refusal to discount mer- chandise during the ’08 holiday season; that sent customers flocking to the competition, which was slashing prices faster than you can say: “I’m not buying anything unless it’s at least 70 percent off.” Since then, the company has offered and deepened promotions, but still hasn’t regained its stride.

#16 Columbia Sportswear Columbia products are sold in more than 100 countries, and this month the 72-year-old outdoor apparel company will make them available at yet another location: its own web site. (See p. 21 for more details.) This move complements its retail expansion strat- egy, which calls for building on its base of outlet stores as well as opening several new first-line retail stores in key metropolitan markets, the next one expected to open in September in the heart of London’s vibrant retail district on Kensington High Street. This month, Columbia Sportwear will finally make its merchandise available for sale on its web site.

www.apparelmag.com • JULY 2009 11 THE TOP 50

#17 Gap #18 Volcom Hitting the billion dollar mark in annual online sales What started as two guys on a snowboard- for the first time was just one of a recent string of ing trip in 1991 is now a leading global “firsts” for the company, which also includes the brand in the boardsport apparel industry. recent launch of Banana Republic Edition, an acces- With a motto of “youth against establish- sories-only store, opening of its first two outlet stores ment,” the brand is inspired by, and steeped in Canada, and plans to open its first Gap store in in, the energy of youth culture: the company Israel this fall, to be followed by a Banana Republic also produces and sells music under its Vol- nameplate in the spring. While the latter moves are com Entertainment label, and boardsports- part of an overall strategy to expand into interna- influenced films through its film division, tional markets, CEO Glenn Murphy, in announcing Veeco Productions. In 2008, the company plans to remodel 50 Old Navy stores this year, says acquired action sports lifestyle brand Electric gaining market share at home is also a top priority. Visual Evolution.

Gap is eyeing international markets while keeping a strong focus on its U.S. business.

#19 American Eagle Outfitters #20 Maidenform Brands With net income and profits down by more than half over the pre- It’s no wonder the company’s share of the intimates vious year, the company’s spot on the Top 50 belies its recent fall- apparel market grew to 9.4 percent. Just a few contribut- off in business, but in a quarterly report released in May, CEO Jim ing factors: In 2008 Maidenform increased its mass-mer- O’Donnell reported early indications of stabilization, noting chant presence 12.6 percent over 2007, while its sales improvements in the AE brand, particularly were up 28 percent in the exploding shapewear category. in denim and other key fashion cate- It also experienced continued growth in full-figure bras (a gories such as dresses and acces- category the NPD Group reports now represents approxi- sories. He also emphasized the mately 35 percent of the overall bra market). More excite- company’s goals of improving ment on the way: the company this year signed a new assortments across AE cate- licensing agreement with Donna Karan and also intro- gories and strengthening mer- duces its new Total Solution, featuring patent-pending chandise margin. Meanwhile, SMARTZONE™ cup technology. On the IT side, an all- American Eagle announced plans to new platform for its e-commerce web site is slated to go expand into the Middle East. live by early 2010, while a project to replace its demand planning and inventory forecasting systems is part of an overall business process improvement initiative expected American Eagle has announced plans to yield significant financial and operational benefits. to expand into the Middle East.

#21 Unifirst Although it has diversified in recent years — did you know the company operates 14 nuclear decontamination facilities? — uniform rental remains at the heart of the company, which for the first time beat the $1 billion mark. Chairman and CEO Ronald Croatti says the company is committed to continued growth even in the face of an extremely challenging economy, moving forward aggressively with special programs designed to address business uncertainties and to target industries that are least likely to experience severe job losses. “We’re not deluding ourselves into thinking that the government’s rescue plan is going to make things right,” says Croatti. Amen to that. The company serves more than 225,000 customer companies throughout the United States and Canada from more than 200 UniFirst locations.

12 JULY 2009 • www.apparelmag.com THE TOP 50

#22 Under Armour #23 Levi Strauss Billing itself as The Athletic Brand of This Generation, the Overall a good year for the company, company that made its name in compression wear contin- 2008 saw the launch of the company’s ues to expand its house, adding to its footwear business first global marketing campaign, “Live with the launch of its Performance Training Footwear and Unbuttoned,” the creation of a global Running Footwear. The company brought down high product development center at its manu- inventory levels from a year-over-year increase of 105 per- facturing facility in Turkey and the estab- cent at the end of 2007, to one of just lishment of a joint venture in Russia. 10 percent at the end of 2008, While the Signature® brand finished the and continues to focus on year strong, sales of its Dockers® brand improving efficiency in this were disappointing. A new ERP system area. (See next month’s supply was successfully rolled out in Asia, but chain feature to learn more the U.S. implementation was not so about Under Armour’s recent smooth, resulting in a brief system shut- WMS implementation.) down that disrupted shipments and had a substantial impact on second-quarter In 2008 Levi launched Known for its compression results in the Americas. its first global wear, the company continues marketing campaign, to expand its business. “Live Unbottoned.”

#24 The Dress Barn #25 The Wet Seal This month marks a year since the As part of its strategy to reverse eight consecutive quarters of company’s fiscal year end reported same-store sales declines, including first quarter fiscal ’09 comp- in this issue, but recent third-quar- store sales down 7.3 percent, the company has identified oppor- ter results for dressbarn show tunities to improve inventory comp-store sales up 3 percent, management and merchandise which president and CEO David mix, particularly among basic and Jaffe attributes to a mix of spring fashion tops, dresses and acces- merchandise that resounded posi- sories. In service of this goal, the tively with the consumer. The company is implementing mark- company continues to upgrade its down and size optimization sys- information systems: dressbarn tems as well as a retail IT remains a strong focus for The Dress Barn. adopted a variant of the merchan- merchandising system slated dising system used at its maurices for completion in 2010. stores; and the company is also implementing a new POS The Wet Seal expects new IT system and upgrading its CRM system. systems to help turn around a Editor’s Note: At press time dress barn and Tween Brands string of consecutive same-store sales declines. (#48) had announced plans to merge.

#26 The Children’s Place #27 Carter’s Its value-priced, fashionable merchandise continues to The maker of the venerable Carter’s and OshKosh brands held appeal to moms and kids, in its 917 stores and online, where strong, with the company achieving record sales, and earnings e-commerce net sales have grown aggregately more than per share comparable to the previous year, despite incurring 200 percent over the past three years, with sales of $88.9 costs related to events such as the bankruptcies of several large million in fiscal 2008. The company is committed to the customers, complying with new safety standards for children’s growth of this channel, and uses third-party resources to products and correcting inventory levels in its own retail stores. fully manage the hosting of its web site, with all other fulfill- Favorable factors including the less discretionary nature of chil- ment services provided in house. The Children’s Place dren’s wear and a rising U.S. birth rate should allow the com- exited its Disney Store business in 2008. pany to continue to build on its 14.1 percent share of the $24 billion baby and young children’s apparel market.

www.apparelmag.com • JULY 2009 13 THE TOP 50

#28 Nordstrom #29 Zumiez A softening in fall 2007 top-line sales, resulting in excess There’s never been a better time to be a 12-to-24-year-old young inventories, led the company to take steps to align inven- guy (or gal!). Design your own skateboard online, or make plans tory and expenses with projected sales, positioning Nord- to join the Zumiez Couch Tour of live music performances and strom to better respond to the subsequent sharp drop in pro skate demos. In the mall? Feel free to hang out on the the economy. Still, 2008 was a challenging year for the Zumiez couch and play video games. Got a question? Ask the retailer; moving forward, customer service remains the cor- staff — they’re not just associates, they’re also product users. nerstone of a four-point strategy rounded out with plans You’ll find national and private-label brands, the latter repre- for continued inventory adjustments; deepening customer senting approximately 15 percent of net sales in 2008; meanwhile relationships through the multi-channel shopping experi- the retailer is working with its vendors to get more low-priced ence and Nordstrom Fashion Rewards® program; and merchandise into stores for back-to-school shopping. The world effective business management. is your skatepark, dude.

#30 The Cato Corp. #31 J. Crew Its market research reveals that low prices and fash- The company hit the jackpot earlier this year ion are the two biggest reasons customers shop at when the entire First Family showed up to inau- Cato — and there can’t be much doubt that the guration festivities clad in J. Crew. You just can’t value-oriented combination served the retailer espe- pay for advertising like that. Continued upgrades cially well in the current economy. Cato performed to IS in 2008 included the implementation of a solidly, ending the year with $140 million in cash new platform for its web site, a new order man- and investments, and no debt. The company’s new agement system in its call center and a new ware- It’s Fashion Metro concept gained momentum, with house management system. While causing some 32 stores opened at the end of 2008 and plans to add disruptions to business during the second, third 40 this year. and fourth quarters, these upgrades should go a long way toward improving the company’s ability Customers shop at Cato for its low prices and fashion — a perfect fit in an economy characterized by to efficiently take and fulfill orders from fans shrinking wallets. seeking to strut Obama-style.

#32 Phillips-Van Heusen Tackling the tough economy head on, the owner of the Calvin Klein, Izod and Van Heusen clothing brands earlier this year announced plans to close 175 stores, lay off 400 employees, stop domestic production of machine-made neckwear, reduce its ware- house capacity and cut travel, marketing and administrative expenses, and realign its global sourcing organizational structure — moves which the company expects to save about $40 million annually, before taxes.

#33 Citi Trends #34 Timberland Addressing problems of ineffective manage- All part of its mission to strengthen its ment of inventories and store payroll, and high connection with consumers, Timber- store inventory shrinkage, the company deliv- land executed an integrated, global, ered strong year-over-year results in all key brand-building campaign that metrics and recently topped it off with record included high-emotion TV ads and first-quarter 2009 results including sales up 18.3 interactive, viral web communications, percent, comp-store sales up 7.4 percent and launched its Earthkeeper program, a net income up 52 percent. Preparing for growth, movement to recruit 1 million people Timberland is on a mission to strengthen its connection with consumers. the company expanded its South Carolina dis- into an online network designed tribution center and is also implementing a new to inspire real environmental behavior change, and opened nearly 100 warehouse management system, while on the branded retail doors and shop-in-shops in China. Its Earthkeepers collection, store side, Citi Trends plans to increase its sell- made with organic and recycled materials, hit its mark with consumers, selling ing square footage by 15 percent this year. well. The company ended the year with zero debt and $217 million in cash.

14 JULY 2009 • www.apparelmag.com THE TOP 50

#35 Hanesbrands #36 Men’s Wearhouse People go back to the basics in a recession, and that’s good Once again named to Fortune magazine’s 100 Best Companies to news for Hanesbrands. “People are still wearing under- Work For list, the company saw a new “buy one get one free” wear, socks, bras, t-shirts and activewear as often as before promotion, the integration of 500 After Hours tuxedo rental and will need to replenish,” says chairman and CEO stores into its business, new leadership at its K&G deep-discount Richard Noll. The company also generated sales with new stores, and reductions in executive compensation and other introductions including Hanes No Ride Up panties and expenses, all of which chairman and CEO George Zimmer says boxer briefs for “wedgie-free” comfort. If that’s not non- will contribute to the company’s ability to navigate through the discretionary spending, I don’t know what is. economic downturn. But can he guarantee it?

#37 Hot Topic #38 American Apparel The purveyor of music- and pop It was a nail-biter to the end but in March the cash-poor retailer of culture-influenced apparel and snug-fitting t-shirts managed to keep from defaulting on $16 mil- accessories in 2008 launched lion in debt by selling an 18 percent stake in the company to Lion ShockHound, an e-space music Capital, a private equity firm that once owned Jimmy Choo, for discovery concept, offering online $80 million. American Apparel, known for its sexually charged music downloads, a music mer- advertising and socially responsible manufacturing, also made chandise retail store, exclusive edi- headlines this year when film actor-director Woody Allen sued torial and video content and social the company for using his image in its advertising without his per- networking. The company oper- mission. The parties settled for $5 million. ates 681 Hot Topic stores and, for the plus-size young women’s mar- American Apparel stayed alive after receiving an $80 million infusion from private equity firm Lion Capital. Pictured here: its tri-blend ket, 159 Torrid stores. short-sleeve track shirt.

#39 Limited Brands #40 The Warnaco Group “We’re in the right businesses,” says chairman and CEO Leslie The company hit a major milestone, surpassing $2 billion Wexner. Since divesting its Express and Limited Brands in 2007 in revenues, with the Calvin Klein brand the cornerstone the company has focused on its core beauty and lingerie concepts of Warnaco’s growth strategy, increasing 21 percent to that Wexner says “combine the best of ‘I need it’ and ‘I want it.’” $1.5 billion in 2008, with Calvin Klein Underwear the The successful expansion of Bath & Body Works into Canada — most profitable division. The company also struck gold as stores are selling two-and-a-half times the volume of U.S. stores Michael Phelps took eight Olympic medals in the com- — has spurred plans for more this year, including Canada’s first pany’s Speedo LZR. PINK store, to be followed in 2010 by Victoria’s Secret.

#41 Charlotte Russe #42 Superior Uniform Group Faced with slipping sales in a crumbling economy, the women’s Although rising unemployment has led to shrinking apparel retailer announced in March that it would initiate the demand for uniforms, CEO Michael Benstock sees oppor- process for selling the company. It tunities in other areas, from working out better deals with rejected an offer in November from vendors to looking for acquisitions. Last year, recognizing KarpReilly Capital Partners for approx- the need for companies to outsource non-core competen- imately $198.6 million. Meanwhile, the cies, the company branched out from apparel when it company shows some hopeful signs of turned its in-house call center in El Salvador into a sepa- progress as it focuses on reversing rate business. Dubbed The Office Gurus, it now services operating troubles. It operates almost not only Superior Uniform but also other U.S. firms. 500 stores in 45 states.

Charlotte Russe continues to focus on improving operations as it looks for a buyer.

www.apparelmag.com • JULY 2009 15 THE TOP 50

#43 Hampshire Group Ltd. A February offer by NAF Acquisition Group to acquire the men’s and women’s apparel manufacturer for $30 million fell through in April. In the same month, Michael Culang resigned from his position as president, CEO and director — just 11 months after having officially taken the helm of the company.

#44 Delta Apparel #45 Destination Maternity The designer and manufacturer of branded and private- Any confusion about its product offerings has most label activewear has seen its fortunes rise since its June certainly been cleared up by the corporate name fiscal-year end, with net sales for the nine months change from Mothers Work, ended March 2009 up 15.6 percent, and a net income part of a major rebranding of $2.4 million vs. a net loss of $4.8 million. Recent strategy that also streamlined business developments include the purchase of head- its store nameplates. The com- wear supplier Gekko Brands LLC by its wholly owned pany will expand into the Mid- subsidiary, To The Game LLC, and the launch of pro- dle East this year through a duction at Ceiba Textiles, a state-of-the-art textile man- franchise arrangement. ufacturing facility in Honduras. Its name change from Mothers This year Delta Apparel expanded its footprint with the Work to Destination Maternity is purchase of headwear supplier Gekko Brands by To The part of a major rebranding Game, a wholly owned subsidiary of the company. strategy.

#46 Chico’s FAS #47 Perry Ellis International Hopping on the inauguration merchandise craze, the While sales and net income are once again down for the first women’s fashion retailer launched a $24 “Hope and quarter of fiscal 2010, strong performers among Perry Ellis’ Change” necklace in its 13 DC-area boutiques in January. diverse portfolio of brands included its golf brands at department If that doesn’t work, there’s promise in recent efforts to and mid-tier stores (revenues up by $9.6 million) and Jantzen® improve sales and better manage inventories with the and Nike® swim wear (revenues up by $3.2 million). The company implementation of a new assortment planning and alloca- saw door expansion of its Hispanic lifestyle brands, particularly tion system, and plans to expand its distribution center Centro at Kohl’s and Cubavera® at the department-store channel. facilities in Georgia.

#48 Tween Brands #49 New York & Company The company has made significant progress in converting all Limited Despite a loss of $3.2 million and comp-store sales Too stores to its more value-oriented Justice brand, with 867 of 910 down 8.6 percent, the women’s specialty apparel stores now displaying the Justice nameplate, but the transition process retailer sees bright spots in the near doubling of its — oh, and the economy — may have hurt business, as the “tween” e-commerce sales to $41 million, strong performance specialty retailer reported a first-quarter fiscal 2009 loss of $1.4 mil- in its accessory and wear-to-work categories and con- lion. Tighter controls on inventories and operating expenses may help tinued store expansion. turn that around.

#50 G-III Apparel The company traditionally known for outerwear has been diversifying into other areas including dresses and women’s sportswear and plans to expand these categories particularly through its strong relationships with Calvin Klein and Phillips Van-Heusen, as well as with Andrew Marc, one of two recent acquisitions by the company. The other was the Wilson’s retail outlet business, which fell short of expectations in fiscal 2009.

Jordan K. Speer is editor in chief of Apparel. She can be reached at [email protected].

16 JULY 2009 • www.apparelmag.com