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editor’s note

Top 50 - Happy Days Are Here Again What a difference a year makes. Although all 50 companies in last year’s rankings were profitable, much of that profitability was achieved through severe cost-cutting measures across their enterprises. The Great Recession forced companies to become more flexible and innovative, to right-size inventories and stores, but it also led them to batten down the hatches as they hoped to weather the storm. Last year’s report found companies peeking cautiously from the hold to see if the winds had abated, and this year, finally, they have fully opened the hatch and emerged to capture the headwinds and steer toward a sunny day. It’s a complex story and each company has a different tale to tell, but a quick look at the numbers is quite revealing: Last year’s Apparel Top 50 reported declining revenues at 27 companies — more than half — vs. just six companies this year, while 15 companies reported declining net income last year vs. just seven this year. In short, the Top 50 are generating more topline growth, and keeping more of it. They are generating more sales, experiencing fewer markdowns and running less wasteful enterprises. Still, as Nike’s CEO Mark Parker puts it,“Nobody is out of the woods yet.”Despite more confident consumers and a return to shopping, all brands and retailers face challenges from still-high unemployment on one hand, and from global market volatility on the other, reflected in the escalating prices of , labor and transportation — costs that they have finally begun to pass on to consumers. But, while no one can control the global economy, the Top 50 show determination to control what they can — tightly managing inventories, improving assortment and allocation planning, streamlining the supply chain, fostering creativity and looking for new opportunities for growth. Where is that growth coming from? International expansion and e-commerce may be the top two answers — although there’s still plenty of opportunity here in the US of A. International markets, both developed and emerging, represent a huge and virtually untapped opportunity. (Even the most globally venturesome of our Top 50, such as Ralph Lauren (with international revenues totaling almost $1.9 billion) and Nike (with revenues from China, for its NIKE Brand alone, totaling $1.7 billion) have really only just begun to get their feet wet.) Apparel brands and retailers are eyeing China’s rapidly growing middle class, which offers a contrast to the slower growing economy and population back home, with eager anticipation. Indeed, BlackRock’s Bob Doll estimates that during the next five years, 70 percent of the incremental earnings of S&P 500 companies will come from outside the United States. As for, let’s just call it Global Connectivity 3.0, it’s impossible to overstate its impact. As retailers try to keep up with the insane pace of change, they are working to perfect the “omni-shopper’s”experience, appealing to the shifting expectations and 24/7 purchasing habits of consumers via interactive experiences, location-based mobile apps, rock concerts, loyalty programs, social networking, new and remodeled stores — and great products. As always, growth also comes from M&A activity, spurred in part by input-cost inflation and rising wages in China that are pushing smaller companies to join forces with larger enterprises that have deeper pockets and greater clout with suppliers. Gymboree, bought by private equity firm Bain Capital in October, exited the Top 50, while No. 15 J. Crew (acquired by two equity firms) and No. 17 Timberland (acquired by No. 14 VF) take their final bows with this year’s rankings. There are some newcomers to the Top 50, and as always, some that did not weather the turmoil well and dropped out of the rankings, namely, Phillips-Van Heusen, bebe, Hot Topic, and Christopher & Banks. There are also those who shone particularly bright. In exploring some of the strategies that led each firm to profitability, we begin with the brightest of those stars, No. 1 lululemon.

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

www.apparelmag.com • JULY 2011 1 COVER STORY

2 JULY 2011 • www.apparelmag.com #1 lululemon athletica It turns out that namaste means “really big profits.” Who After several years of cost- knew? While its customers rest comfortably in shivasana cutting and right-sizing, apparel (that’s the final yoga pose), lululemon is achieving bliss of a different sort. To put its profit margin of 17.11 percent in per- companies are taking bold steps spective: in the 20 years that Apparel has published its Top 50 report, no company has ever broken the 17 percent threshold, toward growth as they expand and just two (Wet Seal and True Religion) came even close, internationally, build bigger and breaking the 16 percent threshold in FY2009, and both FY2008 and FY2007, respectively. So, what is the secret to financial better flagship stores, invest in nirvana? While lululemon’s soaring profits reflect an uneven their strongest brands and put economic recovery that saw high-income consumers ready to splurge on luxury items — such as $100 — as oth- one seamless face across their ers proceeded with caution, the company’s success also stems omni-channel enterprises. from its relentless focus on customer and product. Yoga instructors offer in-store classes (and drive brand awareness) while behind the scenes the company has grown its men’s business and rapidly expanded into running wear and other new categories such as bags, underwear and outer- wear, while not losing sight of its core yoga business. Last year it introduced Silverescent, a line of yoga performance wear with silver-thread odor-fighting technology for easy transitioning from the gym to Starbucks.

Through its 142 stores in North America and Australia (and its web site lululemon.com), the company continues to spread its message of positive thought — and to sell a lot of yoga-inspired apparel.

#2 The Buckle

Buckle up for another great ride, as this destination turns in another fantastic performance, with net sales up 5.7 percent to a record $949.8 million and net income up 5.8 per- cent to $134.7 million. 2010 also marked the 4th consecutive year of positive comp-store sales, which were up 1.2 percent. Buckle’s private-label brands continued to flourish, growing from 29 percent to 33 percent of the business, and expanded to include new offerings and several brand extensions, including the expansion of bestselling brand BKE across all product cate- gories. Building on its reputation for exceptional customer ser- vice, the company expanded its loyalty program by partnering with key brands to offer one-of-a-kind promotions, and enhanced its personalized shopping program, Get Fitted, with the addition of call-ahead shopping appointments. Buckle completed its new 240,000-square-foot DC in Kearney, Neb., opened 21 new stores and completed 25 full remodels, while also focusing on the online experience, helping to grow buckle.com sales by 19.3 percent to $62.4 million, or 6.6 per- cent of net sales.

www.apparelmag.com • JULY 2011 3 THE TOP 50

#3 Oxford Industries Charging up from No. 43, Oxford Industries takes the award for the biggest leap up the Top 50, with a transformational year that saw the operator of Tommy Bahama, Ben Sherman and Lanier Clothes sell its Oxford Apparel Group (to a subsidiary of Li & Fung, for $121.7 million) and acquire the Lilly Pulitzer brand — taking two huge steps toward the company’s strategic goal of repositioning itself from a private-label apparel manufacturer to a marketer of aspira- tional lifestyle brands. The company experienced a strong year across its portfolio, with its largest business, Tommy Bahama, improving comp-store sales and e-commerce, with net sales up 10 percent to almost $400 million and operating income up 36 percent to $51 million, due in large part to the continuing evolution of its merchandising strategy: When Oxford acquired Tommy seven years ago, approximately two-thirds of sales were wholesale and one-third came from the direct channel. Today that mix is reversed, with two-thirds of sales generated through its 89 company-owned retail stores, 13 restaurants and TommyBahama.com. Expect new stores this year, abroad and at home, including a new signature location at 5th Avenue and 45th Street in Manhattan. Tommy Bahama, Oxford’s largest business, will open a new signature location on 5th Avenue in Manhattan this year.

#4 Urban Outfitters #5 True Religion Apparel Perhaps more surprising than the 2008 addition of garden center It slipped a few notches, from No. 2 last year, but there’s no Terrain to its portfolio of specialty retail, direct-to-consumer and reason to lose faith in this brand, whose still-impressive wholesale properties across its Urban Outfitters, Anthropologie near 12 percent profit reflects a devoted following of the and Free People nameplates is the February online launch of popular “Malibu-hippie-bohemian-chic” style developed bridal brand BHLDN. With its heirloom and artisanal by visionary founder, CEO and chief merchant Jeffrey hair pieces, the brand fills a demand for beauty and elegance Lubell, who continues to oversee every aspect of marketing while giving tradition a twist — think wedding at the beach vs. and creative development. True Religion Brand , before the altar — and extends to 2nd- and honeymoon which often sell in the range of $168 to $376 per pair at attire and just about anything needed for the perfect wedding, retail, are found in the company’s branded retail stores (94 including table décor, lighting and even thank-you notes. While U.S. stores, four Japan-based stores and one store each in the company plans to open its first BHLDN store this year, the U.K., Germany and Canada) as well as contemporary along with another 50 to 55 stores across brands, it maintains a department stores and boutiques in 50 countries on six con- “channel agnostic” view of its business, engaging customers tinents — while 80 percent of its is manufac- where it best them. Increasingly, that’s online: Direct-to- tured in the United States. The worshipful gather online as consumer sales (including catalog) for all brands combined were well: In 2010, the U.S. Consumer Direct segment generated approximately 19.1 percent of sales — up from 14.9 percent just net sales of $189.1 million, comprising 52 percent of total two years ago. net sales.

#6 Guess? In the five years since it shot from No. 25 to No. 4 on Apparel’s Top 50, Guess? has not once fallen below No. 6, and fiscal 2011 marks eight consecutive years of revenue and earnings growth, reflecting continued focus on increasing its retail presence, expanding internationally and building a global infrastructure platform. Its strong performance was again driven by international sales, with and Asia delivering almost two-thirds of top-line growth. Europe was the most significant contributor, with revenues increasing by more than 30 per- cent, balanced across retail and wholesale apparel and accessories, and expan- sion continues into new markets such as Belgium and Holland. Europe now boasts 474 GUESS stores vs. 71 just five years ago, and the company now expects to reach its goal of $1 billion in sales in Europe in fiscal 2012 — one year ahead of schedule. In Asia, revenues increased 36 percent with the open- Guess? continues to expand its retail presence and ing of 43 stores and 80 concessions, as the company builds a world-class orga- now boasts 474 GUESS stores in Europe and a nization and infrastructure in Hong Kong and Shanghai to support its retail growing footprint in Asia. and wholesale network. In New York City, its newest and largest flagship opened on 5th Avenue.

4 JULY 2011 • www.apparelmag.com THE TOP 50

#7 Nike #7 Polo Ralph Lauren President and CEO Mark Parker What does this pioneer of lifestyle branding have in com- says that more than selling mon with the War of 1812? The restoration of the flag and apparel, Nike is “ultimately in the business of human poten- that flew after the Battle of Baltimore and inspired the tial.” That human potential turned kinetic, pumping out a record- writing of “The Star-Spangled Banner” (view it at the setting year in profits, in affiliate-brand revenue (up 5 percent to National Museum of American History) was funded by $2.5 billion, from Cole Haan, Converse, Hurley, NIKE Golf and the Polo Ralph Lauren Foundation, whose extensive phil- Umbro), in direct-to-consumer revenue (up 12 percent to nearly anthropic initiatives (including the Ralph Lauren Center $2.5 billion from NIKE-owned stores and online business), in for Cancer Care and Prevention and a scholarship fund gross margin (46.3 percent), in free cash flow from operations for children of 9/11 victims) mirror its virtually unending ($2.8 billion) and in cash and short-term investments ($5 billion- range of labels and products, available through its whole- plus). Meanwhile, it inspired millions to Write the Future, generat- sale distribution channels at approximately 10,000 retail ing excitement around the World Cup with its most integrated locations worldwide, and directly via 367 full-price and campaign ever — its lightest and most sustainable performance factory retail stores, 510 concession shops and its product, new traction technology, an online community that num- e-commerce websites, RalphLauren.com, Rugby.com, bers in the tens of millions and fully immersive and interactive and its recently launched United Kingdom and France consumer experiences online and at retail. Also in fiscal 2010: e-commerce sites. This year, the official outfitter of Wim- NIKE expanded its Considered Design ethos by launching an open bledon celebrates the Tournament’s 125-year history with source community for patents and intellectual properties called a 2011 special edition collection, while behind the scenes The GreenXchange; the NIKE Foundation expanded The Girl Effect, the company initiated a restructuring plan to reposition its a social and economic collaboration with the NoVo Foundation to existing distribution network in the Greater China region combat inter-generational poverty; and it launched Lace Up, Save that will include a reduction in workforce and the closure Lives with (RED) and The Global Fund to leverage the power of of certain retail stores and concession shops that do not NIKE Inc. and global football in the fight against HIV/AIDS in support the company’s new merchandising strategy. Africa.

#8 Jos. A. Bank Clothiers Go West, 106-year-old retailer. Another fantastic year for the company may be a sign that men are heading back to work and pumping up their closets, but it definitely reflects expansion into new frontiers. Thirty-six new stores brought the total to 506 at fiscal-year-end 2010, as the company closes in on its goal of approximately 600 full-line stores and 50 to 75 factory stores in the United States. With plans to open 40 to 50 stores this year, Jos. A. Bank looks to core markets where it may be able to leverage existing infrastructure, and also intends to open new stores in less mature markets such as Western states, where it is developing a critical mass of stores to gain leverage. Prompted by success with a tuxedo rental initiative which it tested last year in five percent of its full-line stores, the company rolled out the business to almost all stores shortly thereafter, while in Direct Marketing (up 24.4 percent to 10 percent of net sales), it launched two new websites, one dedicated exclusively to its Big and Tall customer category (it also expanded its offerings) and one to its new Factory store concept, both sites leveraging the e-commerce platform developed and implemented in FY2009.

# 9 Aeropostale The mall-based specialty retailer threw in its … er … graphic tee to the Times Square ring, joining American Eagle Outfitters and Forever 21 in opening flagship stores last year in what has swiftly become a teen shop- ping mecca. New York City’s high-profile landmark serves up more than 365,000 visitors daily, offering phenomenal branding and sales opportu- nities and widespread attention, especially from international customers — visibility that is crucial as the company continues to expand globally. Next up? Singapore, Malaysia and Indonesia. While net sales and earn- ings were up, same-store sales were up 1 percent and sales productivity was up to $626 per square foot, fiscal 2010 was a divided year for Aero- postale, with a robust first half followed by a slowdown resulting from some product misses and a highly competitive and deeply promotional retail environment. This year the company begins the roll-out of an assortment planning tool as well as a workforce management tool, while continuing to pursue its multi-year real-estate strategy, which includes selectively expanding highly productive locations.

www.apparelmag.com • JULY 2011 5 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, 2011 Year’s50 Recent Previous Change Recent Previous Net Most Previous RANK Rank Company FY FY FY Sales FY FY Income Recent FY FY 1 4 lululemon athletica Feb. $711.7 $452.9 57.14 121.80 $58.3 108.92 17.11 12.87 2 3 The Buckle Jan. $949.8 $898.3 5.73 134.70 $127.3 5.81 14.18 14.17 3 43 Oxford Industries Jan. $603.9 $585.3 3.18 $78.7 $14.6 439.04 13.03 2.49 4 6 Urban Outfitters Jan. $2,274.1 $1,937.8 17.35 $273.0 $219.9 24.15 12.00 11.35 5 2 True Religion Apparel Dec. $363.7 $311.0 16.95 43.50 $47.3 (8.03) 11.96 15.21 6 5 Guess? Jan. $2,487.3 $2,128.5 16.86 $289.5 $242.8 19.23 11.64 11.41 7 14 Nike May $19,014.0 $19,176.0 (0.84) $1,907.0 $1,486.7 28.27 10.03 7.75 7 9 Polo Ralph Lauren Feb. $5,660.3 $4,978.9 13.69 $567.6 $479.5 18.37 10.03 9.63 8 10 Jos. A. Bank Clothiers Jan. $858.1 $770.3 11.40 $85.8 $71.2 20.51 10.00 9.24 9 7 Aeropostale Jan. $2,400.4 $2,230.1 7.64 $231.3 $229.5 0.78 9.64 10.29 10 17 Carter’s Jan. $1,749.3 $1,589.7 10.04 $146.5 $115.6 26.73 8.37 7.27 10 26 Limited Brands Jan. $9,613.0 $8,632.0 11.36 $805.0 $448.0 79.69 8.37 5.19 11 13 Gap Jan. $14,664.0 $14,197.0 3.29 $1,204.0 $1,102.0 9.26 8.21 7.76 12 11 Maidenform Brands Jan. $556.7 $466.3 19.39 $45.3 $37.0 22.43 8.14 7.93 13 16 UniFirst Aug. $1,025.9 $1,013.4 1.23 $76.4 $75.9 0.66 7.45 7.49 14 19 VF Jan. $7,702.6 $7,220.3 6.68 $571.4 $461.3 23.87 7.42 6.39 15 12 J. Crew Jan. $1,722.2 $1,578.0 9.14 $121.5 $123.4 (1.54) 7.05 7.82 16 15 Volcom Dec. $323.2 $280.6 15.18 $22.3 $21.7 2.76 6.90 7.73 17 30 Timberland Dec. $1,429.5 $1,285.9 11.17 $96.6 $56.6 70.67 6.76 4.40 18 New Express Jan. $1,905.8 $1,721.1 10.73 $127.4 $75.3 69.19 6.68 4.38 19 25 Nordstrom Jan. $9,310.0 $8,258.0 12.74 $613.0 $441.0 39.00 6.58 5.34 20 22 Dec. $1,063.9 $856.4 24.23 $68.5 $46.8 46.37 6.44 5.46 21 27 Cato Jan. $925.5 $884.0 4.69 $57.8 $45.8 26.20 6.25 5.18 22 20 Cintas May $3,547.3 $3,774.7 (6.02) $215.6 $226.4 (4.77) 6.08 6.00 23 32 Chico’s FAS Jan. $1,905.0 $1,713.2 11.20 $115.4 $69.7 65.57 6.06 4.07 24 28 The Jan. $2,295.8 $2,019.6 13.68 $138.6 $96.0 44.38 6.04 4.75 25 29 The Ascena Retail Group July $2,374.6 $1,494.2 58.92 $133.4 $66.6 100.30 5.62 4.46 26 33 G-III Apparel Group Jan. $1,063.4 $800.9 32.78 $56.7 $31.7 78.86 5.33 3.96 27 23 Columbia Sportswear Dec. $1,483.5 $1,244.0 19.25 $77.0 $67.0 14.93 5.19 5.39 28 37 Zumiez Jan. $478.8 $407.6 17.47 $24.2 $9.1 165.93 5.05 2.23 29 New Ever-Glory International Group Dec. $134.1 $89.9 49.17 $6.7 $4.4 52.27 5.00 4.89 30 24 The Children’s Place Jan. $1,674.0 $1,643.6 1.85 $83.1 $88.4 (6.00) 4.96 5.38 31 47 Jan. $4,326.7 $3,891.3 11.19 $211.3 $51.3 311.89 4.88 1.32 32 31 rue21 Jan. $634.7 $525.6 20.76 $30.2 $22.0 37.27 4.76 4.19 33 21 American Eagle Outfitters Jan. $2,967.6 $2,940.3 0.93 $140.6 $169.0 (16.80) 4.74 5.75 34 50 Abercrombie & Fitch Jan. $3,468.8 $2,928.6 18.45 $150.3 $0.3 50000.00 4.33 0.01 35 41 Stein Mart Jan. $1,181.5 $1,219.1 (3.08) $48.8 $23.6 106.78 4.13 1.94 36 46 Casual Male Retail Group Jan. $393.6 $395.2 (0.40) $15.4 $6.1 152.46 3.91 1.54 37 Back Ann (formerly Ann Taylor Stores) Jan. $1,980.2 $1,828.5 8.30 $73.4 ($18.2) 503.30 3.71 (1.00) 38 40 Superior Group Dec. $105.9 $102.8 3.02 $3.8 $2.0 90.00 3.59 1.95 39 New G&K Services July $833.6 $936.0 (10.94) $28.6 ($72.5) 139.45 3.43 (7.75) 40 34 Levi Strauss Nov. $4,410.6 $4,105.8 7.42 $149.4 $151.9 (1.65) 3.39 3.70 41 35 Citi Trends Jan. $622.5 $551.9 12.79 $20.9 $19.7 6.09 3.36 3.57 42 36 The Men’s Wearhouse Jan. $2,102.7 $1,909.6 10.11 $67.7 $46.2 46.54 3.22 2.42 43 Back Destination Maternity Corp. Sept. $531.2 $531.3 (0.02) $16.8 ($40.7) 141.28 3.16 (7.66) 44 44 Perry Ellis International Jan. $790.3 $754.2 4.79 $24.5 $13.5 81.48 3.10 1.79 45 42 Delta Apparel July $424.4 $355.2 19.48 $12.2 $6.5 87.69 2.87 1.83 46 39 Stage Stores Jan. $1,470.6 $1,431.9 2.70 $37.6 $28.7 31.01 2.56 2.00 47 1 Wet Seal Jan. $581.2 $560.9 3.62 $12.6 $86.9 (85.50) 2.17 15.49 48 Back Jones Group Dec. $3,642.7 $3,327.4 9.48 $54.4 ($86.3) 163.04 1.49 (2.59)

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, because its sales were not large enough, 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 (see separate chart). Nordstrom files with the SEC under “Retail – Family Clothing Stores” (SIC code 5651).

THE TOP 50

#10 Carter’s #10 Limited Brands Up seven spots from last year, the largest U.S. branded “While the rest of the world ‘receded,’ we forged ahead,” said Les marketer of apparel exclusively for babies and young Wexner of Limited Brands’ performance during the recent economic children holds the No. 1 branded position in the $22 downturn. Since 1963, the company’s founder and CEO has kept the billion U.S. children’s apparel market with its Carter’s increasingly massive company agile, shedding and building busi- brand, with a 10.9 percent market share, while its nesses and identifying new opportunities. Abercrombie & Fitch (No. OshKosh brand holds a 3.2 percent market share. While 34) and Justice (part of Ascena, No. 25) were former Limited compa- it’s not entirely recession-proof, children’s wear tends nies, as were apparel businesses Express (No. 18) and Limited, to be one of the last sacrifices parents make when which the company divested in 2007 to focus on its core and money is tight, and Carter’s top 10 baby and sleepwear personal care brands including Victoria’s Secret, Pink, La Senza and core products (essential consumer staples that are less Bath & Body Works. Calling 2010 Limited Brands’ best year ever, dependent on changes in trends and are further Wexner pointed to its unprecedented growth and improved operat- supported by a strong birth rate) accounted for approxi- ing results, including comp-store sales up 9 percent, inventories per mately 67 percent of its baby and sleepwear net sales in square foot at cost down 2 percent (down 11 percent on a two-year fiscal 2010, including mass channel. On the other hand, basis), operating income up 50 percent to a record $1.28 billion, and children’s wear is heavy on cotton, and chairman and distribution of more than $1.5 billion to shareholders — milestones CEO Michael D. Casey says he expects profitability in achieved by “unrelenting discipline and focus” on top priorities, its 2011 to be affected by the spike in cotton prices. Sales of customers and brands. In a world that is accelerating, Wexner’s goal Carter’s OshKosh products in fiscal 2010 increased “is simply to be the fastest brand in the world,” but he’s still moving approximately 5 percent over the previous year, and the cautiously when it comes to international expansion. Despite its company looks to the 116-year-old brand for significant almost-1,000-and-growing international stores, including new loca- long-term growth, especially in the $15.6 billion young tions in Canada and the Middle East, his primary focus is a vibrant, children’s playclothes market. healthy and growing U.S. business.

#11 Gap Despite an embarrassing gaffe in which the company sprung a brand new and much dis- liked logo on the public — it quickly did an about-face; think “New Coke” and you’ll get the idea — Gap nonetheless inched up the Top 50 this year, with a profit margin of 8.21 percent on sales of $14.664 billion. Expect to see that number grow, as the company makes a strategic play to become a truly global retailer. In 2010, the 3,000-store retailer opened its first store in China, in Shanghai, vying to capture its share of the most popu- lous marketplace, along with the rest of what CEO Glenn Murphy calls the “global run- way.” Just five years ago, Gap operated in eight countries and sold products online only in the United States, with 14 percent of sales coming from online and international; today it operates in 31 countries, offers products online in more than 90 countries, and expects to nearly double that 14 percent figure within three years. Here at home, in January, Gap opened the first physical store for its Athleta brand of workout wear, in San Francisco.

#12 Maidenform Brands Shapewear is super hot and on the move, with sales now accounting for 33 percent of Maiden- form’s business, vs. 25 percent in 2007, part of another record-setting year in sales and earnings, including double-digit sales gains in department stores and national chains, mass merchants, inter- national outlets and shapewear. Last year, the company expanded internationally in Mexico, the Benelux countries, the United Kingdom and Spain; expanded its Donna Karan and DKNY licensed business; launched a junior’s brand, Maidenform’s Charmed®; opened shapewear kiosks and carts in high-traffic regional shopping malls, relaunched its website, and introduced a new collection, Pure Genius, that provides extra coverage in an everyday T- — all while scaling the organi- zation for global expansion and improving its supply chain to maximize profitability and increase speed to market. (Just last month, it announced that it will use CYBRA Corp. as the solution provider for its RFID item-level EPC tagging initiative.) Recently, the company launched its Pres- sure-Free™ bra and Adjusts to Me™ collection (for which it won an Apparel Innovator Award) and expects to see 2011 net sales growth in the mid-to-upper single digits, including 10 percent to 12 percent growth in its branded wholesale channels and a decline in its private-label business.

www.apparelmag.com • JULY 2011 7 THE TOP 50

#13 UniFirst President and CEO Ronald Croatti, grandson of UniFirst’s founder, donned a disguise as a retired hobby store owner needing work and went undercover at his own company as part of the hit CBS series “Undercover Boss,” where he faced challenging tasks requir- ing fine motor skills and speed, confronted a few inefficient processes, and saw first-hand the hard work and ingenuity of his family of employees and their focus on the customer, concluding: “We have great people with great ideas, and we’ve got to get those ideas up the pipeline.” During the episode, which aired in January, Croatti says his goal for the company — which experienced record- high revenues in fiscal 2010 — is to hit $2 billion in sales by 2020. As the only public company in the $17 billion uniform and services industry to grow revenues and net income during the 2007-2010 recessionary years, UniFirst should be well on its way.

#14 VF In China, where there is not a strong tradition of outdoor participation, The North Face® is creating one. More than 70 percent of the brand’s 2010 marketing budget there was invested in events that encouraged consumers to get outside — in one such initiative the brand used social media and an online contest to recruit for an expedition to climb China’s legendary Haba Mountain. In its mission to get the Chinese outside, VF may receive aid from just- acquired Timberland (No. 17) and Vans, which opened 149+ new stores and shop-in-shops in China in 2010, bringing its retail presence there to 260. Speaking of The North Face’s Double-Track that marketing budget, a decision in 2010 to invest an running can easily transition from pavement to trail. Photo additional $100 million in marketing to drive top-line courtesy of The North Face. growth in its highest profit markets and opportunities benefited nearly every brand in VF’s vast portfolio, but The North Face® (named a 2011 Apparel Sustainability All Star) and Vans® brands received the lion’s share (more than half), and the investment paid off, as revenues rose 7 percent to $7.7 billion and gross margins reached an all-time high of 46.7 percent, with Outdoor & Action Sports accounting for 42 percent of total revenues, up from only 22 percent five years ago. Photo Courtesy of Vans.

#15 J. Crew Likely making its last appearance for some time on the Top 50*, J. Crew has been acquired by a pair of private-equity firms, with TPG Capital, a former majority shareholder, and Leonard Green & Partners shelling out almost $3 billion to purchase the chain. Although J. Crew had initially weathered the recession better than many apparel retailers, its net income fell during the most recent fiscal year with merchandise that missed the mark. A Bloomberg analyst noted late in 2010 that the company didn’t change its fash- ion fast enough, keeping its tops over-embellished with ruffles and the fit of its jeans too tight. The company stopped filing its earn- ings after completion of the acquisition in March, but there’s a good chance J. Crew, under its new ownership and with Millard “Mickey” Drexler still at the helm, will quickly leave those fashion missteps behind. *The Top 50 ranks publicly held firms.

#16 Volcom In April, Volcom rider Pat Burgener stuck the world’s first-ever switch bs 1440 triple cork, in his home resort of Crans Montana, Switzerland. Honestly, I have no idea what that means, but it sure looks cool, and cool is definitely what it’s all about at this boardsports brand, whose apparel and accessories are all sold under the Volcom and Electric brands and typically retail at premium prices. As with most apparel companies, manufacturing is outsourced, with approximately 63 percent and 11 percent of the company’s total 2010 product costs coming from manufacturing operations in China and Mexico, respectively — but the company has been bringing some parts of the business in-house, establishing direct con- trol of international operations (this year it will take control of the Spain terri- tory) and also terminating the Volcom outlet license agreement by purchasing assets related to the operation of the 10 existing licensed outlet stores.

8 JULY 2011 • www.apparelmag.com THE TOP 50

#17 Timberland #18 Express Making its last solo appearance on the Top 50, Timberland Making a strong debut on the Top 50 this year after its May announced last month that it will be acquired by VF Corp. (No. 2010 IPO, the specialty apparel retailer — purchased by 14) for approximately $2 billion, which represents the most Golden Gate Private Equity from Limited Brands in 2007 — expensive purchase by VF, whose previous acquisitions include targets a growing demographic of men and women between 7 For All Mankind, Nautica and The North Face. It’s a great the ages of 20 and 30 years old with an assortment of fash- time to buy. Last year represented a turning point for Timber- ionable apparel and accessories. Express opened its first store land; its strong top-line growth and earnings reflect a renewed in 1980, in Chicago, launching its men’s apparel line in 1987, focus on the brand’s New England outdoor heritage after a which in 1989 was rebranded as Structure. The mid-1990s stumble resulting in part from over-distribution of its classic saw a period of rapid expansion resulting in more than 1,000 yellow Timberland . Its recent purchase of the Smartwool stores by the year 2000 — often both Express and Limited merino- brand (which Timberland has broadened to stores could be found in the same shopping center — and in comprise such offerings as base-layer underwear and mid-layer 2001, the company began to consolidate these into combined ), and the energy generated by its Earthkeepers® dual-gender stores under the Express brand, a conversion green line and dyed-in-the-wool commitment to sustainability, largely completed last year. At the end of January, the com- combined with strong international growth, (including in pany operated 591 stores, with 2010 net sales comprised of China, where revenues more than doubled), also contributed to approximately 65 percent women’s and approximately 35 the wave of momentum that VF clearly hopes to ride, and swell, percent men’s merchandise. into the future.

A ranking of U.S. publicly traded department stores 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, 2011 Year’s10 Recent Previous Change Recent Previous Net Most Previous RANK Rank Company FY FY FY Sales FY FY Income Recent FY FY 1 1 Kohl’s Jan. $18,391.0 $17,178.0 7.06 $1,114.0 $991.0 12.41 6.06 5.77 2 2 Belk Jan. $3,513.3 $3,346.3 4.99 127.60 $67.1 90.16 3.63 2.01 3 4 Macy’s Jan. $25,003.0 $23,489.0 6.45 $847.0 $329.0 157.45 3.39 1.40 4 5 Dillards Jan. $6,121.0 $6,094.9 0.43 $179.6 $68.5 162.19 2.93 1.12 5 3 JC Penney Co. Jan. $17,759.0 $17,556.0 1.16 389.00 $251.0 54.98 2.19 1.43 6 9 Saks Jan. $2,785.7 $2,631.5 5.86 $47.8 ($57.9) 182.56 1.72 (2.20) 7 8 Burlington Factory Jan. $3,701.1 $3,553.8 4.14 $31.0 ($15.2) 303.95 0.84 (0.43) 8 7 The Bon-Ton Stores Jan. $2,980.5 $2,959.8 0.70 21.50 ($4.1) 624.39 0.72 (0.14) 9 6 Sears Holdings Jan. $43,326.0 $44,043.0 (1.63) $150.0 $297.0 (49.49) 0.35 0.67 10 10 Neiman Marcus July $3,692.8 $3,643.3 1.36 ($1.8) ($668.0) 99.73 (0.05) (18.34)

Department Stores have never been included in Apparel’s Top 50 while other department stores became too bloated and stagnant to rankings primarily because of the vast amount of non-apparel they carry, adapt their enterprises to the changing times. but also because it used to be that most of the merchandise they Today, department stores have a new lease on life, with customers carried was nationally branded — and thus they had no hand in the heading to their doors specifically for their private-label and apparel supply chain. exclusive brands, which continue to grow. At Kohl’s, for example, During the past decade, the role of private-label merchandise has exclusive and private brands represented 48 percent of sales in 2010, done a 180: Having become lost in a sea of boring sameness with up from 44.3 percent the previous year, while at JC Penney that figure customers shopping stores on price alone, department stores sought was 55 percent, up from 54 percent in 2009. greater differentiation from their competitors and the opportunity for Still, department stores continue to lag pure-play apparel companies higher profit margins. when it comes to profitability. Were these 10 companies to be ranked While the much-predicted death of the department store a few years with our Top 50, only Kohl’s would have made the top half, tying with back didn’t happen, the field has become much smaller. Of the 63 Chico’s at No. 23., while Belk, Dillard’s, Macy’s and JC Penney would department stores that list in that category (SIC code 5311) on the U.S. have made the bottom quartile. Saks, Burlington Coat Factory, Bon-Ton, Securities and Exchange Commission, only 10 are still in business. Sears and Neiman Marcus would not have been ranked at all. Consolidation from M&A activity significantly reduced the numbers,

www.apparelmag.com • JULY 2011 9 THE TOP 50

#19 Nordstrom #20 Under Armour The high-end retailer honed its planning, sharpened its It surpassed the $1 billion threshold in 2010, but the ever “hum- editing and put greater discipline around execution to ble and hungry” president, CEO and chairman Kevin Plank, feels turn out a year that exceeded even its own expectations. as if the company is just getting started, having built a powerful Same-store sales were up 8.1 percent in 2010 (after a brand in such a short time, with a product line that is narrow rel- decrease of 4.2 percent in 2009) and sales per square foot ative to the opportunities available, and one that has yet to go increased to $397, approaching pre-recession levels, truly international. Apparel net rev- though still below its 2007 peak of $435. A record-setting enues increased 31 percent to $853.5 year of $9.31 billion in sales also produced the fastest million, while direct-to-consumer inventory turn of its history at 5.56. The company sur- grew 57 percent. Although still in the passed 200 total stores in 2010, adding three new Nord- early stages of its business, strom full-line and 17 Nordstrom Rack stores. As it it’s hit the big time, with UA base- transforms itself from a customer-focused to a customer- ball cleats (and ) decking driven organization, the company is redefining the way it out the University of South Carolina Gamecocks head-to-toe as serves its customers: introducing Wedding Suites, they took home the College World Series National Champi- expanding its Personal Stylist program, creating a seam- onship, and UA football cleats (and uniforms) spurring on the less multi-channel experience, putting WiFi into all full- Auburn University Tigers, led by Heisman Trophy-winning QB line stores and completing the first major overhaul of Cam Newton, to an undefeated season and a win over Oregon Nordstrom.com in 10 years — part of efforts to optimize for the National Championship. In March, UA launched its latest the online shopping experience regardless of the device innovation, Charged Cotton™, designed to dry up to five times customers use to shop. Now underway? Mobile checkout. faster than ordinary cotton, while in 2010 its licensing partner in This year Nordstrom also scooped up HauteLook Inc., a Japan passed the US$100 million mark, evidence that the brand leader in the fast-growing online private sale marketplace. plays well outside its home turf.

#21 Cato While the lack of shopping-center development in 2010 hindered store growth for the company’s approximately 1,300-store Cato division — it’s currently testing new real estate strategies including stores sizes, formats and larger markets — openings of It’s Fashion Metro stores continued (some were “conversions,” a new store in the same market where an It’s Fashion store was simultane- ously closed), bringing the total to 91, with 34 additional openings expected for the division this year, part of 54 store openings company-wide. Plans to open the first 10 of a new concept store, Versona Accessories, this fall, will provide new growth opportunities, offering quality fashion jew- elry and accessories accented by key apparel items at value prices. While the company experienced its third consecutive year of earnings improvement in a difficult environment, it faces challenges — as all companies do — from its own rising merchandise costs, but also must contend with a cus- tomer base that tends to be more negatively impacted by slow job growth and higher prices for fuel and food.

#22 Cintas Although the largest company in its industry remained as profitable as it did last year, its sales and earnings decreased. It’s instructive to look at the numbers, which in the particu- lars reflected the widening gap between Main Street and Wall Street, with the three divi- sions offering rental uniforms; direct uniform sales; and first aid, safety and fire protection services taking a beating, while Cintas’ document management services was up by a whop- ping 18.7 percent. Bankers doing some shredding? Your guess is as good as mine. On the bright side, in the nine-month period since Cintas filed its fiscal 2010 numbers, the com- pany has seen a significant increase in all four operating segments of its business, and also deserves kudos for its continued strides in sustainability. During 2010 alone, it launched two additional “green” apparel lines: the Full-Circle Eco Polo and the Machine-Washable Tuxedo, and in January 2011 it launched what it says is the healthcare industry’s first “green” scrub collection.

Cintas puts a premium on providing innovative performance technologies that will keep its customers safe from workplace disasters and injuries.

10 JULY 2011 • www.apparelmag.com THE TOP 50

#23 Chico’s Up nine spaces after jumping 14 spots in the 2010 Top 50, Chico’s contin- ued to build on the financial success it reestablished in the prior year. Comp sales, including stores and direct-to-consumer, were up 8.3 percent on top of the 7.6 percent increase for 2009, but new store growth also played a key role in the company’s success, with the opening of 79 new stores, both frontline boutiques and outlets, across its Chico’s (21), White House | Black Market (17) and Soma Intimates (41) brands. Another 100 to 110 net new boutique and outlet openings are targeted to open this year. Direct-to- consumer sales increased 40 percent on top of the 39 percent increase in the prior year, benefiting from the alignment of the company’s web sites with each brand’s marketing, while the company’s emphasis on its supply chain has played no small role in its success (learn about the role of IT at Chico’s in Apparel’s February cover story, and its unique RFID implementation, for which it won an Apparel Innovator Award, in the May issue).

#24 The Warnaco Group Since 1874 when it began making and selling corsets to retailers, Warnaco has evolved into a global apparel business that designs, sources, markets, licenses and distributes a broad line of intimate apparel, sportswear and swimwear worldwide, sold under brands such as Calvin Klein®, Speedo®, ®, Warner’s® and Olga® in 100 countries. Another record year, Warnaco’s net revenues were up 14 percent to $2.3 billion, led by Calvin Klein, which represents 74 percent of the business and in 2010 continued to expand in existing geographies, new markets and direct-to-consumer to achieve a 14 percent increase in Calvin Klein revenues. International revenues grew 17 percent to represent 56 percent of total company revenues, while direct-to-consumer revenues were up 25 per- cent, fueled by productivity gains in existing doors along with the addition of more than 200,000 square feet of new retail space, a 31 percent increase over the prior year. President and CEO Joe Gromek anticipates another strong year in 2011, which will see the launch of CK One across its portfolio of Calvin Klein properties.

#25 Ascena Retail Group #26 G-III Climbing seven spots after its huge leap (formerly Dressbarn) from the bottom last year, fiscal 2011 was Luring fans to its maurices’ nameplate by staging a another record-breaker, as G-III continued girl-band contest whose winner performed at her to leverage its skills in acquisitions and hometown shop alongside popular indie group Sick related integration processes to turn out of Sarah, the 700-store girls’ apparel chain, which net sales up 33 percent to exceed $1 billion, operates primarily in small towns, is taking advantage net income up 57 percent and improved of a rising trend among retailers and consumer brands to operating margins. It was a strong year for step in where record labels have left off, promoting G-III’s outerwear business, for key brands emerging rock in exchange for little more than including Calvin Klein, Kenneth Cole, hopes that the cool factor will rub off on their businesses. Guess and its own Andrew Marc brand, Meanwhile, behind the scenes, something similar to the and for women’s sportswear and , a squeals of delight that issue from the throngs of young category in which G-III is becoming quite a girls ogling the merchandise at Justice might be sound- force, anchored by licenses with Calvin ing from the C-suite at Ascena, which experienced Klein and its own Jessica Howard dress record sales of $2.4 billion and profits up more than a line. Its newly launched Calvin Klein full percentage point over the prior year, pumped up by and luggage shipped this spring, its November 2009 acquisition of Tween Brands, owner its team sports business expanded, and its of the Justice nameplate (the company’s new name Wilsons retail outlet store business pro- change from Dressbarn to Ascena was designed to duced its first positive comp-store sales reflect its new diversity). Kicking in to that profit is the and full-year profitability since being savvy use of technology, including the implementa- acquired in July 2008. A new joint venture tion of a new merchandise financial planning and with The Camuto Group will see the open- allocation system at dressbarn and new size opti- ing of footwear and accessory retail outlet mization and POS systems at dressbarn and maurices. stores under the Vince Camuto name.

www.apparelmag.com • JULY 2011 11 THE TOP 50

#27 Columbia Sportswear Net sales grew 19 percent to a record of nearly $1.5 billion, with double-digit growth in each region and in each product category, and solid performance across its four major brands, with Columbia sales up 18 per- cent to $1.26 billion, Sorel brand sales up 48 percent to $90 million, Mountain Hardwear up 21 percent to $122 million and Montrail up 5 percent to $9 million. The global launch of the Columbia Omni-Heat® suite of warmth technologies was the highlight of the year (see Apparel’s November 2010 issue for the full story including the new Omni-Heat Electric); during its first season in the market, Omni- Heat styles dominated the best-sellers list in its direct-to-consumer channels in every region of the world. Just last month, the company’s innovation rollout continued as Columbia previewed new technologies including Omni-Wick EVAP wicking technology and Omni-Freeze ICE™, which capitalizes on body sweat by actually lowering the temperature of the fabric the moment moisture hits its surface. Talk about chilling out! That temperature lowering apparel may come in handy in-house, as the company begins a multi-year implementation of a new ERP platform.

This half-zip long-sleeve top features Columbia’s Omni-Freeze ICE™ advanced cooling technology — which capitalizes on body sweat by actually lowering the temperature of the fabric the moment moisture hits its surface — while a new sleeping bag keeps you warm all night with Columbia’s Omni-Heat™ reflective.

#28 Zumiez #29 Ever-Glory Like many apparel websites, but particularly those tar- Making its debut on the Top 50 after surpassing the $100 million mark geting the youth market, Zumiez’ website suavely blurs in revenues*, Ever Glory was the first Chinese apparel company listed the lines between shopping and entertainment. on the American Stock Exchange. The company, with 10,000 employ- Zumiez.com is a smooth blend of video from the ees, provides full-package apparel to brands and retailers in Europe, annual Zumiez Couch Tour, (a free summer festival the United States, Japan and China, with a focus on middle- to high- event with pro skate demos, skate competition, live end , sportswear, jeans, outerwear, down jackets and fash- music and other activities — for which there is also a ion and accessory items. Ever-Glory maintains four trade divisions mobile app); “Completes,” for building your own skate- and three international branches (in the United States, United King- board; contest info; and of course scads of products and dom and Germany). Although it owns manufacturing capacity, it out- brands (including Volcom, No. 16), which can be sources most manufacturing to its long-term contractors as part of its shopped by pro, so you can easily buy the gear of your overall business strategy, and is supported by a core manufacturing favorite skate star. The chain, which caters to young base in Nanjing and 20 factories in China, Vietnam and Cambodia. In men and women between ages 12 to 24 and focuses on addition to wholesale, retail operations are conducted by subsidiary skateboarding, surfing, snowboarding, motocross and LA GO GO, which is focused on creating a leading brand of women’s BMX, opened its first stores in Canada this year, and as wear and building a nationwide retail distribution channel in China. of the end of April 2011, operated 406 stores in the As of year-end 2010, the company operated 293 retail stores in China United States and two in Canada. Approximately 44 with sales of more than $29 million. new stores are planned for fiscal 2011. *Companies must generate at least $100 million in sales to be eligible for inclusion in the Top 50.

#30 The Children’s Place In working toward five growth initiatives put in place last year, the largest pure-play children’s specialty retailer, which saw U.S. comp-store sales decline 4.7 percent, is modernizing its merchan- dise offerings, expanding its line of shoes and accessories sold in all stores, and will soon begin introducing “made-for-outlet” mer- chandise to its outlet stores (which represent approximately 13 per- cent of total stores). In striving to improve inventory management, the company began reducing initial inventory allocations to stores and replenishing more frequently. It is also sharpening its market- ing message, actively engaging customers through social media and focusing on expanding the e-commerce user experience — fourth quarter FY2010 saw the launch of international shipping from its U.S.-based e-commerce website. The 1,032-store chain opened 67 stores and closed 19 during fiscal 2010 and plans to open approximately 85 new stores and close 20 in fiscal 2011. Eric Bauer, most recently executive vice president, brand operations and COO at GAP North America, has joined The Children’s Place as COO.

12 JULY 2011 • www.apparelmag.com THE TOP 50

#31 Hanesbrands If you inhabit a -free home, you’re in the minority: Hanes is the No. 1 basic apparel brand in the United States and can be found in nearly nine of every 10 homes. Several years of investing in its brands, its capital structure and its global low-cost supply chain (restructured to create more efficient production clusters that utilize fewer, larger facilities and balance production capability between the Western Hemisphere and Asia, the latter where Hanes now has 12,000-plus employees vs. 500 just four years ago) is paying off. The company had a fantastic year — with double-digit growth in sales and earnings and domestic and international growth in core product categories. On the strength of shelf-space gains, sales increased in nearly every country and in every category except sheer ; it substantially expanded its market share, and acquired Gear For Sports, a licensed logo apparel seller. Its self-owned supply chain, which provides the company earlier visibility to input-cost inflation, led Hanesbrands to secure a substantial portion of its 2011 cotton needs relatively early and at favorable prices — but the company also recently signed a 10-year deal to buy flax fiber from Port- land, Ore.-based Naturally Advanced Technologies (NAT), which uses a part of the flax seed that's typically discarded by food produc- ers to make a proprietary fabric called CRAiLAR that is soft and performs like cotton but costs about 30 percent to 40 percent less.

#32 rue21 In the most recent fiscal year, rue21 outpaced its peers relative to profit margin growth, with an increase from 4.19 percent to 4.76 percent, while Aeropostale’s profit margin, while higher, fell from 10.29 percent to 9.64 percent and American Eagle’s from 5.75 percent to 4.74 percent. But teen-clothing chains, particularly hard hit in 2008 and 2009, are starting to see a reversal in fortunes. Ken Perkins, president of Retail Metrics, reports that teen apparel outfits have outpaced the retail industry in each of the past five quarters, and first quarter 2011 shows a 10 percent rise in profits over the prior year vs. a five percent increase for all retail. In the first quarter 2011, value-priced rue21, which has been growing at double-digit rates since going public in November 2009, saw its net income rise 65.5 percent over the same quarter the previous year, to $9.6 million, representing a 5.6 percent profit margin, up from 4.2 percent. The retailer, which focuses on small- and mid-size communi- ties, likely benefits from its locations in Wal-Mart strip malls, where traffic is high, and where teens may seek out fashion while par- ents shop nearby.

#33 American Eagle Outfitters Revenues were up, but net income (and profitability) were down, as the company slides 12 spots from No. 21, with its direct-to-consumer business, including ae.com, aerie.com and 77kids.com, flat compared with last year at $334 million. But first quarter fiscal 2011 is looking up relative to profitability: although revenues decreased by six percent, net income increased by 160 percent for a profit margin of 4.6 percent vs. 1.7 percent for the same quarter last year. American Eagle is seri- ous about monetizing social media and joins some other apparel retailers and brands, including GAP, Macy’s, Wet Seal, Marc Jacobs and Jimmy Choo, in exploiting micro-location-based services such as Foursquare, Gowalla and Shopkick that offer deals and discounts when users “check in” at participating locations. American Eagle has launched on Shopkick, an app that allows users to col- lect “kickbucks” for checking in and for scanning products in the store with mobile devices.

#34 Abercrombie & Fitch Abercrombie climbs 16, from the bottom spot last year, with a strong fourth quarter that included comp-store sales for abercrombie kids up 9 percent and Hollister comp-store sales up 13 percent. Similar to other specialty retailers that play in its space, Abercrom- bie & Fitch has found that its heritage brands translate well to the younger set, with Gen Xers looking to dress their kids like them- selves, and kids developing a sense of fashion much earlier than they used to. The trend has spawned a growth area for these chains, including J. Crew’s Crewcuts, Aéropostale’s P.S. From Aéropostale and American Eagle’s 77kids. Abercrombie & Fitch’s own abercrombie kids will see a new location in Dusseldorf, in fiscal 2011, while a good spot is sought for another in London. The company also will open Abercrombie & Fitch flagship stores in Paris, Madrid, Dusseldorf, Brussels, Dublin and Singapore. During the fourth quarter, Abercrombie & Fitch commenced the consolidation of two Ohio DCs into one multi-purpose facility, at an expected cost of about $26 million.

www.apparelmag.com • JULY 2011 13 THE TOP 50

#35 Stein Mart Climbing six spots, the 264-store retailer, which describes itself as a hybrid between department/specialty stores and off-price retailers, continued to make progress with turnaround initiatives it began in 2008, by strengthening its role as a fashion-driven, value-oriented retailer while positioning itself for long-term growth, turning in a second consecutive year of increased profitability driven primarily by lower expenses and improvements in inventory management. Con- sistent comp-store sales growth has taken longer to achieve than hoped for, but the company saw an improving trend in 2010. For 2011, the company is editing its assortment with a focus on designer labels and national brands (it added more than 60 new labels in 2010); targeting a broader customer base including those with a “more youthful attitude,” and Hispanic shoppers; advertising around its new tagline, “more fashion, less price;” expanding its customer research; improving its shopping experience, refining its Home category merchandise assortment, testing e-commerce, and investing in IT and stores, including a new merchandise information system that will improve its ability to manage regional merchandising, size optimization and more complex pricing strategies.

#36 Casual Male #37 Ann Moving up 10 notches, in fiscal 2010 the multi-channel Bounding out of the red and back onto the Top 50 this year, the big & tall retailer added a new store concept to its port- company emerged from a three-year restructuring program that folio: Destination XL (DXL) merges all of its brands (the realized $125 million in ongoing annualized savings and refocused value-oriented B&T Factory Direct, the moderately- the company on continuous improvement, fiscal discipline and that priced Casual Male XL and the luxury-oriented most important of goals — interacting with the customer and pro- Rochester Clothing) under one roof, making it easier for viding the high quality and value she seeks, wherever she wants to customers to find the merchandise they are looking for shop. While the owner of the Ann Taylor and LOFT brands recently without having to shop several stores. DXL stores have a changed its corporate name from Ann Taylor Stores Corp. to Ann much larger footprint and also address customer Inc. to better reflect its evolution to a multi-channel retailer, stores requests for bigger aisles and dressing rooms, along with are definitely not taking a back seat. This year the company will on-site tailoring services. The subsequent launch of a look to drive growth for the Ann Taylor brand through the aggres- corresponding e-commerce site earlier this year brought sive roll-out of its slightly smaller, more “luminous and chic” —and all the brands together in one place. The four DXL stores more profitable — new concept stores. For the LOFT brand, it is opened in fiscal 2010 turned out sales increases of more counting on the accelerated expansion of its LOFT Outlet stores than 20 percent when compared to the prior year’s pre- (adding approximately 38), and for Ann Taylor Factory stores decessor stores for each market area (which were closed (adding approximately five), it will attempt to capitalize on a grow- when the new DXL store opened), and the company ing trend by major retailers — including Neiman Marcus and plans to open an additional 10 to 14 stores during fiscal Bloomingdales — to open outlet stores and cash in on the more fru- 2011. If successful, long-range plans are to open 75 to gal shopper who still seeks high-value name-brand merchandise. 100 DXL stores by fiscal 2015.

#38 Superior Uniform Group Locking down an Apparel Innovator Award for uniforms (part of its new everybody media® division) whose interchangeable fabric panels, brand messaging and interactive mobile action codes create a whole new advertis- ing medium and shopper experience (see the May issue for the full story), the manufacturer of uniforms, image apparel and uniform accessories also launched on Twitter, donated as uniforms for the medical team at the National Special Olympics held last July in Nebraska, and closely watched the price and availability of cotton, which saw highs in the $2.00 per lb. range as demand from Asia increased, Mother Nature wreaked havoc glob- ally and the price of other raw materials, including petroleum, skyrocketed. Although Superior climbed just two spots, the company almost doubled earnings on revenues up three percent for an 84 percent increase in profit margin over the previous year.

14 JULY 2011 • www.apparelmag.com THE TOP 50

#39 G&K Services The 109-year old Minnetonka, Minn.-based provider of branded work apparel and facility services programs saw sales fall, but pulled out of the red with net income up 139.5 percent to $28.6 million, and in the nine months since its fiscal-year end, has contin- ued its upward trajectory, with a 46.3 percent increase in net income on revenues up less than one percent, with profit margins increasing from 2.9 percent to 4.2 percent over the same nine-month period the previous year. G&K Services employs nearly 7,500 employees serving approximately 165,000 customers from more than 160 facilities in North America and Europe — and it’s also the sponsor of NASCAR racer Mike Wallace and the J-D Motorsports #01 Chevrolet Nationwide® team.

No. 40 Levi Strauss Maybe the world breaks on purpose. So we can have work to do. People think there aren’t frontiers anymore. They can’t see how frontiers are all around us. So concludes the “Braddock, PA” commercial, one of many in Levi’s extremely popular Go Forth advertising campaign launched in 2010 that in various iterations draws on America’s rich heritage of freedom, creativity and diversity as a call to action to fix problems and make the world a better place — a theme that draws out the company’s knack for combining its own rich heritage with pioneering trends. Last year also saw the company: 1) Tap into the phenomenal growth in Asia through the creation of a completely new global brand, Denizen™, launched in China and making its way around the globe (Levi recently announced exclusive U.S. distribution of the brand at Target); 2) Make a … splash … using innovative techniques to recreate its well-known styles and finishes as the Levi’s® Water

#41 Citi Trends #42 The Men’s Wearhouse The value-priced retailer of urban fashion Founder and CEO of the 1,187-store business, George Zimmer, who’s guaranteed apparel and accessories opened 60 new men for years that they’re going to like the way they look, made the decision to stores and closed two in fiscal 2010 (for a “step up” to the role of executive chairman, turning over the reins of CEO to “sig- total of 461 stores in both urban and rural nificantly younger” president and COO Douglas Ewert. Zimmer, who started the markets in 27 states) while also begin- men’s apparel chain in 1973, is focused on both continuity and change. Continuity ning to test a new store format. With the — of success; in an inspiring workplace environment (MW once again landed on assistance of a retail design consulting Fortune Magazine’s “100 Best Companies to Work For” in 2010); in “tying it all firm, Citi Trends opened its first new together” for customers with help from MW’s and Moores’ consultants; prototype store in Savannah in July 2010, of growth in the tuxedo rental business (up nine percent), e-commerce (revenues followed shortly thereafter by five more. up 150 percent from this channel) and expansion (the company made an invest- Positive customer response to the ment in the corporate uniform (non-rental) business in the United Kingdom last design’s new color palette and logo, new year, acquiring Dimensions and certain assets of Alexandra). Change — from its layout, new fixtures, dressing room, customer base, which includes retiring Baby Boomers, less in need of its core prod- graphics and lighting, redesigned check- uct, being replaced by Millennials, with their mobile apps and different expecta- out area and expanded footwear depart- tions. As it makes ment spurred the company to adjustments to stay in step incorporate the new format for all new with the market, the company store openings this year. It also converted will focus on converting 15 existing stores to the new format in tuxedo rental customers to January 2011 to determine if the cost of retail; adding product cate- conversions would pay off. The company gories, such as denim at purchased a 460,000-square-foot DC in Men’s Wearhouse and Roland, Okla. last year to support its women’s clothing at K&G; continued growth, and also implemented and expanding product offer- software services from Workday to ings in certain customer seg- process payroll and facilitate various ments such as Big & Tall human capital management processes. across all retail store brands.

www.apparelmag.com • JULY 2011 15 THE TOP 50

#43 Destination Maternity You can socialize at thebump.com, relax at the Edamame spa and stay fashionable whilst your belly expands — what more does a soon-to-be mom need? The world’s largest designer and retailer of maternity apparel climbed out of the hole (er, no pun intended) and is back in the black, with a 141 percent increase in earnings resulting from reductions in cost structure, an increase in e-commerce, sales from its leased department relationships, mar- keting partnership revenues and international sales. The company also reduced net debt by $63 million over the past three years, bringing it to $21 million at fiscal year end. As it strives to continue to increase comp-store sales, reduce expenditures and close underperforming stores, the company is pursuing specific growth opportunities with attractive ROI, including the significant expansion of its relation- ship with Macy’s as well as its Internet and international initiatives.

#44 Perry Ellis Expanding its already voluminous portfolio, the company (which received an Apparel Innovator Award in May for its new transporta- tion management system) expanded its punch in the women’s sportswear arena, completing the acquisition of Rafaella Apparel Group in January, and then upped the ante in March, completing the acquisition of the Miller’s Outpost® and Anchor Blue® brands. The latter, a teen denim retailer with operations on the West Coast and a loyal following among Hispanic consumers, should allow Perry Ellis to expand in the denim category and the Hispanic demographic — which accounts for half of U.S. population growth dur- ing the past decade and is a market in which the company is already established, with its Cubavera®, Havanera®, Centro® and Solero® brands. The company saw particularly strong growth in this and its other core businesses, including Perry Ellis® (revenues up more than 20 percent); Golf (which delivered more than $18 million in organic growth); International (the company is expanding in Europe and has opened offices in Canada and Mexico) and Direct to Consumer, which includes four websites and more than 50 stores across its three retail concepts, Perry Ellis®, Original Penguin® by ® and Cubavera®, that turned out strong double-digit comp- store sales gains. The company sees e-commerce opportunities in the near future with women’s wear brands Rafaella® and by Shelli Segal®.

#45 Delta Apparel Its diverse portfolio of high-quality branded and private-label activewear apparel and headwear drove a seventh consecutive year of record sales at the company, and was enhanced with the acquisitions of The Cotton Exchange in July 2010 and Art Gun Technologies in December 2009. The Cotton Exchange, which Delta acquired for $9 million, designs and markets decorated casual apparel to college bookstores, the U.S. military and other retail accounts, while Art Gun, for which the company paid $1 million, provides shoppers the ability to choose a basic gar- ment and design a unique graphic to create a one-of-a-kind customized product. In the nine months since its fiscal year end, the company shows sales up 13.2 percent and net income up 35.4 percent over the same period the prior year.

#46 Stage Stores With earnings up 31 percent on revenues up 2.7 percent, Stage Stores continued its mission to be America’s small town and neighborhood retailer, opening 33 new stores — 30 under the Goody’s name, which it purchased in 2009. The company also rebranded 26 non- Goody’s stores with the Goody’s name, bringing the total under that banner to 71. Stage Stores, which sells moderately priced, nationally recognized brand name and private-label apparel, accessories, cosmetics and footwear in more than 800 stores in 39 states operating under the Bealls, Goody’s, Palais Royal, Peebles and Stage nameplates, also rolled out a new markdown optimization tool and launched its e-commerce platform in the fourth quarter — to great response, as customer interest and sales activity exceeded expectations. The company named Oded Shein, previ- ously vice president of finance at Belk, as executive vice president and CFO, and Robert Bernard, previously senior vice president, general merchandise manager at Ross Stores, as president and COO of its South Hill Division, which operates 300 of the company’s stores in 24 states.

16 JULY 2011 • www.apparelmag.com THE TOP 50

#47 Wet Seal The Year of the Although it plummeted the furthest, all the way from the No. 1 spot, it’s Management Shakeup worth noting again that Wet Seal achieved that lofty position in last year’s The past year saw a flurry of high-level rankings as the result of the reversal of a valuation allowance against net management shake-ups, particularly in the deferred tax assets, to the tune of $71.3 million. Sans such padding, the teen sector, which struggled in a highly company would have come in at No. 33 with a profit margin of 3.94, which promotional environment characterized by a makes the current drop look somewhat less precipitous. The Wet Seal lack of product differentiation. Mindy Meads brand got a lift in the fourth quarter on the strength of its tops (its largest merchandise category), as well as non-denim bottoms, active wear, dresses stepped down as co-ceo of Aéropostale, and jewelry, while Arden B turned out strong sales growth, led by excellent leaving the role of sole CEO to Thomas performance in its dress Johnson. American Eagle Outfitters is category. Also in the seeking a replacement for retiring CEO fourth quarter, e-com- James O’Donnell, while the company’s merce sales increased by former president and CMO Susan McGalla 33.9 percent, driven by took the reins at The Wet Seal, and former increased inventory Gymboree CEO Lisa Harper took the helm at investments and higher Hot Topic. Among other big moves, Marka marketing investments Hansen left Gap after four years as Gap primarily focused on president and 24 years with the company, customer acquisition. and Limited Brands named former Lands’ End president Nick Coe as the new Bath & Body Works CEO.

No. 48 The Jones Group It celebrated its 40th anniversary in 2010 and also changed its name from Jones Apparel Group in acknowledgement of its evolution beyond apparel. Revenue grew nine percent — the first sales increase of that magnitude in five years — driven by a combination of organic growth in its core brands and the completion of several strategic acquisitions, including a 55 percent interest in Stuart Weitzman Holdings LLC, designer and marketer of women’s salon footwear, and the acquisition of Moda Nicola International LLC, owner of the Robert Rodriguez Collection, a designer and marketer of women’s contemporary sportswear and eveningwear. The company also secured several strategic licenses related to the Jessica Simpson and B Brian Atwood brands, while its Jones New York brand recently entered several department stores in Mexico and Spain. In a tale that’s become quite familiar, a strong performance in the first half of the year was derailed by increased pressures from the rising costs of materials, overseas labor and logistics that fostered a more promotional environment and resulted in declining gross margins in the second half of the year. The company headed into 2011 having taken measures to counter some of these challenges, including sourcing raw materials early in its cycle, pre-buying essential components, renegotiating vendor contracts — and planning to increase its own prices.

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

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