Contents
APPAREL INDUSTRY..............................................................................................................................................................................3
Summary and Recommendation.....................................................................................................................................................3
Industry Investment Thesis.............................................................................................................................................................3
Valuation ...........................................................................................................................................................................................4
Risks..................................................................................................................................................................................................6
KBCM Apparel Rating Framework..................................................................................................................................................6
Macroeconomic Conditions, Potential Signs of Hope ...................................................................................................................7
Global Trade Environment Important .............................................................................................................................................8
Investment in Lifestyle Brands a Long-Term Positive...................................................................................................................9
Department Stores Under Secular Pressure................................................................................................................................10
A Few Final Thoughts… ................................................................................................................................................................12
Chartbox – Comparing the Two Companies................................................................................................................................13
G-III APPAREL GROUP, LTD. (GIII-NASDAQ) .....................................................................................................................................15
At a Glance .....................................................................................................................................................................................15
Summary and Recommendation...................................................................................................................................................15
Key Investment Points...................................................................................................................................................................15
Valuation .........................................................................................................................................................................................16
Risks................................................................................................................................................................................................17
EPS Outlook: Down EPS in 2009, 5-7% Long-Term Growth Rate ...............................................................................................17
Near-Term Pressure, Potential Long-Term Upside Due to Luxury and Retail ...........................................................................19
Broadening the Product Offering..................................................................................................................................................20
Department Store Discounting Weighs on Top Line....................................................................................................................24
Andrew Marc: Long-Term Positive, Difficult Near Term ..............................................................................................................26
Wilson’s Business Continues to Struggle ...................................................................................................................................27
High Level of Debt Remains a Concern .......................................................................................................................................30
Highly Tenured Management Team, Although Questions on Retail Experience.......................................................................31
OXFORD INDUSTRIES, INC. (OXM-NYSE)...........................................................................................................................................37
At a Glance .....................................................................................................................................................................................37
Summary and Recommendation...................................................................................................................................................37
Key Investment Points...................................................................................................................................................................37
Valuation .........................................................................................................................................................................................38
Risks................................................................................................................................................................................................38
Earnings Outlook: Headwinds, Limited Visibility........................................................................................................................39
Cash Flow and Balance Sheet Are Respectable ..........................................................................................................................41
Surviving and Transforming – From Manufacturing to Retail.....................................................................................................42
Controlled Distribution – Targeted Customers + Owned Retail..................................................................................................44
Tommy Bahama: Well, the Weekend Isn’t So Swell… .................................................................................................................45
Ben Sherman Business Is Struggling ..........................................................................................................................................49
Lanier and Oxford Exposed to Secularly Challenged Channels.................................................................................................54
Tenured Management Teams Shows Vision................................................................................................................................56