|What Wall Street May Not Know About Fashion - They may actually already know...|
Retail buyers come and go. It is VERY easy to lose a good business contact (therefore, lose big orders). The days of long term business contacts in the fashion industry is going the way of the dodo bird. In the past, retail buyers would be paid well and last a long time in a particular position at a company. In the more modern garment industry, buyers have had their wings clipped too many times to have longevity. Now, the clothing store buyer has less opportunity in may respects. In fact, much of the buying decisions come from "planners" not buyers. And on the creative aspect, they are often given direction for purchase from corporate merchandisers, etc. In reality, buying is simply not as fun nor as rewarding as it had been in the past. With that said, their is a higher turnover rate for employment. This is a negative to many clothing companies for the following reason. If for example, I work for a wholesale apparel company and I have developed a great relationship with the women's activewear buyer at Macy's, Nordstrom, Neiman Marcus, Dillards, Khols, or Lord & Taylor. What happens when my buyer leaves his or her job and is replaced with the cousin of my biggest competitor??? Oh boy, I just lost a huge program... Ouch.
As far as I know, the "relationship factor" of the fashion industry does not show up in corporate filings. If you want to better understand the relationship factor, you may want to participate in a social network for the fashion industry such as the Fashion Industry Network.
Here are some possible ways to gauge the stability of a WHOLESALE clothing company:
Are wholesalers paying their suppliers on time? Possibly, if they are running behind on payments they are financially strapped. Or this can just mean they are being clever and holding onto their money as long as possible before paying an invoice... Maybe you would be well advised to find a friend at one of the factors.
How many hangers, hangtags, or garment labels has the clothing wholesaler purchased?If you can develop a relationship with the trim suppliers, you can possibly determine the number of units a company will sell in the coming quarter... Or instead of a relationship with the trim supplier, maybe you can simply ask the wholesaler for a status on trim purchases. Let's keep in mind that as a clothing company, I must buy my hangers "before" I ship my product to a store. You can do calculations based on fabric purchased, but that is way more difficult because you would have to understand the fabric consumption per garment. Not an easy task without having the size specs.
Check with freight companies to determine how much importing activity is taking place? It is not an exact science, but "X" number of t-shirts can fit into a 40' container. And "X" number of down jackets can fit in a 40' container. Determine the number of containers a wholesaler has imported, you may be able to get an estimate regarding the volume of clothing. Then you can estimate the volume (units) times the estimated selling price to determine an idea of revenue projection. If you are going to do this sort of hard core research, be careful to note that their are a few different container sizes such as 40' HQ, 20', 40', etc. Also, each garment is different size based on the size spec. In addition, different retailers have different requirements regarding how many garments should be packed per carton (which effects carton size; which effects number of units per container). Also, is the shipment palletized (pallets take up space in the containers). Anyway, trying to determine quantities shipped is a challenge. However, not impossible. The best way may be to get your hands on packing lists. This may let you figure out a companies volume before they report it in a filing. Here is another big "however"... You must also keep in mind that just because a clothing company imported "X" number of garments, it does NOT mean that they sold that many garments during that quarter. It is very possible that their was a buyer cancelation (or delay). It is very possible the wholesaler is building up inventory in their warehouse as well (which is a dangerous thing for sure).
Another option would be to take a garmento to lunch and buy them a sandwich. Possibly, they will spill the beans and let you know exactly how many units they have sold. If you do this with several key sales people from the company, you can then estimate sales volume.
Note: I do NOT work in the financial industry and have zero knowledge regarding regulations. If any of the concepts mentioned above are not legal ways to obtain knowledge regarding a publically traded company according to the SEC, I strongly suggest that you do NOT do any of the above. You should only do what is legally and more importantly ethically appropriate.
Most of above was regarding "wholesalers" of apparel and fashion accessories. Much of this also can apply to some publically traded retailers. However, there are other unique tips to help figure out their financial status. Unfortunately, I am too tired at the moment to list them here. If you remind me, maybe I will add more tips in the future.