Apparel/footwear retail bankruptcies completely decoupled from banks, non-apparel retail, and just about every other consumer sub-sector. That will change.
Bank failures are taking center stage in the news, which is more than fair. But what about retail bankruptcies? The two charts below illustrate the change in retail bankruptcies we’ve seen over time. Is it me, or is anyone else floored that retail bankruptcies have trended up along with the cycle and are now running close to record pace through 1H08, but the number of textile and apparel retailers remains early nonexistent. I don’t care what anyone tells me, the declining rate over the past five years has been due to a sourcing-induced margin bubble. This is absolutely done, as I’ve stated in much of my apparel macro work.
There is no fundamental reason why apparel should be exempt from a retail bankruptcy cycle. We’ll start seeing more of them go under.
Bank failures are taking center stage in the news, which is more than fair. But what about retail bankruptcies? The two charts below illustrate the change in retail bankruptcies we’ve seen over time. Is it me, or is anyone else floored that retail bankruptcies have trended up along with the cycle and are now running close to record pace through 1H08, but the number of textile and apparel retailers remains early nonexistent. I don’t care what anyone tells me, the declining rate over the past five years has been due to a sourcing-induced margin bubble. This is absolutely done, as I’ve stated in much of my apparel macro work.
There is no fundamental reason why apparel should be exempt from a retail bankruptcy cycle. We’ll start seeing more of them go under.
