We attended the annual consumer conference hosted by ICR last week, where we were able to sit down with management teams from the likes of VF Corp (VFC), Guess (GES), Crocs (CROX), Waranco (WRC), Domino’s (DPZ), Ascena Retail Group, G-III Apparel Group (GIII), Children’s Place (PLCE), Fossil (FOSL) to smaller names such as Gordman Stores (GMAN), Destination Maternity (DEST), Nautilus (NLS), and QKL Stores (QKLS).
The most notable takeaway was the nervous chatter from portfolio managers and analysts we spoke with pertaining to guidance risk going into the upcoming earnings season for the broader apparel and speciality retail group. The bulk of the concern stems from a number of companies in the group facing a materially higher cost for goods in 2011 - and management's expectation that the solution is raising prices to the consumer. We noticed a few management teams get somewhat irritated with sourcing and inflationary cost questions, suggesting they would review this topic in more detail in the upcoming fourth quarter earnings call.
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