Negative rating trends predicted for US apparel sector in 2008 - S&P
BANGALORE, Jan. 28, 2008 (Thomson Financial delivered by Newstex) -- Standard & Poor's (NYSE:MHP) Ratings Services forecasts negative rating trends for the US apparel sector in 2008 given the current macroeconomic trends such as higher fuel and energy costs, lower consumer confidence due to recession-related fears, and the housing market slump which will have customers curtail spending.
A soft 2007 holiday season for retailers may affect first-quarter to end-March results for most apparel companies.
S&P expects retailers to try and maintain lean inventories and negotiate markdowns and allowances.
Moreover, increased buying power arising from industry consolidation is expected to further challenge most apparel vendors, along with higher labour costs in China that will have a proportional effect on apparel firms' operating and freight costs.
In its report titled, 'Credit FAQ: Rating Trends Forecast For The U.S. Apparel Sector In 2008', S&P said these factors could leave many domestic clothing companies vulnerable to downgrades.
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