Blog: Leonie BarrieBrand bubble bursts

Leonie Barrie | 30 November 2006

Interesting comments from Morgan Stanley, which predicts that the profit margins of eight branded apparel makers are near a peak and sales will decline by 2008 as the cost benefits from outsourcing come to an end. The investment bank, which covers companies including Polo Ralph Lauren, VF Corp, Columbia Sportswear and Liz Claiborne, said the US apparel industry has benefited from $30bn in savings by sourcing product overseas – but with the US facing import saturation and a slowdown in the rate of import price erosion, “the industry needs to find a new cost lever to keep prices low and demand high, or else sacrifice demand, margin or both.”

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