Suitmakers hit hard as retailers want discounts

LAS VEGAS (Reuters) - Competition and a move away from tailored dressing, only exacerbated by a weak economy, are hurting the men's suit business hard, and retailers are adding to manufacturers' pain by demanding more discounts.

Suit vendors at a trade show this week described how men's taste for more casual clothing, a flood of low-cost rivals from Asia, and a recent pull-back in spending due to tough economic times are plaguing the suit industry, the most economically sensitive category in the apparel business.

"(Suit makers) can't withstand the competition and the downturn in the economy at the same time," Mark Lipman, vice president of national sales for Los Angeles suit maker and wholesaler Marina Imports, said at the Magic Marketplace apparel trade show. "It's a perfect storm."

The troubles can be seen in some major players' numbers. Retailer Men's Wearhouse Inc's second-quarter profit fell 40 percent, while profit dropped 44 percent for Oxford Industries Inc, a manufacturer and retailer whose men's tailored division cut inventory by more than 25 percent in its most recent quarter.

One big problem is how men now dress. Many pair a dress shirt with more casual pants, even jeans, when they dress up, a far cry from the buttoned-down, tailored looks of years past.

"Casual Friday," a 1990s phenomenon that allowed office workers one day a week to dress down, was a big thorn in the side of the suit industry and the gradual shift to more casual looks has only intensified in the United States.

"The overall dress-up market has changed dramatically in the past 10 years," said retailer Cy Rosengarten, owner of Suits 20/20 outside Chicago, who noted fewer menswear vendors were in attendance at the Las Vegas trade show this year.

Apart from men's stores stocking sportswear at the expense of suits, the industry is also competing for the attention of fewer retailers amid industry consolidation and the decline of small haberdasheries in American cities.

Moreover, cheaper fabrics from Asia that compete with costlier Italian imports have driven down prices, which helps any guy looking for a suit, but hurts profit margins.

"If volume is down and the price is down, retailers have an additional problem," Lipman said.

Given these challenges, retailers are being more demanding.

"People are balking at the prices, they're bargaining with me, but they do want my product in their stores," said Anna Bouskila, owner of New York-based BMG Imports. "We'll make less but we'll make a sale."

Bouskila -- who said she's not able to pass along to retailers the 40 percent price hike in Italian fabrics due to the weak dollar -- said stores that historically ordered dress shirts in every color are now being much more selective.

One big manufacturer, which declined to be named, said department stores in this weak market are increasingly asking for "margin support" if branded or private-label products end up being marked down, eating into the retailers' margins.

Vendors have few options when powerful accounts start bargaining. "A lot of them (vendors) are sitting with merchandise they want to sell," Rosengarten said.

Yet despite all the bad news, some manufacturers are moving into more modern suits that may attract younger clients and jazz up the tired category.

Louis Raphael, one of the country's top trouser makers that sells to clients from Macy's Inc to Kohl's Corp, said it is expanding into suits with more athletic fits and fabrications, like washable wools or crease prevention fabrics.

"We're expanding and growing," said Kenneth Petersen, the Brisbane, California-based company's vice president of merchandising and design. "We think this is the right time to gain market share through innovation."

Retailers have been testing new looks from Louis Raphael, he said, pointing to suits with slimmer shoulders and a lower rise in pants, and details like peak lapels or more colorful suit linings.

(Editing by Braden Reddall)