Convention Highlights
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Opportunities Afoot for the Legwear Industry

The 170 attendees, who packed the Charleston Harbor Resort for The Hosiery Association’s 2007 Annual Convention from April 26-29, 2007, heard a consistent theme: ample opportunities avail.

Throughout the convention, industry experts addressed timely issues that all member companies faced. Lively discussions and interaction made the 102nd Annual Convention one of the most memorable and substantive programs yet.

Sally Kay, THA President and CEO: Keeping the Industry in Step

THA President and CEO Sally Kay set the tone for the Convention with an overview of the Association’s proactive mission and initiatives. In addition to developing a Statistical Task Force to provide government-based industry, retail and consumer data to members, THA moved forward with launching its Seamless Consortium and fostering its growing partnership with the Hosiery Technology Center (HTC).

Each of The Hosiery Association’s activities are specifically designed to advance its four core objectives:

1. Influence industry, media, government, consumers and retailers through high level leadership.

2. Develop consistent, cohesive marketing and communications efforts.

3. Develop new revenue sources to fund both existing and new programs.

4. Influence THA members by continuing to add value.

As an example of its efforts, Kay featured a pictorial montage of the “You Wear US Well ™” campaign at MAGIC, the Seamless Consortium participation at Outdoor Retail and the highly influential television segment highlighting legwear opportunities that aired on NBC’s TODAY SHOW. Kay concluded her presentation by urging members to continue to be proactive, not reactive to emerging challenges and opportunities.

Marshal Cohen, Chief Industry Analyst, NPD Group: Consumers Seek Emotional Rescue

Marshal Cohen again offered a hard-hitting, yet entertaining analysis of an industry in which he is passionate about.

Hosiery Insights

Apparel/Accessories continued a solid growth trend in 2005 (+4.3%) and in 2006 (+5.1%).

The big news this past year, however, was that for the first time hosiery growth outpaced Apparel/Accessories, jumping 6.5% in 2006 after being up slightly in 2005. Sheer hosiery achieved a remarkable surge, from being down -9% in 2005 to a growth of +11.7% in 2006.

While specialty and national chains performed well, sales of hosiery through direct mail increased almost 12%. Surprisingly, the category is experiencing solid growth among young women ages 18-24 entering the workforce.

Marshal emphasized opportunities amidst this youthful segment, challenging members to tailor their product marketing strategies specifically to young adults. He emphasized the fact that THA as well as its members too should maintain a presence throughout the various types of media and advertising outlets. Influencing the media through advertisements and educating the consumer through editorial about the wide range of products available is critical.

3 Caution Flags

Even with the good news, Marshal identified three areas of concern. Initially, our industry must capitalize on this momentum and not become complacent. Case in point, after experiencing a great surge in 2005, the footwear category cooled significantly in 2006 as manufacturers engaged fewer consumers with exciting products. Athletic footwear was particularly sluggish, a harbinger for weakness in performance socks.

Secondly, Marshal described his “See Saw Theory,” in which footwear and apparel seemingly exhibit opposite sales patterns, i.e. When one is up, the other is down. “If you don’t take advantage of opportunities now, someone else will take your place,” he warned and cited the fact that handbags took the place of footwear this past year.

Lastly, Marshal clearly demonstrated that hosiery is not earning the space it deserves on store shelves. As in previous years, he reiterated the fact that our industry must take a more proactive stance to gain more visibility so consumers can find our products.

Understanding the New Consumer

Consumers continue to be heavily courted by both retailers and brands. With so many options, it is evident that consumers are truly in the driver’s seat. While private label sales continue to grow, research shows that consumers will pay up to 25% more for branded products if they have a reason to do so.

What’s the difference between successful brands and those that are not? The answer is simple…passion. Companies must put passion back into the equation to create an emotional connection with today’s consumers.

Opportunities for Growth

Marshal highlighted a half dozen opportunities for industry growth:

1. Provide unique products that offer consumers a choice.

2. Use the power of the Internet to engage, educate, communicate and elevate.

3. Capitalize on growth of Direct Mail.

4. Deliver on your promise.

5. Market products based on lifestyle needs, not ethnicity.

6. Put passion back into the equation, using multi-dimensional, customized products.

In closing, Marshal captivated the group with research which exemplified the importance of establishing an emotional connection with the consumer in selling product in today’s world. Perhaps there’s some truth behind the Rolling Stones’ lyrics… except you need to be “the knight in shining armor coming to their emotional rescue.”

David Whittington, Managing Director, Oxford Advisors: Importance of Private Equity

David Whittington, Managing Director of Oxford Advisors, enabled members to better understand opportunities which can be gained through private equity deals for their companies.

According to Whittington, private equity investors are drawn to acquisitions for the promise of extraordinary yields—usually over 30%. In 2006, over $215 billion dollars were raised; four times the amount in 2002.

The trend toward private equity ownership of smaller companies was evident in the purchase of North Carolina-based Thomasville Buses and more recently Gold Toe/Moretz along with Renfro Corporation.

Whittington noted that hosiery companies can benefit from the growth of a worldwide population that needs socks, and a product that contains a limited wear life cycle.

He advised companies interested in attracting private equity ownership to ensure they accomplish the following:

1. They must be well-managed with a lower cost of production.

2. They must have established a brand name with a competitive advantage.

3. They need to have a record of growth.

Whittington’s advice is actually good for all companies and will serve them well whether they remain publicly held or privately owned.

As the first day of the Convention concluded, it was evident to all that legwear businesses must capitalize on recent growth trends and plan now for future opportunities.