WEEK IN REVIEW

The economy continued to concern exhibitors and retailers in Las Vegas this week attending two major semi-annual international trade shows Details of the show’s can be seen, especially in this issues Upholstery section

More than a few brands acknowledged this week that the next round of shoe upper negotiations will have to include price increase to tanners. Details of this can be seen below.

The high end customer continues to spend as can be seen in quarterly statements from PPH, Coach and LVMH

In Raw Materials, Latin American as well as prices in other origins were steady to softer as Europe went on holiday for the month.

GENERAL NEWS

Consumer sentiment up off of lows

U.S. consumer sentiment rose in July, though it remains at a relatively low level, according to a media report Friday. The consumer sentiment index from the University of Michigan and Reuters hit 61.2 in July -- up from a reading earlier in the month of 56.6 -- compared with 56.4 in June. The June reading was the lowest since 1980 and the third-lowest reading in the 56-year history of the survey. Economists surveyed by MarketWatch had expected a July result of 56.

U.S. consumer sentiment recovered from early 1980s lows in July as Americans received tax rebate checks from the government but remained pressured by high gasoline prices and falling home values.

Both perceptions of current economic conditions and expectations improved somewhat on the month. Yet the outlook was far from rosy, according to the survey.” The data still indicate an ongoing downturn in spending that will last well into 2009," the report said. Inflation expectations one year out held steady at 5.1 percent, while looking further out at a five-year horizon they dipped to 3.2 percent from 3.4 percent.

Fewer hides in the future

USDA's Economic Research Service issued its monthly Livestock, Dairy and Poultry Outlook today. Details can be seen below in our Slaughter section.The USDA confirmed continued liquidation of the U.S. beef cow herd. USDA's mid-year Cattle Inventory on July 25th showed a 1% year-over-year decline in the U.S. beef cow herd, as economically challenged ranchers continue to slowly sell-off their stock in the face of prohibitive fuel and feed costs.

The report said that the U.S. total cattle and calf herd is shrinking. The dairy cow herd is still above a year ago. The beef cow herd is shrinking. The Canadian cow herd is shrinking; Extrapolated around the world, the Australian cow herd is shrinking. The South American cow herds on aggregate are shrinking and the European cow herd is shrinking, so this is not just a domestic phenomenon

House prices fall-bode ill for consumer spending

Prices of U.S. single-family homes plunged at a record pace in May from a year earlier, with each of the 20 regions monitored showing annual declines for a second month, according to the Standard & Poor's/Case Shiller home price indexes reported on Tuesday.

The S&P/Case Shiller composite index of 20 metropolitan areas fell 0.9 percent in May from April, bringing the measure down 15.8 percent from May 2007.The decline was slightly less than expected and not as severe on a monthly basis as in April. Seven regions showed increases on a month-over-month basis, providing a "possible bright spot" for U.S. housing that otherwise continues to weaken, S&P said.

"We are not going to get too excited about the data yet as it is not seasonally adjusted and prices tend to be higher during the spring selling season," said Michelle Meyer, an economist at Lehman Brothers in New York.

Falling home prices are seen at the crux of a growing crisis in foreclosures as homeowners find themselves "underwater," with the value of their homes now less than their loans. Expectations that prices will continue to fall into 2009 also makes refinancing of loans tougher, leaving homeowners in high-cost mortgages peddled during the housing boom.

Economists surveyed by Thomson Reuters expected the monthly and annual drops would be 1 percent and 16 percent, respectively.S&P said the composite index of 10 metropolitan areas fell 1 percent in May, for a 16.9 percent year-over-year drop.

Regions that saw some of the largest gains during the housing boom, such as Miami and Las Vegas, were the worst performing markets in May. Miami home prices fell 3.6 percent in May from April for a 28.3 percent annual drop. In Las Vegas, prices in May slumped 2.9 percent, for a 28.4 percent decline from a year earlier.

FOOTWEAR

Major brands pushed for leather price increases

An unofficial survey of major footwear brands this week reinforced previous information that as the second half of this year and the first half of next year they will be forced to increase prices to tanners in the area of $0.5 to $0.10 cts/sq ft. This is not only due to raw material prices that have been fairly steady for quite sometime but also for the increases tanners have been absorbing for higher chemical, pollution, labor and so many other costs.

Timberland posts loss

The Timberland Company reported a second-quarter net loss of $18.9 million and a loss per share of ($0.32). These results compare to a second-quarter 2007 net loss of $19.2 million and a loss per share of ($0.31).When adjusted to exclude restructuring and related costs, loss per share was ($0.32) and ($0.30) in the second quarters of 2008 and 2007, respectively.

Second-Quarter Results Summary: Revenue declined 6.3% to $209.9 million as declines in casual footwear, Timberland brand apparel and boots were partially offset by growth in Timberland PRO series footwear and SmartWool socks and apparel.

Foreign exchange rate changes increased second-quarter 2008 revenue by approximately $9 million, or 3.9%, due to the strength of the Euro and the British Pound, and increased operating income by approximately $1 million.

North America revenue declined 13.4% to $99.6 million, reflecting soft consumer spending in the U.S. Europe revenue decreased 1.3% to $78.8 million, or 8.3% on a constant dollar basis, driven by declines in men's casual footwear and kids' performance footwear.

Asia revenue increased 7.7% to $31.6 million driven by gains in foreign currency, but decreased 2.2% on a constant dollar basis.

Global footwear revenue was $142.9 million, down 7.5% compared to the prior year, driven by declines in men's casual footwear and boots.

Global wholesale revenue decreased 10.0% to $136.1 million. Worldwide consumer direct revenue increased 1.3% to $73.8 million, reflecting gains in outlet sales in Europe and Asia. Operating loss for the quarter was $30.0 million, a 4.7% improvement from the prior-year period. Operating loss excluding restructuring and related costs was $29.7 million, a 2.7% improvement compared to the prior year level.

Inventory at quarter end was $195.0 million, down 9.7% versus 2007 second-quarter levels, due to the Company's disciplined inventory management in the face of challenging market conditions. Accounts receivable decreased 9.9% to $121.5 million, compared to the prior year.

Rocky Brands earnings up

Footwear and apparel maker Rocky Brands' earnings-enhancing strategy bore fruit with a US$0.7m profit in the company's second quarter. That compared with a $1.4m loss in the same period last year, with sales up 2.9% to $60.5m.

Wholesale revenues edged up slightly to $42.5m, while retail sales were down marginally at $16.2m. Military sales were $1.8m, compared to $0.3m a year ago. "Our second quarter performance was highlighted by the successful execution of our continuing strategy to enhance profitability," said chairman and CEO Mike Brooks.

"Due largely to more favorable sell-in terms with our retail partners and better utilization of our company-owned factories, wholesale gross margins increased 250 basis points," he added. Rocky Brands also succeeded in controlling costs, reducing the company's operating expenses by some $2m on the year.

Wolverine strikes deal in India

Footwear company Wolverine Worldwide has enlisted India's M&B Footwear to launch its Merrell outdoor shoe range on the sub-continent.

M&B, which currently has 110 retail outlets across India, plans to more than double the size of its retail roster over the next two years following the Merrell launch this week in the Garhwal Himalayas.

The initial product range will include 21 brands, according to local press reports, with prices ranging from INR2,985-3,985 (US$71-95) for sandals and INR3,285-6,985) for shoes and boots. The company plans to launch ranges for women and children next year. M&B is planning to promote the Merrell products through tie-ins with adventure clubs, travel and adventure sports.

Nine west teams with New Balance

Jones Apparel Group's NineWest division is teaming up with New Balance to create a new shoe collection that will drive both brands further into the fast-growing fashion athletic footwear category. The new license agreement, terms of which were not disclosed, combines New Balance's performance and materials technology with Nine West's fashion styling.

The initial collection will offer active lifestyle fashion footwear with performance technology, and will be available in a limited distribution nationwide and internationally for spring 2009. The collection will be designed in partnership with Fred Allard, Nine West creative director, and Savania Davies-Keiller and Roberto Crivello, New Balance creative directors.

Manufacturing and production will be split between the companies. New Balance will be responsible for the material direction and insole technology while Nine West will be responsible for soft-tech styling and trend-right color.

This effort will be supported by an integrated marketing campaign, including public relations, events, and a combination of digital and traditional media. Wesley R Card, Jones Apparel Group president and chief executive officer said the deal "marks yet another significant step toward enhancing the appeal of our core brands and growing them."

Rob DeMartini, chief executive officer at New Balance, added that the arrangement is a "win-win opportunity for both companies.”According to research by the NPD Group, sales of fashion-focused athletic shoes are racing ahead of those designed for a specific sport.

In the US athletic footwear market, sales of low performance shoes showed a 12.4% increase in 2007 according to its research. Demand for sport inspired/fashion focused shoes is being driven by higher acceptance of these port inspired shoes in the workplace and hence in daily life.

S&K Famous Brands hopes for turnaround

Value-priced men's wear retailer S&K Famous Brands Inc has hired a turnaround firm to sell off non-core assets and help it refocus its business on more fashion-oriented products, and said it has axed 50 jobs in a cost-cutting move.

The Richmond, Virginia-based firm, which operates 219 stores, says the 50 full-time positions at its Richmond corporate office, including a number of senior management roles, will save more than $3.3m a year. It is restructuring its business in an attempt to stall sliding sales and profits. In its first quarter to 3 May, the firm swung to a net loss of $1.4m from a profit of $490,000 in the same period of the previous year.

Sales for the quarter fell 12% to $41.1m, while same-store sales were down 10.8%. To advise on its strategic plan, the company has hired Alvarez and Marsal LLC to help sell non-core assets and carry out a strategic evaluation of the company.

China’s Lady sources ties up with Italy’s Con Findustria FEmo

It has been reported that China Lady’s Shoes Capital and Italy Con-Findustria Fermo Association signed a strategic cooperation agreement on recent Sichuan and EU economic and trade week and at least 30 Italian shoemaking enterprises was invited to attend the 2008 LSCC International Sourcing Festival in October in Chengdu.

ANCI holds talk with Chinese Footwear Mfg

National Association of Italian Footwear Manufacturers (ANCI), Marche region Footwear Association and more than 30 Italian shoe factories and held talk with part of Chinese footwear manufacturers on July 17; during the talk Italian side showed great interesting in potential of Chengdu footwear industry and Chinese markets both sides signed a cooperation agreement on the promotion of brand, trade, marketing, exhibitions, training and designing. Marche is Italy’s largest shoe-making region, 40% -50% of Italian shoemaking located here, it has world well known brands of CK, and Tod.

Confindustria Fermo Association said in addition to organize 30 more Italian enterprises toparticipate this year International Sourcing Festival in Chengdu they will held regularly Italy footwear trends news conference in China and give lectures by well-known fashion designers and professionals bring global trends and fashion designing concepts to Chinese footwear designers.

Chinese side will assist the Italian to open shoe stores in China promotion on brands and marketing and provide services on local policy and investment in Chengdu.

Italian shoemaking industry shown special interesting in Chengdu and International Sourcing Festival through bilateral cooperation on business and establishment of manufacturers Italy will bring their world’s most advanced talent technology and R & D system to Chengdu that surely will boost the entire footwear upgrade. The Italy brand shoes made in Chengdu will gradually match to the world’s best. “

WSA attendance down

To the surprise of no one, attendance is lower than last summer at the Semi-annual shoe show in Las Vegas this week. It is too early to ascertain sales, but the number of exhibitors was lower as well.

UPHOLSTERY

Housing sales down

Re-sales of U.S. single-family homes and condos fell 2.6% in June to a seasonally adjusted annual rate of 4.86 million, the lowest level in 10 years, the National Association of Realtors reported Thursday. Resale’s have sunk 15.5% in the past year and are down about 33% from the peak in 2005. The pace of sales has been relatively stable since last August at around a 5 million annual pace. Read the full release.

Economists surveyed by MarketWatch expected sales to fall to 4.95 million. The inventory of unsold homes on the market rose 0.2% to 4.49 million, an 11.1-month supply at the current sales pace, the second-highest inventory level since the mid-1980s.  The median sales price fell 6.l% in the past year to $215,100.

Sales of single-family homes fell 3.2% to a seasonally adjusted annual rate of 4.27 million, the lowest since January 1998. Sales of condos rose 1.7% to an annual rate of 590,000, the highest since November.

About a third of sales are distressed sales, either foreclosures or short-sales. Many foreclosures aren't included in the data at all because they are not sold through the realtors' multiple-listing service. On Wednesday, the House approved sweeping legislation designed to help the housing market, including back-stop support for Fannie Mae and Freddie Mac, help for homeowners to refinance high-rate loans, and a tax-credit for first-time home buyers. See full story.

The legislation could help the housing market to recover, said Lawrence Yun, chief economist for the real estate trade group. About 3 million home buyers could take advantage of the tax-credit for first-time homebuyers before it expires next July, he said.

added to the housing stock since last year, 1.26 million more units are vacant, the government said.

Sales of newly constructed U.S. single-family homes were stronger than expected in June, falling 0.6 percent to a 530,000 annual pace, a government report showed on Friday, providing a glimmer of hope for the beaten-down housing market.

Las Vegas Furniture Market

Despite a sales slump that has plagued home furnishings for more than a year, the market got off to a brisk start Monday, buoyed by the opening of the World Market Center’s third showroom building. Furniture Today surveyed participants and found the following.

Showroom traffic generally was light to moderate early in the day, but picked up noticeably as the day wore on and the lengthy registration lines dissipated in all three buildings.By day’s end, market officialswere claiming it was the busiest opening day since the market’s debut in July 2005.

WMC President Bob Maricich said Monday’s attendance was 35% ahead of the opening day of the January market, 21% ahead of last July and 38% ahead of January 2007, which featured the grand opening of Building B.

Market officials didn’t release attendance figures, but said they were calculated with data from the RFID tags worn by all market attendees. That shows actual attendance, not registrations, officials said.“There are a lot of people who came here to change their business … and I think we’ve given them the tools to do that,” Maricich said. “What blew me away is to look out on this campus and realize that is has been just three years since the first market was held here.”

Many exhibitors said they feared the market would not be well attended, but were pleasantly surprised. “Like many exhibitors concerned about soft business and attendance at a summer market in Vegas, we held our breath. But we began writing orders when the doors opened and we’ve been going ever since,” said Jeff Baron of Baron Consult, which is helping Chinese leather producer Kuka Home introduce its first product under its own brand in the U.S. market.

To help drive retailers to the 46,000-square-foot showroom in Building C, Kuka was offering dealers show incentives and special show pricing.Phil Haney, president of Lexington Home Brands, was equally pleased with the opening day in his company’s Building C showroom.

“We had an incredible first day with strong traffic to see our new Mar-a-Lago collection from Trump Home. We couldn’t be more pleased,” Haney said.Dennis Valkanoff, senior vice president of Chromcraft Revington’s CR Home, said the company’s Building B showroom was busy.

“We enjoyed brisk traffic early opening day and were getting a lot of play from our casual dining and upholstery offerings,” he said.Ron Wanek, chairman of Ashley Furniture Inds., also was pleased with opening day traffic in his Building B space, noting that business picked up before lunchtime.

“We’ve already had lots of buyers in, including a strong showing of international buyers,” Wanek said early Monday afternoon. Jay Foscue, senior vice president of merchandising for Klaussner Home Furnishings, said Monday morning that the company expected business to be “flat or maybe down a little bit” in its Building A showroom, noting that dealer registrations on Monday were running about even with last July’s market.

The opening of the third building gives the market 5 million square feet of showroom space. Maricich said the newest building is about 85% leased.

Retailers said they were hunting for special buys at this week’s event. Facing an uncertain economy, buyers headed to this week’s Las Vegas Market say they’ll be shopping hard with an emphasis on special buys, great values and fill-ins and replacements for goods that aren’t working or have run their course.

They’re also looking for more quick-ship special order programs and U.S. warehousing from overseas sources. And several retailers say they want to find more color and cleaner lines. They’re getting used to the price increases resulting from rising raw materials costs, but they’re also making a habit of hunting for the best price in this environment.

One typical comment heard at this show and all others is when one retailer said “We’re looking for some color,” “Color excites people — not just sofas, but something in the bedroom other than brown or cherry, something that both sells and would stand out on the floor. We’re trying to put in some lipstick, some excitement, something that would connect with the female consumer.”

“We’re going to be looking for exceptional value, and I think the buying groups become even more significant to all of us with the import situation,” said Judy Blackledge, co-owner of Blackledge Furniture in Corvallis, Ore., and a PFD member. “Being able to flow goods, split containers and things like that have made a huge difference for all of us.”

Blackledge said her business is off by single digits this year, and she expects the business climate will get worse before it gets better. She said price increases from manufacturers will affect stores’ open-to-buy this week, because retailers have had to move quickly to lock in prices before they go up.

One retailer noted that “The consumer is looking for something lighter and cleaner,” he said. “That doesn’t mean traditional isn’t selling, but they’re looking for cleaner traditional, contemporary and transitional.”Perceived value is essential, “but the customer is not looking for low-priced furniture,” he said. “They want something to last.” “People want events to react to,” one retailer said, noting that the holidays pull well for his company, which operates full-line Value City and Ashley Furniture HomeStores.

One retailer of leather furniture commented that he went to o Las Vegas mainly to see what’s new at Ashley and to get ideas there and “strategize for the future.” It’s not going to be a big buying market.

Higher prices at the Las Vegas market

Raw material prices climbed in Las Vegas this week. Upholstery buyers and manufacturers spent time here talking about ongoing increases in raw materials costs and how they are likely to affect wholesale and retail price structures. A large percentage of upholstery introductions will have increases built in, so negotiations may focus on goods already in the pipeline. But most manufacturers feel retailers are aware that the cost of almost everything involved in producing goods these days has gone up — especially steel, foam, fabric, packing materials and fuel used to get materials to the factories.

While some merchants ask vendors to defend their cost figures, most are taking the increases with a “what-can-we-do attitude,” much like three years ago when Hurricane Katrina slowed the flow of petrochemicals for making foam, causing pricing to spike upwards.

Still, most upholstery execs would rather cut off their own legs than announce price increases. But price points are likely to shift upward as the industry rides out current conditions.“We’ve absorbed some (increases) and we’ve raised prices on some,” said George Cartledge Jr., CEO and upholstery and leather buyer for the 17-store Grand Home Furnishings, referring to pricing of the company’s seating lines.“You can’t sell it for what you’d like to. You have to be realistic,” he added.

A sofa priced at the Roanoke, Va.-based retailer priced at $499 six months ago is still $499, Cartledge said, but products with a lot of steel — recliners, for example — have taken a hit. “We’ve had some recliners that we were selling for $349 that are now $399,” he noted.What’s seems more troublesome to Cartledge — a point of view echoed by others — is the rising cost of transportation.

“Some of our vendors are further away, like in Mississippi, and the surcharges are pretty substantial,” he said. “Some of the vendors can’t do anything about it but it just makes North Carolina (manufacturers) much closer to us. If you’re looking at a $15 delivery charge on a sofa versus $45, that’s a heck of a difference.” Roy Calcagne, president and CEO of Craftmaster, agreed that rising fuel costs are a particular challenge for retailers.“It’s one thing for us to produce it but they’ve got to get itfrom the factory to their store,” he said. “When you look at diesel fuel, it’s gone up a $1.50 in the last four or five months. The sofa that used to cost $20 to go from Craftmaster (in North Carolina) to Washington might be $25 or $28 now, so that’s going to affect the retail price as well.”

Calcagne, whose company produces its upper-end Estate collection in China, said that cost pressures have intensified at every link in the supply chain. In addition to the rising cost of raw materials, recent adjustments in the value of China’s currency have raised the cost of exported goods by 12% to 15%. And China has tightened subsidies on fuel, causing transportation costs to jump as well.

Craftmaster took a modest price increase at the April High Point Market but that “just barely covers the increases that we’ve been hit with,” Calcagne said, adding the company won’t be making further increases here. The impact on pricing that Hurricane Katrina had in 2005 taught everyone that the industry doesn’t have to have self-imposed price points, said Ted Jarnagin, vice president of retail sales for upholstery maker Loft.

“We all think that we have to have a $399 sofa. But if nobody had a $399 sofa, our business wouldn’t suffer; it would just increase our gross dollars. When we had the mandatory foam increase a couple of years ago, it forced everybody to go up and nobody lost any business because everybody had to go up at the same time. “The consumer doesn’t know the difference. They never have and they never will.”

The Sustainable Furniture Council plans to issue a revised set of standards this year and will focus on green product education efforts, officials with the organization said at its general meeting here Monday.

The SFC also is updating its Web site with a searchable database for green companies, said Executive Director Susan Inglis. The move is in response to the mass of inquiries it receives asking who makes green products. As of this month, the SFC has 261 members. The organization, which rates product eco-friendliness, has certified five members to Silver Exemplary status and five others are seeking certification. Education will continue as a focus this year, Inglis said.

At the general meeting, SFC member Holly Barbo of retailer Barbo Furniture in Bellingham, Wash., showed a video the company released titled, “It Can Be Easy Being Green,” which discusses furniture manufacturing. (An introduction is online at http://www.barbofurniture.com/easygreen/intro.html.)

The SFC is working on an educational package that stores can use to teach consumers, said Michael Hennessey, an SFC education committee member and CEO of Salt Lake City retailer C.G. Sparks. There is gap is between consumers’ enthusiasm about green and their understanding of basics such as what is renewable and what is recyclable, he said.

“I think there’s a commonality to the questions. People don’t know their foams are made of oil. They understand the concept but the not the finer points,” Hennessey said.

ACLE/Chinese Furniture Assn to meet

To coordinate the ACLE that to be held in Shanghai from 3 to 5 September, 2008, CLIA leather management commission will host a business talk in Shanghai Hongqiao Hotel; this activity is sponsored by Chinese Furniture Industry Association. There are dozens of entrepreneurs of furniture manufacturers to attend the business talk. More participants are welcomed to register for the meeting.

GARMENTS AND ACCESSORIES

Chinese exports higher

In first five months China exported 5.1 billion U.S. dollars of travel goods luggage and bags up 27.7 percent compared with the corresponding period last year, 6.8 percent higher than that of last year. Import went up to 69.7 percent to 210 million U.S. dollars; the growth rate of import went up 25.8 percent.

PPR reports sale rise

PPR, the luxury goods group which owns the Gucci brand, reported a 5.1% rise in like-for-like sales to €4.7 million (£3.7m) during the second quarter of 2008,thanks to a stellar performance from its Gucci brand.

PPR's Guccilabelsaw like-for-like salesrise 16% to €761,000 (£600,000) during the period. Sales of fashion and leather goods rose by 17% and theGucci Groupopened 10 new stores, taking its total to 521. Sales at PPR's Bottega Veneta brandjumped by 20% on a like for like basis during the second quarter. Bottega Venta reported growth in all markets.

Sales at Yves Saint Laurent rose 33% compared to the second quarter of 2007. YSL'sleather goods andfootwear categoriesperformed particularly well. Second quarter sales at PPR's other luxury brands, including Balenciaga, Boucheron, Alexander McQueen, Stella McCartney and Sergio Rossi, rose by acombined 31%.

PPR chairman and chief executive François-Henri Pinault said: "In a market environment in line with our expectations, PPR's activity in the second quarter improved at a steady pace, ahead of the Q1 progression. The excellent performance of our luxury goods activities illustrates the strength of our brand portfolio, driven by the outstanding growth of the Gucci brand. More than ever, our improved performance confirms the group's resilience and growth potential. I remain confident in PPR's ability to achieve another year of growth and improve its financial performance in full year 2008."

Coach roll continues

Luxury footwear and accessories brand Coach posted higher fourth quarter and full year profit gains helped by higher sales and a tax gain, but said it expects the consumer malaise in the US will remain well into 2009, significantly impacting its business.

For the fourth quarter ended 28 June, net income rose 33% to $213.5m, or $0.62 a share, from $160.6m, or $0.42, a year earlier. Excluding a tax settlement which reduced the company's tax provision by $50m, and the setting up of a new charitable foundation, Coach posted net income of $0.50 a share.

Quarterly sales rose 20% to $782m from $652m. Excluding the positive currency effects from translating foreign-denominated sales into US dollars, net sales were up 16% the company said. Direct-to-consumer sales increased 22% in the quarter to $659m, with North American same-store sales up 6.7%. In Japan, sales rose 12%, or 30% in dollar terms.

Indirect sales increased 11% to $123m.Gross profit rose 16% to $593m from $509m a year ago, but gross margin slipped to 75.9% from 78.1% in a continued promotional environment.  Lew Frankfort, chairman and chief executive officer, said the company's performance "demonstrated our ability to generate profitable growth in challenging times."

For the full year, net sales were up 22% to $3.18bn from $2.61bn in fiscal year 2007. Excluding the positive currency effects, net sales increased 20% for the year. Net income rose to $742m, up 17% from last year's $637m, while earnings per share rose 22% to $2.06 from $1.69 a year ago. Including the one-time net gain, earnings per share were $2.17.

Frankfort cautioned, though, that: "While our new fiscal year has just begun, we believe that the consumer malaise in the US will remain well into calendar 2009, significantly impacting our business.”Accordingly, we will plan cautiously until we see concrete evidence of a change in consumer behavior," including being more promotional and aiming "to deliver more compelling value."

The New York-based company said it expects fiscal 2009 sales of about $3.61bn, an increase of 13%, and a 10% rise in earnings per share to at least $2.25.

For its first quarter, sales are targeted at about $765m, an increase of 13%, and earnings per share projected to be $0.44, about 8% ahead of last year.

The company, which operates 297 retail stores and 102 factory stores in North America and 154 locations in Japan, its second-biggest market, plans to open about 50 new locations in Greater China during the next five years.

LVMH Moet profits up

Sales of leather handbags and jewelry at LVMH Moët Hennessy Louis Vuitton SA buoyed profits at the luxury-goods behemoth, defying a global financial crisis that has sapped spending on lower-priced goods.

Net profit by revenue at the world's largest luxury-goods conglomerate beat analyst estimates, rising 6.8% to €891 million, or roughly $1.4 billion, in the first half, the group said in a statement Tuesday. Sales, which rose 5.2% to €7.8 billion during the period, were tempered by a weakened U.S. dollar and Japanese yen. At constant exchange rates, the group's sales rose 12%.

LVMH Chairman and Chief Executive Bernard Arnault said he was "reassured by the strong momentum" of the first half.

The steady sales growth at LVMH, which is considered an industry barometer, highlights the resilience of high-priced luxury goods in a turbulent global economy. Big-spending luxury consumers have continued to splurge on pricey handbags and jewelry, even as the global financial crisis has forced them to cut back in other areas.

Several luxury companies have shown surprising sales growth in recent weeks, including French silk-scarf and leather-goods company Hermés International SA and Switzerland's Cie. Financiére Richemont SA, owner of the Cartier and Dunhill brands.

LVMH's apparel and leather-goods division, which includes the Louis Vuitton brand, reported a 6% rise in sales to €2.77 billion.

Not all its businesses have managed to escape the slowdown, however. Sales at the wines-and-spirits division fell 2% to €1.29 billion, compared to €1.31 billion in the first half of 2007.

Some investors question whether the luxury shopping spree will last. European luxury shares have been battered over the past year on expectations that slowdowns affecting other sectors in the U.S. and Europe will eventually ensnare the luxury-goods market.

Analysts, however, expect LVMH to perform better during the economic downturn than smaller rivals, thanks to a rapid expansion in recent years that has anchored the group's presence in key emerging markets such as China, Russia, India and the Middle East.

"Growth in emerging markets should stay robust" in the second half of the year and "mitigate a slowdown in the developed world," wrote Credit Suisse analyst Rogerio Fujimori.China is also spurring demand in the group's fast-growing watches and jewelry business, where sales rose 7% to €417 million.

CRUST WET BLUE AND SPLITS

In Brazil this week, wet blue, whole hides, machine flayed, full substance, average 48/52 ft, average 24 kg Selection TR1 sold at $1.35/ft. TR 2 sold at $1.25. Selection TR1/TR2 70/30% or 80/20% at around $ 1.28/ft CFR.

Upholstery crust in substance 0.9/1.1 mm, in sizes varying from 48 to 56 ft:sold at $1.32/ft for selection TR1 and for TR 2 $1.15/ft  The automotive upholstery leather, in substances 1.1/1.3 to 1.2/1.4 mm, stucco and buffed, at: $1.50/ft CFR for selection TR1 and $1.40 for TR2 for selection TR2 $1.25/ft or selection TR2 + TR3

LOOKING AHEAD

Bangkok International Fashion and Leather Fair 2008

As part of its efforts to brand Bangkok as the "ASEAN Fashion Center", the Department of Export Promotion (DEP) under the Ministry of Commerce is planning to accentuate the capacity of the Thai fashion and leather industry by showcasing the "Bangkok International Fashion Fair and Bangkok International Leather Fair 2008", to take place during 27-31 August 2008 at Bangkok International Trade & Exhibition Center (BITEC) Bangna.

BIFF & BIL 2008 is regarded as the foremost regional sourcing and networking platform for both local and overseas fashion trade professionals.

The event provides an excellent opportunity to pronounce Thailand's fashion and leather business capability in a full range of services including design, manufacture and merchandise, with emphasis on a strategy of value-added in every segment of the fashion and leather industry to enhance global competitiveness.

To communicate this concept and attract participation from buyers, sellers, manufacturers and agents, the event will be divided into fashion shows and exhibitions to present fashion and leatherware collections by Thaland's established designers as well as selected young up-and-coming designers in order to provide a comprehensive showcase.

Tanning Tech

The 2008 Simac and Tanning Tech fair will take place from October 28-30 at the Bologna fairgrounds. These will take place at the same time as Lineapelle and the total area of the exhibition (judging by bookings received by mid-July) is 18,500m². It will occupy five of the usual pavilions, as follows:

Pavilion 31: Injection molding machines; Pavilion 32: Chemical products; Pavilion 33: Machines for footwear and leather products; Pavilion 34: Machines for footwear and leather products; Pavilion 35: Machines for the tanning industry.

The exhibition will be similar to those held in previous years. The return of Tanning Tech in October also means the return of exhibitors from the leather chemical segment. Moving Simac to October has had no obvious negative repercussions.

One important new feature is the duration of Simac and Tanning Tech, which has been reduced for the first time ever to three days. On the other hand, the opening hours have been extended by 30 minutes, from 09.00-18.30 every day.

So far, exhibitors from 22 countries have applied, confirming the international dimension of this event. Despite the continuing international changes in the ‘geography' of the manufacturing and semi-finished product industries, Simac and Tanning Tech has reaffirmed its international leadership and continues to play a key role in the scenario of trade fairs of technology for the leathergoods industry for two main reasons: At almost all the stands the machines being presented are actually running, so that it is easier to demonstrate their effectiveness and worth.

Also the machinery and plant exhibited at Simac and Tanning Tech comply 100% with current safety standards and environmental requirements, reflecting extremely strict international laws.

As far as visitors to the fair are concerned, they have been selected by means of systematic, in-depth market research. At the beginning of September, they will receive customized ID cards and a preliminary exhibitors' catalogue. Things are looking good since requests for accreditation for admission to the event have already started to arrive. Numerous delegations are expected to attend the fair, but the number of countries of origin has yet to be worked out.