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Analysts: Apparel Makers Struggled In 4Q

Apparel and footwear makers will likely report weak fourth-quarter results following one of the worst holiday seasons in decades, analysts said.

NEW YORK (AP) -- Apparel and footwear makers will likely report weak fourth-quarter results following one of the worst holiday seasons in decades and continuing weak retail environment, analysts said Tuesday.

Most apparel shares fell on Tuesday, following the broader market down as investors worried about the strength of banks worldwide.

Apparel makers, which will report fourth-quarter results over the next few weeks, are suffering as retail sales have weakened steadily over the past several months.

"As the retail environment has become more challenging in recent months, we have already seen some footwear and apparel manufacturers fall short of expectations in the fourth quarter, and others will likely follow," said Robert W. Baird & Co. analyst Mitch Kummetz in a note to investors on Tuesday.

He lowered his fourth-quarter estimates on several apparel and footwear makers, including Heelys Inc., Rocky Brands Inc. and Volcom Inc.

"We expect the challenging retail environment to persist through at least the first half of 2009," Kummetz said. "This will likely put pressure on first-half reorders, and also put pressure on the retail performance of those manufacturers with company-owned stores."

Barclays Capital analyst Robert Drbul added in a separate note on Tuesday that recent earnings warnings by Coach Inc., Liz Claiborne Inc. and VF Corp. have shown that the apparel manufacturing industry is suffering.

"Given a bleak outlook for 2009, especially in the first half, we expect to see a notable amount of initiatives by apparel and footwear companies aimed at cost cutting," Drbul wrote.

Finally, a Goldman Sachs analyst Adrienne Shapira cut her rating on Polo Ralph Lauren Corp. to "Sell" from "Neutral" based on the weak environment.

Shares tumbled across the sector. Polo Ralph Lauren shares fell $3.37, or 8.2 percent, to $37.76. VF shares fell $3.47, or 6.2 percent to $52.66. Heelys shares fell 3 cents to $2.05. Volcom shares fell 48 cents to 5.2 percent to $8.74.

Liz Claiborne shares fell 29 cents, or 11.8 percent, to $2.17. Coach shares fell $1.10, or 6.5 percent, to $15.90.

The Dow Jones Industrial Average fell more than 200 points over concern about the banking industry worldwide.

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