U.S. Sourcing Perspective Today

April 27, 2011

• Outlook for the Global Economy

• Consumer Confidence

• Rising Costs

• Cotton

Big Issues Today

More recently, however, we have seen increased

evidence that a self-sustaining recovery in

consumer and business spending may be taking

hold.

… a more rapid pace of economic recovery in 2011

than we saw last year.

Ben Bernanke, Chairman of the Board of Governors

of the Federal Reserve System, February 3, 2011

Outlook for U.S. Economy

Report from the NCTO Annual Meeting

U.S. textile executives, operating in a recovery and

expansion mode for the first time in a while, are

looking for ways to consolidate their gains without

losing profit margin to historically high cotton

prices and market share to pending trade

agreements.

WWD April 19, 2011

Outlook for U.S. Textile Industry

Report from the NCTO Annual Meeting

Last year, would anybody have guessed that cotton prices

would have tripled, polyester would have been up by more

than 30 percent and importers would begin to seriously

double China and turn back to the Western Hemisphere and

that we would actually run into capacity issues for some of

our products?

David Hastings, President CEO of Mount Vernon Mills,

outgoing NCTO Chairman, April 19, 2011

Outlook for U.S. Textile Industry

Strong customer service, innovative

marketing and original, differentiated

product are the keys to success, and

department stores, a sector that recently

has shown signs of increased differentiation,

understand that.

Citi Broadlines Analyst, Deb Weinswig

WWD April 7, 2011

U.S. Retail Outlook

Clothing is something that is more price elastic, so

that if your spending power is squeezed by food

and energy prices, and on top of that you see

clothing prices go up, then you…wait on buying

clothing and hope for more reasonable prices in the

future.

WWD April 17, 2011

U.S. Retail Outlook

Consumer Confidence

Seventy-four percent of Americans believe higher prices

could curb their spending in the months ahead, and 53

percent see spring merchandise prices as inflated, according

to a Deloitte survey released Wednesday. It’s currently up

only a few percentage points, but inflation on most apparel is

expected to be up 10 to 15 percent for fall due to higher raw

material and labor costs. Higher energy costs, higher medical

costs, unemployment levels and job concerns — and political

unrest in Africa, the Middle East and Asia — are further

driving down the will to spend.

WWD April 14, 2011

Consumer Confidence

Rising Costs

According to a AlixPartners study,

apparel inflation is averaging 17.4

percent for most retailers, with some

seeing increases as high as 30

percent.

WWD April 18, 2011

Rising Costs

Obama Administration Trade Agenda

• National Export Initiative

• Free Trade Agreements

• Colombia

• Panama

• Korea

• Trans-Pacific Partnership Negotiations

More than $70 Billion

From More Than 100 Countries

U.S. Apparel Imports

Top Apparel SuppliersYear Ending January 31, 2011

Rank Country Million SME Million $ % Share % Growth

1 China 10,462.9 28,387.2 41.80 19.43

2 Vietnam 1,943.7 5,968.7 7.76 19.83

3 Bangladesh 1,655.0 4,068.9 6.61 22.17

4 Honduras 1,283.5 2,441.4 5.13 27.29

5 Indonesia 1,283.3 4,479.8 5.13 20.79

6 India 977.8 3,166.7 3.91 8.26

7 Cambodia 970.1 2,283.6 3.88 30.10

8 Mexico 958.9 3,560.4 3.83 8.92

9 El Salvador 827.6 1,657.5 3.31 27.69

10 Pakistan 709.7 1,527.4 2.83 12.02

11 Thailand 462.2 1,313.9 1.85 15.22

Rank Country Million SME Million $ % Share % Growth

12 Nicaragua 367.6 1,033.4 1.47 19.63

13 Philippines 361.0 1,046.8 1.44 9.05

14 Guatemala 317.7 1,163.9 1.27 10.05

15 Sri Lanka 317.3 1,238.6 1.27 1.16

16 Haiti 265.5 544.1 1.06 15.22

17 Dom. Rep. 233.7 620.2 0.93 -2.03

18 Egypt 233.3 848.9 0.93 8.65

19 Jordan 191.3 813.3 0.76 14.15

20 Taiwan 175.1 480.1 0.70 7.92

24 Peru 74.5 678.9 0.30 16.10

29 Colombia 51.6 262.8 0.21 19.21

Top Apparel SuppliersYear Ending January 31, 2011

Major Apparel Suppliers

China Remains Top Supplier

But Opportunities Remain for Western Hemisphere Producers

Peru

U.S. Imports of $ 679 million

Ranks Twenty-fourth for Apparel

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

0

100

200

300

400

500

600

700

800

900

1,000

U.S. Imports from Peru 1992-2010

Apparel Assem-bled by

U.S. fabric0.83%

Apparel , chief

value of Ilama, Alpaca,

or Vicuna1.48%Short

Supply0.04%

Combina-tions

sewn or assem-bled in one or

more AT-PDEA, or

the United

States, or both

0.005%

Apparel assem-

bled from ATPDEA or U.S. yarn

97.65%

U.S. 2010 Peru Imports, by benefit

HTS No. Product Category YE Feb 2011 Value

6105.10.00.10 Men's Knit Cotton Shirts 338 113,597,869

6110.20.20.79Women's or Girls' Knit

Other Cotton Other Pullovers

339 119,864,498

6109.10.00.12Men's Knit Cotton Other

T-Shirts, except Underwear

338 63,386,533

6110.20.20.69Men's or Boys' Knit Other Cotton Other

Pullovers338 55,768,694

6109.10.00.40Women's Knit Cotton T-

Shirts, except Underwear

339 35,948,607

6106.10.00.10 Women's Knit Cotton Blouses and Shirts

339 32,258,703

6105.20.20.10 Men's Knit Other Man-made Fiber Shirts

638 20,967,545

6110.30.30.59Women's or Girls' Other Man-made Fiber Other Pullovers, etc., Other

639 18,211,588

6105.10.00.30 Boys' Knit Cotton Other Shirts

338 23,477,881

6109.10.00.27

Men's or Boys' Knit Cotton Other Shirts, Not

Underwear, T-shirts, Tanktops & Singlets

338 12,150,811

Top U.S. Imports from PeruYear Ending February 28, 2011

Rank Country Million SME Million $ % Share % Growth

1 Pakistan 4,115,320 169,445 18.65 33.94

2 China 3,231,456 215,003,827 14.65 20.31

3 India 3,062,535 169,554,254 13.88 10.49

4 Vietnam 2,667,030 154,795,244 12.09 34.80

5 Indonesia 2,154,178 107,168,992 9.76 18.93

6 Bangladesh 1,134,524 51,455,962 5.14 29.08

7 Peru 890,488 113,597,869 4.04 47.73

HTS No. 6105.10.00.10Men’s Knit Cotton Shirts

Year Ending February 28, 2011

Rank Country Million SME Million $ % Share % Growth

1 China 29,895,786 1,759,678,174 26.01 18.44

2 Vietnam 19,338,969 746,791,428 16.83 6.68

3 Indonesia 13,770,311 517,507,547 11.98 14.15

4 Guatemala 9,623,132 280,589,959 8.37 -6.76

5 Cambodia 8,665,314 281,712,570 7.54 20.00

6 Nicaragua 5,263,060 177,710,353 4.58 12.74

7 India 5,024,614 214,240,239 4.37 9.47

10 Peru 2,082,019 119,864,498 1.81 -3.34

HTS No. 6110.20.20.79Women’s or Girls’ Knit Other Cotton

PulloversYear Ending February 28, 2011

Rank Country Million SME Million $ % Share % Growth

1 Honduras 11,765,749 215,548,611 20.11 105.60

2 El Salvador 8,444,190 162,885,415 14.44 39.79

3 Haiti 6,104,819 98,475,729 10.44 19.03

4 Mexico 5,554,509 143,023,185 9.50 4.51

5 Bangladesh 3,897,435 61,093,269 6.66 -2.04

6 Pakistan 3,810,869 79,480,392 6.51 40.09

7 China 3,617,129 105,993,821 6.18 20.41

14 Peru 867,561 63,386,533 1.48 44.03

HTS No. 6109.10.00.12Men’s Knit Cotton Other T-Shirts, except

UnderwearYear Ending February 28, 2011

2007 2008 2009 20100

5,000

10,000

15,000

20,000

25,000

FabricYarn

U.S. Exports to Peru 2007-2010

Global Supply Chain

ComplianceQA & TechProduct Development

Global Logistics Production QA & TechGlobal Logistics Production

Garment Costs

Material is about 40 percent of the overall costs, trims add one-third to the price of the garment, and then labor and finishing and transportation become more impactful as they go up.

David Bassuk, global retail practice, AlixPartners

Sourcing Outlook

• Multi country sourcing for maximum flexibility

• Strong supplier partnerships• Social compliance• Quality product at a value price

Sourcing Outlook

Julia K. Hughes+1 202 419 0444jhughes@usaita.com

Contact Info:

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