Gap collection for guys for Spring, Summer 2011.

News today from Gap, Inc. indicates that the second part of 2011 may be even more unfavorable for the fashion industry than ever before. Gap reported their net income for the 1st quarter had dropped 23% to $233 million compared with $302 million last year.

But it gets worse. According to their financial report, “As stated earlier in the year, the company expects business performance during fiscal year 2011 to be heavily impacted by pressure from sourcing cost inflation, particularly in its value channels. While the company anticipated that the cost of goods would increase during the back half of the year, costs are actualizing above the initial estimates. The company now expects product costs per unit to be up about 20 percent in the back half of the year, which will more than outweigh retail price increases. As a result, the company has revised guidance for fiscal year 2011 diluted earnings per share to be in the range of $1.40 to $1.50.”

Gaps’ acknowledgement of sourcing pressures has resulted in many different changes. The organizational structure was changed including the formation of a Gap Global Creative Center in New York, and a formal search has begun to replace the brand’s head of Adult product design.

Other attempts to stop the bleeding include Gap’s plan to open up another 75 stores, which is up from 65 previously announced. However most of these are Outlet stores in North America. Inventory liquidation sales are becoming more a part of business than most consumers realize, even for many high-end brands which see collections going into outlet inventory as fast as a month after it hits the main stores.

Zumiez Up 18.8%
On the flipside, Zumiez announced their first quarter financials with net sales up 18.8% to $105.9 million from $89.1 million last year. Comparable store sales increased 12.6% for the 1st quarter. Costs mostly incurred came from moving their distribution center from Everett, Washington to Corona, CA.

Rick Brooks, Chief Executive Officer of Zumiez Inc., stated, “Our first quarter results represent a good start to fiscal 2011, although only a small percentage of our full year earnings. This gives us added confidence as we increase our store base in the U.S. and now Canada. Longer-term, we remain excited about the multiple areas of organic growth we believe exist for our concept including meaningful unit expansion, same store sales opportunities, and further development of our e-commerce platform.”

Zumiez outlook includes opening 44 new stores in 2011, including its first stores in Canada.

Team SweetCheeks.

Two-time Snowboarding Olympic Medalist Hannah Teeter Launches SweetCheeks
Hannah Teeter has always been giving back it seems, ever since she started charity making and selling maple syrup to raise funds for an impoverished village in Kenya. Now, she’s turned to cute panties with a message “From your heart, for your butt.” 40% of sales (currently all online at go to Children International, a non-profit known for getting kids food in impoverished areas fast.

The concept is catching on, having sold over 1,000 pairs so far, and including a hot girl’s team of ambassadors including Hannah, pro surfer Monyca Byrne-Wickey, and snowboarders Gabi Viteri to start with.

Transworld Business did a nice interview with Hannah Teeter.