Family Clothing Business Plan

ReHabiliments, established as a Limited Liability Corporation, is a clothing and apparel business with principal offices located in Sandybar Harbour.  The company sells trendy clothing and apparel, such as casual and active wear, head gear, work-out gear, leather coats, and baseball jackets to an international market consisting of individuals of all ages, from all walks of life.  ReHabiliments markets its product line as “ReHab Your Wardrobe – ReHab Your World,” and commits a portion of the company’s sales revenues to programs that transform the lives of the less fortunate and abolish the exploitation of children forced into activities such as scavenging, rag-picking or marginal economic activities in the streets, drug trafficking, criminal activities, physical and sexual abuse, forced labor, debt bondage, and prostitution.

“ReHabiliments,” is the brainchild of L. Owerd Emlynes, the company’s founder.  While managing musical performance group, Mr. Emlynes developed the idea of promoting the group and increasing revenue by selling tee shirts and sweat shirts bearing the group’s name, logo, and slogan – “There is Strength in Harmony.”

After purchasing $500 in clothing (e.g., tee shirts and sweat shirts), Mr. Emlynes had the apparel designed and silk-screened and then negotiated with two clothing stores in the Sandybar Harbour area to carry the clothing.  In less than one week, both stores were sold out of the apparel.

Mr. Emlynes conceived the idea of carrying the music group’s marketing strategy one step further and developing an entire clothing line around the concept of “harmony.”  After brief negotiations with the group, it was mutually agreed that since Mr. Emlynes was the brainchild behind the idea, the clothing line known as “ReHabiliments,” and the company (e.g., ReHabiliments), would belong solely to Mr. Emlynes.

The underlying foundation of ReHabiliments, and its clothing line is based upon the principle of harmony – harmony of thought, harmony of purpose, and harmony in humility.  When people are of one mind, they are supported in their purpose and are accepted despite their weaknesses.  By purchasing “ReHabiliments,” consumers make a conscientious decision to become an integral member of a community dedicated to the greater good of humanity.

Lately, Mr. Emlynes has explored the potential of the “ReHabiliments” concept, expanding the line to include a variety of apparel and, built upon personal marketing efforts and out-of-pocket funds, has sold over $6,000 in products to various venues such as the New York City Jacob Javits Convention Center; the “Black Expo” in Atlanta, GA; multicultural expositions at the Anaheim Convention Center, CA; at street fairs in Englewood, NJ; and through various online, e-commerce sales.

We are seeking funding to expand ReHabiliments’ operations, establish a reputable storefront, and to further develop the business, business infrastructure, internal systems, product and service development, and extensive marketing and geographic positioning.  Based upon conservative market growth projections, once start-up funding is secured, the company expects to generate very healthy sales revenues in Fiscal Years 1, 2 and 3.

1.1 Mission

ReHabiliments, (ReHabiliments) is a clothing and apparel business with principal offices located in Sandybar Harbour.  The company sells trendy clothing and apparel, such as casual and active wear, head gear, work-out gear, leather coats, and baseball jackets to an international market consisting of individuals of all ages, from all walks of life.  ReHabiliments markets its product line as, “ReHab Your Wardrobe-ReHab Your World,” and commits itself to programs that transform the lives of the less fortunate.

The company’s first responsibility is to the men, women, and children who use its products.  As a customer oriented business, ReHabiliments recognizes that customer satisfaction is the key to success and strives to deliver the highest quality customer service and superior products.  ReHabiliments supports the success of its employees, community, and investors, and will conduct its operations prudently to ensure adequate financing and resources necessary to achieve business objectives for future growth.  The company promotes a spirit of sharing and caring, where people eagerly contribute their time, knowledge, and experience towards a successful community.  As a socially responsible company, ReHabiliments contributes to the world’s obligation for the protection of the environment, contributes to the economic strength of society, and functions as a good corporate citizen on a local, regional, national, and global basis.

1.2 Objectives

ReHabiliments’ management recognizes that the company must establish concrete goals that assist management in determining whether or not the company is achieving corporate objectives.  ReHabiliments’ chance of implementing those goals depends upon management’s ability to track progress toward goals and to measure results in conjunction with those goals.  To ensure implementation of the company’s goals, management has established the following corporate objectives:

• Securing start-up funding and subsequent funding through a combination of investment and debt strategies.
• Establishing marketing and sales initiatives to expand the company’s clothing line and capture 10% of the branded urban apparel industry.
• Based upon market growth projections, generating very healthy sales revenues in Years 1, 2 and 3.
• Reinvesting corporate profits for market share growth in the international apparel industry.

1.3 Keys to Success

ReHabiliments recognizes that the idea of keys to success is based upon the need for focus.  To establish itself as a global leader, the company must display extraordinary competence and intelligent foresight.  By making the company’s keys to success the corporate vision, management can ensure the success of ReHabiliments.

To ensure the success of the company, management will:

• Become the industry leader in the branded urban apparel industry.
• Build a brand as “American” as Wrangler or Levis.
• Offer clothing suitable for sizes from toddler to 5XL.
• Establish and commit to “best practices” in all significant business processes, including ethical production practices (no child labor), through extensive training programs, tools, measurement, and sophisticated self-assessment reporting systems.
• Create, nurture, and enhance customer relationships through problem and opportunity awareness, assessment of desired goals and results, and through routines and communications that constantly reinforce target relationships.

ReHabiliments, established as a Limited Liability Corporation, is a start-up clothing and apparel business with principal offices located in Sandybar Harbour.

ReHabiliments’ roots can be traced back to 1994, when Mr. Emlynes managed an up-and-coming, music performance group.  To promote the group and increase revenues, Mr. Emlynes developed a clothing line bearing the group’s name, logo, and slogan, “There is Strength in Harmony.”  While the group performed, T-shirts and sweat shirts were sold to the public.  In addition, Mr. Emlynes negotiated an agreement with two local clothing stores to carry this unique line of clothing, and within one week, $500 worth of T-shirts and sweat shirts were completely sold out in both stores.  Unfortunately, shortly after implementing this marketing strategy, Mr. Emlynes resigned his position as their manager; however, he continued to maintain a strong relationship with the group.

Mr. Emlynes conceived the idea of carrying this marketing strategy one step further by developing an entire clothing line around the concept of “harmony.”  After brief negotiations it was mutually agreed that since Mr. Emlynes was the originator of the idea, the clothing line, known as “ReHabiliments,” and the company (e.g., ReHabiliments), would belong solely to Mr. Emlynes.

The underlying foundation of ReHabiliments, and its clothing line is based upon the principle of harmony – harmony of thought, harmony of purpose, and harmony in humility.  When people are of one mind, they are supported in their purpose and are accepted despite their weaknesses.  By purchasing “ReHabiliments,” consumers make a conscientious decision to become an integral member of a community dedicated to the greater good of humanity.

This principle has deep-seated meaning to Mr. Emlynes, who serves as a worldwide advocate for the weakest members of society – children.  He represents an ongoing mission to abolish the exploitation of children forced into activities such as scavenging, rag-picking or marginal economic activities in the streets, drug trafficking, criminal activities, physical and sexual abuse, forced labor, debt bondage, and prostitution.

In fighting this exploitation, Mr. Emlynes donates a portion of the company’s proceeds to programs that transform the lives of the less fortunate, such as “Feed the Children” and UNICEF.  Additional donations are given to other causes that support child education and the eradication of life-threatening diseases.  These donations foster social responsibility within the company and represent the company’s commitment to its vision of harmony.  In addition, ReHabiliments is committed to sourcing its original inventory (sweatshirts, T-shirts, pants, etc.) only from manufacturers who can demonstrate use of ethical production practices, with no child labor or forced labor. 

2.1 Company Ownership

ReHabiliments, is a privately held corporation that is solely owned by its founder, Mr. L. Owerd Emlynes.  The company was incorporated as a Limited Liability Corporation.

2.2 Start-up Summary

Total start-up expenses for ReHabiliments are estimated in the tables below.  To date, the majority of these expenses have been financed by direct owner investment; however, ReHabiliments is seeking to secure additional first round funding through a combination of investment and debt strategies that will cover the majority of the company’s start-up expenses.  In addition, the founder, Mr. Emlynes, is working with the Social Security Administration to qualify for the Plan for Achieving Self-Support (PASS) Program, which will provide the company with additional funding.

Most expenses are typical start-up expenses and include, but are not limited to, the following items:

• Legal (Business Incorporation Filing and Taxes)
• Business Planning/Development
• Consulting Fees
• Advertising/Marketing
• Research and Development
• Business Cards, Letterhead
• Telephone/Internet Expense
• Postage/Shipping
• Business Insurance (Initial Policy)
• Initial Rent
• Decorating/Remodeling/Repairing
• Office Equipment
• Office Setup/Vehicles
• Manufacturing/Distribution
• Web Design
• Reference Materials
• Business Travel
• Expensed Equipment

To date, Mr. Emlynes, the founder, has received $10,000 through grant monies (e.g., DVR), plus an additional $7,000 from other investors to assist with start-up expenses.  Total Capital and Liabilities after start-up costs amount to $580.

Assets to be purchased during start-up include:

Inventory:  $50,000

• Miscellaneous Apparel Accessories:  $900
• Embroidery Supplies/Assorted Threads:  $2,000)

Current Assets: $24,950

• Used, 1999 Chevrolet Step Van w/Shelves and Racks:  $15,000
• Two Garment Racks:  $200
• A Dell Computer System with Digitizing Software:  $2,500
• Three Power Spec, 1 Gigabit Computer Systems w/Software:  $4,000
• Telephone/FAX Machines:  $500
• Five Display Mannequins:  $1,250 (e.g., $250 each)
• Office Furniture:  $1,500

Long-term Assets: $34,485

• A Digital Embroidery Station (Model TEHVC-1501):  $22,000
• Five Industrial Sewing Machines (RX-9803A-UTC):  $5,000 (e.g., $1,000 each)
• An Industrial Steam Press (SP643-A):  $6,000
• A Mighty Press (MP#1):  $635
• A Mighty Cap Press (MCP#3):  $450
• Two Cash Registers:  $400 (e.g., $200 each)

2.3 Company Locations and Facilities

ReHabiliments is currently operating as a home-based business located in Sandybar Harbour.  Once the company acquires start-up funding, ReHabiliments’ headquarters will be moved to a facility capable of accommodating both administrative activities as well as apparel warehousing/inventory and production.  We have located three suitable sites in Sandybar Harbour, and will enter lease negotiations once start-up funding is confirmed.  Ideally, the corporate facility will be jointly inhabited by other tenants and/or small businesses, which will enable ReHabiliments to draw additional revenue from leasing.

ReHabiliments offers a full collection of apparel that is classy, upscale, and versatile.  This apparel line includes casual and active wear, headgear, workout gear, leather coats, and baseball jackets.  Clothing sizes range from toddler to 5XL (in most items).

ReHabiliments will start out by adding logos and branding to pre-made items selected from ethically-sound producers abroad, and gradually shift to producing more whole items in-house, using our team of designers. 

3.1 Product Description

Casual Wear

“Casual wear” is only one of the phrases used to describe the trend away from pin stripes and high heels.  Other terms include “business casual” (usually means the Dockers-khakis-polo shirt look), “business appropriate” (a step-up from casual), “business ready” (meaning that a “traditional” suit must be ready to wear at all times), “corporate casual,” “clearly casual,” “resort casual” (definitely not allowed in the office), “refined casual wear” (acceptable provided that you understand what it is), and, perhaps most appropriately, “casual confusion.” 

–CNet News.com, “Casual Wear:  Dressing for Success or For Stress?” June 10, 2000

ReHabiliments carries a variety of products to suit the needs of every individual, whether they are dressing for success or for an afternoon of leisure.  Some of the company’s products include:

• Jerseys (50/50 Weight Ultra Blend)
• Men’s Pullover, Long Sleeve, Small to 5XL:  $65.00
• Men’s/Women’s Pullover, Short Sleeve, Small to 5XL:  $55.00
• T-Shirts (100% Cotton)
• Men’s, Long Sleeve, Small to 5XL:  $60.00
• Men’s, Short Sleeve, Small to 5XL:  $35.00
• Women’s, Long Sleeve, Small to 5XL:  $30.00 (100% Ladies Cotton)
• Women’s, Short Sleeve, Small to 5XL:  $25.00 (100% Ladies Cotton)
• Denim Jackets (100% Cotton Denim)
• Men’s, Small to 5XL:  $65.00
• Women’s, Small to 5XL:  $60.00
• Denim Pants (100% Cotton Denim)
• Men’s/Women’s:  $50.00

In 2004, staying at home to relax will become an important lifestyle choice that will continue throughout the decade.  As dress becomes less formal and more casual most of the time, even at work, so does the desire for differentiation between leisure wear and casual wear.  Consumers will require clothes to “cocoon” in.  These clothes will be soft and comfortable, stretching and retaining shape.  Today, over 50% of consumers require comfort over other qualities in their clothing, as well as wear-easy care. 

–Source:  “Fashion Trends 2004:  Part 1 – General Changes Affecting Textiles,” by Pauline Weston Thomas.

Activewear/Sportswear

Athleisure lifestyle apparel, from yoga pants to terry track suits, is on the rise, and ReHabiliments offers a range of high-performance clothing for active sport, trekking, climbing, and travel that is suitable for the street, and practical for the gym.  The collection is characterized by modern, comfortable, high-tech fabrics and functional, ergonomic designs.  The company’s active wear products include:

• Sweatshirts (100% Cotton)
• Men’s/Women’s, Long Sleeve, Small to 5XL:  $70.00
• Men’s/Women’s, Short Sleeve, Small to 5XL:  $60.00
• Sweatsuits (Velour)
• Men’s/Women’s, Small to 5XL:  $100.00

Sports styling will continue to dictate many casual designs throughout 2004, although natural looks where the fabric makes the statement will also be important.  Sportswear and sports styling will continue to grip consumers who desire comfort in everyday wear, yet, as couch potatoes, hardly ever indulge in the activities for which the clothes were originally designed.  (Source:  “Fashion Trends 2004:  Part 1 – General Changes Affecting Textiles,” by Pauline Weston Thomas)

Workout Gear

The return of the Olympic Games will help maintain strong sports fashion influences in city wear for both sexes.  This will be more and more popular as the 2004 Olympic fever gains a grip on individuals globally.  Colorful fashion trainers, rather than traditional running trainers, will accommodate the massive shift in shoe buying habits.  Keyholes, zip inserts, and satin contrast strips and bindings will continue to feature in mass casual wear emphasizing the sporty feel.(Source: “Fashion Trends 2004:  Part 1 – General Changes Affecting Textiles,” by Pauline Weston Thomas)

ReHabiliments offers a line of workout gear that brings together a combination of high-end, high-tech, and unique fabrics with today’s hot fashion trends.  The company’s workout gear includes:

• Workout Tops (100% Spandex)
• Women’s, Small to 3XL:  $25.00
• Workout Bottoms (Coordinating) (100% Spandex)
• Women’s, Small to 3XL:  $35.00
• Socks (100% Cotton)
• Women’s, Fits Up to Shoe Size 15:  $15.00
• Jacket (Cotton/Polyester Blend)
• Women’s, Small to 3XL:  $45.00

Smart consumers are driving the performance fabrics of today.  They want products with more comfort, more durability, and more fashion, which in turn will make their lives easier.  In answer to the consumers’ needs, companies such as DuPont, Milliken & Co., and Mylstar, Inc.  are developing techniques that manage moisture better, so it dries faster; improving dye-techniques to enhance color-fastness; and designing garments that keep people warm without weighing them down.  (Source:  “Arresting Odor and Moisture,” by Michael Fickes, SportsEdge, December 2002)

Leather Garments

The leather motorcycle jacket is much more than a coat – it’s a mentality.  From the early twentieth century, airplanes, automobiles, and motorcycles redefined freedom, idealized speed, and captured the hearts of men and women alike.  The leather jackets developed to protect pilots, racers, and motorists from the elements came to symbolize a romantic sense of rugged adventure.  In particular, motorcycle jackets maintained this ideal for decades to come.  ReHabiliments carries on this American-made tradition of the classic, leather, motorcycle jacket.

• Motorcycle Jackets (100% Black Leather)
• Men’s/Women’s, Small to 4XL:  $300.00
• Leather Pants (100% Black Leather)
• Men’s/Women’s, Small to 4XL:  $175.00

Leather jackets are the most versatile and classic article of clothing the consumer can own.  They may be extremely stylish and popular, following fashion trends from year to year, but the truth is that they are never out of style.

Consumers can find leather jackets in various shapes and sizes or different lengths (e.g., such as trench coat, knee, three quarter, and hip), depending upon the consumer’s body type, height, style, and taste.  Even square-shaped, leather bomber jackets have made their return and continue to be popular.  All leather jackets are stylish.  (Source:  “The Look of Leather,” by Karin Eldor, AskMen.com)

Baseball Jackets

Ever since hip-hop innovators and style aviators Outkast appeared on MTV sporting old school Houston Astros jerseys with rainbow colors and 70s flavor, the rap world has seen a trend toward old school/vintage sports apparel.  Since then, others have been seen in videos “discovering” forgotten logos and athletes.  Retail stores’ shop windows of showcase styles that, by today’s standards, would be considered out of place for men playing on the field.  Vibrant colors and rainbow designs that were once the norm in the seventies and eighties have been replaced with more conservative color schemes, or with shades of gray and black.

ReHabiliments carries a line of new, satin baseball jackets that mimic those worn by teams of the past.  They are made of thick, lined satin with attention to the finest details.

• Baseball Jackets (Satin and 100% Cotton)
• Men’s/Women’s, Small to 5XL:  $75.00

The love affair with the retired logo is merely another trend in hip hop’s long evolution.  A sports symbol can symbolize far more than one might expect.  While wearing the traditional, current logo of a local team can still symbolize an artist’s claims of his/her roots, recent styles of sporting wear attest to more than locality, signifying pure fashion for fashion’s sake in an ever-changing culture.

Headgear

During the summer, fedoras and mesh caps made of natural grasses found favor among both men and women.  Another common sight was unlikely combinations of feminine clothes and baseball caps, while, as an extension of the layered look, turbans were also a hit.  This fall has witnessed the renewed popularity of the rounded, visored berets known as “caskets” that have been a conspicuous presence since last year.  Hats and caps are coming out in a variety of materials, colors, and shapes, including woolen caps with designs knitted in and hats made of furry materials like angora.

As to why hats have become entrenched as a fashion accessory over the past few years, we believe that headwear offers the easiest means of self-expression in the context of a general trend for casual fashion.  Even a person dressed in a simple outfit like pants and a T-shirt can instantly express his or her personal style just by putting on a hat.

Hats are becoming as much an integral part of young people’s wardrobes as other fashion items, and ReHabiliments carries a variety of hats to suit everyone’s taste.  These include:

• Ski Hat (Wool)
• Men’s/Women’s, One-Size-Fits-All:  $15.00
• Beanie (Polyester/Cotton)
• Men’s/Women’s, One-Size-Fits-All:  $12.00
• Fitted Baseball Cap (Cotton)
• Men’s/Women’s, One-Size-Fits-All:  $25.00
• Sun Visor
• Men’s/Women’s, One-Size-Fits-All:  $15.00

Hats have always combined fashion with practicality, offering protection from both the summer sun and the winter cold.  Right now, hats are experiencing a boom in popularity that has made them an essential item regardless of the season.  More and more people are wearing hats of distinctive designs that, unlike the past hat booms, are not constrained by fashion trends.  Rather than famous brand boutiques, it is specialty shops stocking hats created by daring young designers that are the forefront of the current craze.

3.2 Sourcing

Intense competition has placed garment retailers in higher income countries under constant pressure to reduce costs.  This has encouraged buyers to favor low cost countries and, in particular, to seek out locations which offer ever lower labor costs. 

Few countries today have lower labor costs than major apparel manufacturers, such as Bangladesh or India; however, this low cost labor is obtained at the expense of children.  The U.S.  Department of Labor’s 1994 international child labor study, By the Sweat and Toil of Children (Volume I): The Use of Child Labor in U.S.  Manufactured and Mined Imports, catalogued existing information on child labor in the garment industries of Bangladesh, Brazil, China, Guatemala, India, Indonesia, Lesotho, Morocco, the Philippines, Portugal and Thailand.  While the report noted that more research was necessary to confirm the extent and working conditions of child workers, in some cases it stated that children were involved in the production of garments for export to the United States. 

With the exception of Bangladesh, where children regularly worked in large-scale, formal factories, the report found that children were more likely to work in small subcontracting shops or homework situations.  In some cases, children were found to work in locked shops, with armed guards preventing entrance and exit during work hours.  Children worked on tasks such as sewing buttons, cutting and trimming threads, folding, and moving and packing garments.  In small shops and homesites in the Philippines, children were also found embroidering and smocking (making pleats).  In some cases, children worked long hours sometimes six or seven days a week.  Some children received less than the minimum wage and were not paid for overtime work. 

The recent proliferation of codes of conduct can be attributed to several factors.  With media reports and exposés on child labor becoming more frequent, consumers – and therefore companies – are becoming increasingly concerned about the conditions under which the garments they purchase are made.  Companies’ adoptions of codes of conduct serve to ease consumer concerns – and their own – that they may be contributing to the exploitation of child labor.  Often companies adopt codes to project a positive image and protect their brand-name or quality reputation.  Some are motivated by good intentions; some by bottom-line considerations – many by both.

As a proponent for the rights of children, ReHabiliments is extremely sensitive to obtaining goods from manufacturers that use children as their main source of labor.  As a result, management thoroughly researches its suppliers and will continue to do so until such time as the company establishes its own U.S.-based manufacturing operation.  In addition, ReHabiliments operates on codes of conduct and model business principles that ensure the safety and welfare of children, demonstrating the company’s social responsibility.

ReHabiliments currently obtains its garments from three factories, as follows:

• T-Shirt Manufacturing

226, Gokule Street
Ram Nagar, Coimbatore -641009
Tamil Nadu, India
Phone:  91-422-5584843
FAX:  91-422-4378459

• Garment Labels

Mr. Supot Sanganunt, Managing Director
Samchai Label Industrial Co., Ltd.
Phone:  (662) 8978090-9
FAX:  (662) 8978100

• Miscellaneous Garments

Winsor Manufacturing Co., Ltd.
No.  14, Shilan Road, Xinqiao, Panyu
Guanzhou, China

Costs for clothing articles are as follows:

• Denim Pants:  $5.00 per garment
• Jackets:  $5.00 per garment
• Sweatsuits:  $7.00 per garment
• Hats:  $150 per hat
• Long Sleeve T-Shirts:  $1.50
• Short Sleeve T-Shirts:  $1.00 per shirt
• Jerseys:  $6.00 per jersey

Costs per garment vary depending upon the number of garments ordered at any given time.  Bulk shipments cost less than items ordered piecemeal.

3.3 Technology

As in other industries, technological advances, globalization, and changing business practices are affecting the apparel industry.  One significant change is the increased emphasis on quick response to customer demand.  This ability is vital in an industry that sells its products in an ever-changing, fashion-conscious market.  Quick response capability links apparel producers more closely to related firms in the textile and retail sectors of the economy.  Aided by communications technology, such as electronic data interchange, point of sale terminals, and bar codes, information is instantaneously communicated to and received from firms in these industries. 

Other technologies affecting the apparel industry include computerized equipment and material transport systems.  Computers and computer-controlled equipment aid in many functions, such as design, marking, and cutting.  Overhead conveyor systems transport material between sewing machine operators and between processes.  Despite these changes, however, the apparel industry – especially its sewing function – has remained significantly less automated than many other manufacturing industries. 

Computer aided design (CAD) is used to design anything from an aircraft to knitware.  Originally, CAD was used in designing high-precision machinery; however, in the 1970s, the technology made its entry into the textile and apparel industry.  Today, most companies abroad have integrated some form of CAD into their design and production process. 

According to the National Knitwear Association of the United States, of 228 apparel manufacturers:

• 65% use CAD to create colorways.
• 60% use CAD to create printed fabric design.
• 48% use CAD to create merchandising presentations.
• 41% use CAD to create knitwear designs.

The apparel industry traditionally has consisted of production workers who perform a specific function in an assembly line.  Increasingly, this organizational philosophy is being replaced by a team concept, in which garments are made by a group of sewing machine operators organized into production “modules.”  Each operator in a module is trained to perform nearly all of the functions required to assemble a garment.  Each team is responsible for its own performance, and individuals usually receive compensation based on the team’s performance.   These changes have greatly altered the atmosphere and responsibilities from those of the traditional assembly line. 

Fierce competition from abroad has prompted these changes in work structure and technology.  Apparel firms have also responded to growing competition by merging and employing workers in other countries to perform some production functions.  Workers in lower-wage countries are increasingly being hired to assemble garments—the most labor-intensive step in the production process—whereas U.S.  workers now perform a greater share of the pre-assembly functions and coordinate the process.  Such changes in the nature of the domestic apparel industry will certainly continue as globalization proceeds. 

(Source:  U.S.  Department of Commerce, August 2000)

3.4 Future Products

ReHabiliments’ long-range objectives include venturing into an apparel line for college graduates and professionals, with further opportunities in licensed and branded cologne and perfume, bedding, underwear, small leather goods, jewelry, and eyewear.  Beginning in Fall 2004, ReHabiliments will offer a line of clothing marketed as apparel to “Clothe Tomorrow’s Professionals.”

The recent economic slowdown, combined with the tragic events of September 11, 2001, reduced consumer confidence, which led to declining sales in the apparel industry as a whole.  The impact of the economic slowdown is felt differently by various sub-sectors of the fashion industry, with some being more greatly affected than others, such as the men’s wear industry, in which the demand is more elastic than in the women’s wear industry.

In general, the apparel market is positive due to the immensity and strength of the industry.  However, manufacturers who want to enter the market, will have to be extra-prudent and prepared to make greater investments in promotions and resources to do observation visits, conduct preliminary market tests, and increase their visibility by taking part in trade shows and other activities.  Industry specialists strongly advise using specialized brokers to increase one’s chances of success.

4.1 Market Segmentation

ReHabiliments intends to target men, women, and children in the Tri-State Area who require competitively priced, branded clothing.  Within all groups, there are no color barriers and customers have diverse backgrounds.  Briefly stated, these consumers range between one year and 59 years of age.

According to the NPD, women spend about 80% of all money that goes for sportswear.  They control 96% of the dollars spent on their own clothes, 93% of those spent on children’s, and 60% of those spent for men’s sports apparel.

During 1999, the women’s consumer segment, a constant consumer group, dominated the U.S.  apparel sales market.  Women’s apparel sales growth was 3.7% and represented 52% of all apparel sales, whereas men’s apparel growth was 4.1% and accounted for 31% of total apparel sales.  Women tend to buy at a constant rate, whereas men’s apparel sales have been growing.

Individuals under the age of 20 wear about 43% of sports apparel, but individuals aged 45 and older accounted for 25% of the market in 1999.  Girl’s and boy’s apparel rose 0.5% and 3.8%, respectively.

The Market Analysis table and chart, below, show potential customers in the Tri-State Area by gender and age groups, as well as potential Internet sales.

4.2 Target Market Segment Strategy

According to the Yale School of Management (November 6, 2002), larger branded apparel manufacturers with diversified product lines and self-owned outlets report revenue growth of between 2% and 9%.  Mass manufacturing and rapid creative copying of fashion catwalk designs means that many of us can afford innovative looks at high street prices without the couture price tag.  Age is no barrier to following a fashion trend or making a fashion statement, as 10 becomes the new 18 and 50 the new 35.  Consumers are craving new and different products, actively seeking new fashion-forward items on each shopping expedition.

Current opportunities in the Tri-State apparel industry include:

• Adult Apparel (Men/Women, Ages 20 to 49 Years)
• Sportswear (Men/Women, Ages 20 to 49; Boys/Girls, Ages 5 to 19)
• Junior Clothing (Boys/Girls, Ages 5 to 19)
• Children’s Wear (Infants/Toddlers, Ages 0 to 4 Years)

Adult Apparel

The production of adult apparel, particularly women’s clothing, occupies the largest sector of the apparel industry.  In 1990, over 1,000,000 workers were employed to produce an almost infinite variety of dresses, suits, coats, and sportswear.

Traditionally, the women’s apparel business has operated on a five-season basis:  fall line merchandise is usually offered to retail store buyers in April; holiday collections in June; early spring, resort, and cruise wear in October; spring and summer clothes in January; summer and early fall fashions in March and April.

Men’s clothing design and sales are in a state of upheaval.  In the past, manufacturers presented two new lines of classic clothing each year, changing fabrics for seasons.  Today, many firms produce highly styled clothes for department store boutiques and small specialty shops which cater to the fashion-conscious man.  Their problems with seasons, lines and style acceptance parallel those of women’s wear producers.

Other than children’s wear, the market for men’s clothing has grown faster than any other sales category in the industry.  The introduction of state of the art permanent-press fabrics probably initiated this sales increase, but the acceptance of casual fashion in men’s wear, spurred by the growing youth market, has been the main factor.

Although the larger firms are continuing to gain ground compared to smaller firms, and brand-name merchandise already has a large share of the market, the preference for major brands is not longer unanimous.  Retailers are now much more open to adding new product lines.  The current interest in personalized trends, which more closely reflect the consumer’s identity, provides an opening for small and lesser-known collections.

The “cheap chic” trend is also spurring consumers to expect more at a lower cost, seeing little difference in style from one brand to another.

Sportswear

Individuals under the age of 20 wear about 43% of sports apparel, but individuals aged 45 and older accounted for 25% of the market in 1999.  The widening age gap between youthful and not-so-youthful wearers represents a multitude of challenges in designing, marketing, and branding for sportswear manufacturers.

The growth of the sportswear industry is particularly marked among female consumers, who now see themselves as more athletic and have begin to wear these collections as street clothes.  Since women are more “outfit-oriented” than men when it comes to exercise clothing, they represent a target clientele for this industry.  The junior market segment is also of primary important in this industry, as sportswear is often tied in to fashion.

A product’s technical characteristics are also very important in this industry, competing with the “sport-fashion” factor in the final buying decision.  Technical consumers are much more consistent in their buying habits and provide stability during economic slow downs.  Technical fabrications, whether relating to textiles or processes (e.g., sneakers) are therefore popular.

Junior Clothing

The strong growth in demand in the junior clothing industry has, so far, been able to minimize the unfortunate effects of the economic slowdown, but heavy competition in the market makes retailers very conscious of fluctuations in demand.  Competition in the junior market segment has shot up in recent years, with a twofold increase in the number of junior clothing chains.

Popularity and brand visibility are very important factors in buying decisions made by this market segment; this reduces the maneuverability of small manufacturers who want to position themselves in the market.  It is crucial to follow trends because this segment follows fashion cycles closely.  It is possible to position one’s self with very up-to-date collections at lower prices than well-known collections; however, this means following the market closely and providing the resources necessary for product visibility.

Children’s Wear

Manufacturers of children’s clothing produce large lines from which the store buyer makes purchases three times a year to cover the main selling seasons of spring and summer, back-to-school and holidays.  Although children’s apparel is a basic family requirement, the fashion revolution is affecting even these styles.  Mothers (controlling 93% of all apparel dollars spent on children’s wear) want their children to have the latest “look.” Children’s wear manufacturers are becoming highly skilled at producing high fashion apparel.  Kid’s fashions have been one of the the fastest growing category of apparel.  To keep pace with this trend, manufacturers have adopted the production and sales techniques used in women’s apparel.  This has led to enormous numbers of children’s wear departments and specialty stores throughout the nation.

The children’s wear industry has grown considerably in recent years, but still remains a small market segment and can be difficult for small manufacturers to enter.  Since children’s wear trends increasingly mirror those of adult apparel, children’s collections must not only please children, but also be very similar to current trends in the adult market.  This calls for constant monitoring of the market and a high degree of flexibility and quick adaptation.  Major firms that market adult collections at the same time as children’s copies have a head start in this regard.  Price, nonetheless, remains a decisive factor in making purchases, given the speed at which children outgrow their clothes.  Manufacturers who are competitive in this regard and have the flexibility to adapt their products to fashion trends can find worthwhile niches.

4.2.1 Market Trends

The Marketplace & Consumer Shopping

Interest in apparel remains high even though there are a number of discouraging factors.  It is the number one choice of items for which to shop, beating out groceries in second place – 34% to 32%.

• In general, women 45 to 64 spend more on clothing per capita than any other group.  The 50+ market spends $26.6 billion a year on women’s apparel and $27 million per day on personal care products.
• The so-called beauty and fashion industry has traditionally focused on white America; however, the new “multi-cultural” math is leading experts to re-think based on these statistics:  35 million African-Americans spend $646 billion a year; 35 million Hispanic-Americans spend $581 billion; 10 million Asian-Americans spend $297 billion.  These individuals currently make up 35% of America.  By 2050, it is estimated that these individuals will make up 50% of America.  This audience is basically untapped when it comes to hair care, skin care, nail care, and cosmetics.
• By 2010, the teen population is expected to grow to 34 million; however, recent recession has put a strain on that spending pattern.  The industry is not sure whether teens are poorer than in previous years or if their parents are forcing them to spend on more practical items in line with the family budget.  Total teen spending in 2002 dropped 3.7% to $20.9 billion.  “Tween” shoppers spent $10.1 billion.
• More and more clothing purchases are planned rather than being impulse/spur-of-the-moment purchases.  A survey conducted in the spring of 2003 revealed that 60% of the respondents say purchases are planned.  This compares to 55% in 2002; in the mid-1990s it was at 53%.
• Shopping trips are getting shorter.  Women are said to spend 88 minutes today (2003) compared with 95 minutes in 2000.  The number of times to shop for clothing per month is holding steady at approximately 1.7 times per month.
• In response to increased competition from new market participants, retailers are exercising a variety of strategies, including downsizing and restructuring, changing their merchandise mix, adding services, and adapting the quick response system for controlling inventory management costs.
• The Internet has become another tremendous advantage to the industry.  With the Internet, consumers can get updated and almost instantaneous information.  The great e-commerce websites of many retailers are helping to ensure global business.  Internet sales are guiding retailers into just the right international and domestic cities in which to build stores, and allowing apparel companies to make their brands known internationally even before they have any physical presence in the international market.

Apparel Selection, Fashion, Personal Appearance, and Image

• Comfort continues to be a very important element when purchasing clothing.  Many consumers elect to wear casual apparel because it feels more comfortable.  In a 2002 survey, 51% of the respondents said they choose comfort over “better looking” clothing items for a night out on the town.  In 1994, 59% opted for the “better looking” clothing items.
• Women have a great deal of “casual” clothing in their wardrobes.  According to Cotton, Inc.’s Lifestyle Monitor, 56% say they own more casual clothing than work clothing, while 35% say the reverse.
• Accessories have gained fashion status during the past couple of years.  Consumers unwilling to purchase big-ticket items to update their wardrobes have seen and used accessories as an inexpensive way to achieve a new, updated appearance.
• Sixty percent of American women are full-figured (size 14 and above).  Expenditures on apparel by plus-sized consumers grew 8% from 1998 to 2001, while those by regular-sized women grew 3%.
• Many manufacturers and retail stores are leveraging their products by licensing their brands for accessories such as sunglasses, watches, fragrances, wallets, and footwear.  This strategy is increasing exposure for well-known brands and building consumer confidence in a specific brand.
• The challenge for many apparel retailers continues to be anticipating the coming trends and deciding how those trends will or won’t fit into the company’s image.  Companies in the apparel industry are becoming more tuned in to what their customers want and giving them what they want.

Textiles (Fibers, Fabrics, Finishes, etc.), Care, and Maintenance

• Stretch continues to be extremely big (1 to 5% Lycra® spandex added to many fabrics).
• Wrinkle-resistant garments are much improved thanks to recent technology; however, consumers must pay more for the product.  Lifestyle Monitor (Article 301) confirms that when given a choice, 53% of the women surveyed said they would pay $35 for 100% cotton wrinkle-resistant slacks versus $30 for a pair of cotton/polyester slacks (July 2003).
• Performance fabrics are not new, but continue to get better and more sophisticated.  New developments are emerging in moisture management and climate control.
• In fashion, novelty prints are on the rise.  Some specifics include abstracts, graffiti, photo prints and Asian-inspired looks.  Textures continue to be extremely good with such looks as crinkled suedes, stretch combinations, etc.  Embellishing will continue with embroidery, lace, and like items.

Apparel Production/Sewing

• The ready-to-wear apparel industry is suffering from cheaper imports and heavy discounting.  According to several experts, “there are too many stores and too much stuff, driving competitor’s use of lower prices as a primary weapon for growth.”  Although consumers benefit initially from this situation, retailers are facing the worst of both worlds – deflation on the revenue side, and inflation on the cost side.  Ultimately, the consumer is hurt when a trusted retailer must sell or go out of business.  Quality is frequently sacrificed in the end.
• A critical element for long-term success in the apparel industry is global expansion.  Companies have to be deliberate in international expansion and expand into countries where the greatest potential exists, as the international sector of the industry becomes more important.

Sources: 

“Apparel and Textile Trends,” compiled by Linda Heaton, Extension Professor Textiles & Clothing, Cooperative Extensive Service, University of Kentucky – College of Agriculture, November 2003

“Apparel Industry,” WowEssays.com

4.2.2 Market Growth

Adult Apparel

The apparel market, as a whole, has been suffering from a deflationary trend in prices as manufacturers move to independent contract manufacturing overseas.  Another reason for price weakness is the casual trend in clothing – casual is less expensive and generally lasts longer than dressier clothing.  These factors set retailers on something of a promotional spree. 

The U.S.  fashion industry had a modest 2% increase in apparel sales for 2000.  According to leading market information provider NPD Group, Inc., total apparel sales reached $182 billion last year, compared to $180 billion the previous year.  While still a small percentage of total apparel sales, online/Internet sales showed double-digit growth in 2000.

Across all channels of distribution, sales of women’s apparel outpaced total market growth, driven by strong sales in both the large size and petite markets. In contrast, men’s apparel, the industry winner in 1999, lagged in 2000, decreasing in both dollar volume and market share. The infants’ and toddlers’ business experienced record-breaking growth from 1999 to 2000.

In 2003, the market showed some signs of recovery, and at least a little evidence that dressier clothing is selling again. However, the long-term deflationary trend in clothing will continue to challenge the men’s outwear market.

Sportswear

In the challenging U.S.  retail environment, casual sportswear, one of the top categories of the past few years, has been steadily narrowing its appeal, not least for its lack of imagination in attracting youth. 

However, women and men over the age of 35 renewed their allegiance to sports and active lifestyles by buying up to 24% and 19% more, respectively, in 2002 than in the previous year, according to U.S.  analyst STS Market Research. 

Women’s casual sportswear in the U.S.  in 2002 registered a slight contraction compared to 2001, falling to US $38.8 billion from $39.6 billion, while men’s sportswear showed less dramatic growth than in past years, rising to US $26.8 billion. 

The most significant gains were made with consumers over 35 years of age, with men’s shopping at specialty stores up 6% to US $1.7 billion and purchases by women over 35 up 14%, to more than US $4.7 billion, compared to 2001. 

Junior’s Clothing

Marketers are competing to provide these age segments desired products.  Unfortunately, less of teens’ and tweens’ money is being spent on clothing than manufacturers and retailers would like.  From 2001 to 2002, teen and tween apparel purchases fell 3.7% and 4.6%, respectively. 

When looking at clothing purchase drivers for consumers aged 13 to 17, price is a highly ranking attribute for jeans purchases, with 40% of dollar share in 2002, up almost 10% versus 2001. 

Children’s Wear

The $28 billion children’s apparel market experienced continuous growth from 1998 to 2003, with the exception of the key 2001 holiday season, which was depressed due to the 9/11 terrorist attacks.  This performance stands in contrast to the overall clothing market, which has been noticeably weak in this period.  However, even within children’s clothing, sales of infant and toddler clothing have grown while those for older kids have declined.

There has been further change in the American consumer’s profile during 1998-2003, which began in the early 1990s: a majority of consumers shop at a small number of mass merchandise or national department stores, in which they expect to find a combination of trendy products and value prices.  Leading brand manufacturers are able to retain market share only through alliances with the increasingly dominant clothing retail stores, such as Wal-Mart, Target, Sears, and J.C.  Penney’s.  To follow the trend of consumer traffic, even premier brands in the children’s apparel market are approaching the discount channel, while specialty stores are competing by launching less expensive concept stores.  Yet, demonstrating that children’s clothing is a complex market with a large and distinct group of consumers outside the typical consumer profile, specialty clothing stores gained significant market share in 2001 to 2003.

4.2.3 Market Needs

Men (Age 20 to 49 Years)

• Branded Products:  Men are more up front about their desire for branded goods, while women are more subtle.  Men’s sportswear, for example, often carries enormous logos, while the logo on the expensive lipstick worn by many a woman remains at the bottom of the handbag, to be flashed only discreetly, in the powder room.

In a survey, “Brand New On Thursday,” conducted by Victoria and Albert Museum, nearly half of all male respondents claimed that, “you can learn a lot about a person from the brands they buy.”  In addition, when the research is broken down into 16 to 34-year-olds and those 35 or older, there is a marked difference in responses.  Among the younger age group, 35% admit that they are influenced by brand image, while only 13% of the over-35s claim susceptibility.

• Comfort/Easy-Care:  Men want comfort and easy-care apparel, and the sportswear world provides this through high-tech fabrics.  According to Bill Ghitis, president of global marketing for DuPont Textiles & Interiors (DTI), “Performance fabrics have been a niche for the athlete, but, based on our research, we believe that all men, particularly smart men, want much more out of their clothes.”

Many apparel brands, including proprietary retail brands, see performance as the future too, and they’re going forward with more apparel that’s comfortable and easy to care for.  This includes the older, wrinkle-resistant or wrinkle-free technology, along with newer technologies, such as stain resistance, stretch, moisture management, and UV protection.  (Source:  “Getting Technical” by Brenda Lloyd, DNR, August 2003)

Women (Age 20 to 49 Years)

• Comfort/Easy-Care:  Women avoid wrinkles on their skin, and they don’t want them on their clothes either.  While the Fountain of Youth may be elusive, in the ongoing quest for comfortable cotton clothing that won’t wrinkle, women (and men) are winning the battle.  Technological advances have ushered in a new generation of wrinkle-resistant, 100% cotton garments that deliver on comfort, style, and wear, while retaining a crisp appearance throughout the day.  (Source:  “A Pressing Matter,” in Lifestyle Monitor, Fall 2003)
• Apparel Sizing:  The discrepancy in the actual size of women who may all – accurately – claim to wear the “same” size is one of the many fit anomalies that is a reality today for the U.S.  clothing industry.  Little analysis of body shapes and sizes has been conducted since the 1940s for women, and since the Civil War for men.

This lack of research, along with a lack of sizing standards, added to the growing practice of vanity sizing – adding inches to clothing to make it appear that a woman wears a size smaller than she actually does – has created a disparity between the clothes available to the consumer and their actual body shapes and sizes.  (Source:  “A Fitting Solution,” by Terri Ross, Apparel, August 2003)

• Sportswear:  Until very recently, even if you got women into the stores looking for sporting goods and apparel, there was nothing for them to buy.  There is a definite void in the market for women’s related merchandise, such as feminine looking garments rather than unisex.

Female athletes and enthusiasts in a number of sports have complained about a lack of selection.  For example, Kate Gengo, a professional inline skater, finds apparel offerings for aggressive inline skating to be very slim.  “There is never any selection for women.  Cool clothes are available from small manufacturers.  Buyers aren’t putting it in their stores or defining their customer needs,” say Kate.

Women are the primary sporting goods buyers, responsible for four-fifths of all athletic apparel purchases.  As clothing options for the female athlete become more targeted, women looking for athletic clothing and shoes will patronize those shopping environments that understand the apparel requirements specific to their sport.  The woman’s sportswear market raked in nearly $25 billion in 2000 and is expected to top $38 billion by 2005.  (Source:  “Girl Power Boosts Female Sportswear Industry to $25 Billion in 2000,” PR Newswire, New York, January 10, 2004)

• Senior Clothing:  Fitness-oriented boomers and Title IX generation athletes are teaming up to give women’s athletic apparel, a market estimated at $23 billion in 2000, strong growth potential within an otherwise flat sporting goods arena.

Mature consumers are increasing their spending on apparel, as baby boomers reach peak earnings levels and their household expenses decrease, with children beginning to support themselves.  Women aged 50 to 64 surpassed female teens between 13 and 18 as the largest spenders on casual sportswear in 2002.

Children (Boys/Girls, Age 5 to 19 Years)

• Fashion:  With fashion continuing to drive the children’s apparel market, industry players are attempting to work more quickly and efficiently to make sure they have the right looks on the floor at the right time.  According to Robert K.  Futterman, CEO of Robert K Futterman & Associates, “Junior’s clothing – young, urban, and hip fashion retailers – like Forever 21, Wet Seal, Arden B, and H&M are poised for growth.”

Children’s and parents’ ever-louder cries for kids’ apparel with looks that mirror juniors, young men’s, and even adult clothing is also inducing retailers to commit to pint-sized incarnations of older styles, without waiting to see how the latter fares with customers.  Tops with spaghetti straps and multicolored shimmering or sequined borders are gaining ground with girls.  Boys are gravitating toward athletic silhouettes:  brightly colored, printed camp shirts worn over muscle T-shirts, zip-off pants and shorts that extend several inches beyond the knee./FONT>

Style is important to these young adults, but style comes in many different packages – cellular phones, cars, and vacation destinations are among them.  In addition, the teen and tween segments appear to find individuality appealing.

Infants/Toddlers (Boys/Girls, Age 0 to 4 Years)

• Ethnic Designs/Colors:  By 2005, at least 40% of the designs and colors seen on children’s clothing will be tailored to appeal to African Americans and Hispanics.  According to The U.S.  Market for Infant, Toddler, and Preschool Clothing, a newly published Packaged Facts report available at MarketResearch.com, children’s clothing companies have identified ethnic markets, and specifically African American and Hispanic segments of the population, as their most important audience.

According to Don Montuori, Acquisitions Editor for Packaged Facts, “Hispanics and African Americans are already making a vast percentage of children’s clothing purchases.  We have found that these ethnic demographics are more than twice as likely to purchase infant, toddler, and preschool clothing.  When you consider this finding in tandem with demographic growth trends of recent years, there can be little doubt that success in the kid’s clothing market rests upon a company’s ability to market effectively to a diverse population.”

4.3 Industry Analysis

The apparel and fabricated textile products industry is a mature, slow growing industry.  Intense competition characterizes this industry and drives its ever-changing structure and operations.  The market is highly fragmented, particularly in the Tri-State Area.  The complexity of this market calls for a high level of research and specialization prior to any attempt at market penetration.

The fashion industry in the Tri-State Area mainly looks to New York City, with its multiple opportunities, in particular the famous Garment District, an area of the city between 35th and 42nd Street and 5th and 9th Avenue.  This district is the main gathering point for buyers and designers in the United States and is beginning to rival the major international fashion capitals of Paris and Milan.  In addition, many firms place their head offices and/or buying offices in New York City.

The rest of the Tri-State Area follows fashion, but in longer cycles, and can serve as the springboard for manufacturers who don’t feel ready for the major challenge represented by the New York City market.

Overall, the U.S.  apparel industry is large, mature, and highly fragmented.  Apparel sold in the United States is produced both domestically and in foreign locations.  According to estimates from the American Apparel Manufacturers Association (AAMA), an industry trade group based in Arlington, Virginia, the dollar value of domestic apparel production was $39 billion at the wholesale level in 1997 (latest available), which was less than the $46 billion (U.S.  wholesale value) of goods imported into the United States.  In addition, $15 billion of goods were produced in both the United States and another country. 

In 1998, Americans purchased approximately $215 billion of apparel and footwear.  According to NPD Group, Inc., approximately $177 billion was spent on clothing in 1998.  The remaining $38 billion was used to purchase more than 1.1 billion pairs of shoes.  With the U.S.  population at 270 million, this accounts for roughly $800 a year per capita spent on apparel and footwear.

4.3.1 Distribution Patterns

In addition to the traditional channels, New York has a unique trade structure that enhances business opportunities.  In addition to having six to eight market weeks each year during which buyers can place their orders, several showroom representatives offer opportunities for placing orders throughout the year.  This market characteristic creates openings for designers who want to enter the market and want good visibility for their products.

In general, traditional distribution channels are followed.  The products are bought from distributors and/or direct from the manufacturers, who have little say in how products are marketed.  Since competition in the apparel industry is extremely intense, the use of a sales representative is strongly recommended to facilitate entry into the market.  Direct distribution in this market can require a very extensive investment of time and money with no assurance of positive results.

4.3.2 Competition and Buying Patterns

Competition in this industry currently turns on prices.  The first two quarters of 2001 were particularly difficult for U.S. textile manufacturers, leading them to shift to a push strategy.  After two years of rising prices, pressure from foreign competition, and shaky economic conditions, leading textile manufacturers are being forced to lower their prices.

In a broad view, the retail apparel industry competes with all other sectors in the retail industry.  These different sectors include electronic retailers, wholesalers, other discount stores, shoe stores, convenience stores, and others.  Many of these different sectors have combined together, and often, a company may operate in various divisions to increase profitability. 

1999 Data indicate that the largest retailers in the apparel industry were:

• Wal-Mart:  $166,809,000
• Sears, Roebuck, and company:  $41,071,000
• K-Mart company:  $35,925,000
• Target Corporation:  $33,702,000
• J.C.  Penny:  $32,510,000

The top retailers in the Apparel Stores category included:

• The Gap:  $11,635,398
• The Limited:  $9,723,334
• TJX:  $8,795,347
• Intimate Brands:  $4,510,836
• Spiegel/Eddie Bauer:  $3,210,225

Many experts point to changes in consumer attitudes as a driving force behind the restructuring that is occurring in the retail apparel industry.  Not only have consumers become more cautious in their buying habits, but they have been reducing the portion of disposable income that they spend on apparel.  In addition, consumers are increasingly demanding quality goods at low prices, which forces retailers to permanently sell merchandise at “sale” prices, with promotions occurring throughout the year.  Economists and sociologists have attributed increasingly volatile consumer demand to growing numbers of new products, the rise of fashion-consciousness for even the lowest-cost apparel, and more selling seasons.  (Source:  “Codes of Conduct in the U.S.  Apparel Industry,” U.S.  Department of Labor, Bureau of Internal Labor Affairs)

4.3.3 Main Competitors

Although the apparel industry is mature and slow growing, it exists in a dynamic and competitive environment.  Many companies are restructuring to create leaner organizations and adopt new technologies, with consolidation prevalent as larger companies gain leverage in market position and cost cutting measures.

ReHabiliments’ competition in the apparel industry is widely varied and comes from a variety of sources, including Tommy Hilfiger, Inc.; The Gap, Inc.; Abercrombie & Fitch; the Jones Apparel Group, Inc.; Polo Ralph Lauren Corp.; Liz Claiborne, Inc.; and Nautica Enterprises, Inc.  The closest competitor in terms of popularity, growth, and product line is the FUBU Corporation.

Tommy Hilfiger, Inc.  (www.tommy.com)

Tommy Hilfiger Corporation, through its subsidiaries, designs, and sources, markets men’s and women’s sportswear, jeanswear, and children’s wear under the Tommy Hilfiger trademarks.  Through a range of strategic licensing arrangements (almost 40 product lines), the company also offers a broad array of related apparel, accessories, footwear, fragrance, and home furnishings.  The company’s products can be found in leading department and specialty stores throughout the United States, Canada, Europe, Mexico, Central and South America, Japan, Hong Kong, and other countries in the Far East, as well as the company’s own network of specialty and outlet stores in the United States, Canada, and Europe.

Tommy Hilfiger’s clothing company, TOM Inc., is among the leading exponents in the intensified process of mass customization over the last few years.  Beginning with a line of preppy looking, clean-cut, and conservative sportswear –  similar to that offered by The Gap, Inc., but somewhat more expensive – Hilfiger set out in the early 1990s to compete against department store staple lines like Ralph Lauren and Liz Claiborne, who were essentially Young Republican clothing.  In the course of only a few years, this basically khaki, crew and button-down WASP style, while remaining a constant theme in Hilfiger collections, has been submitted to variations which are intended to bring the product closer to Hip-Hop style – bolder colors, bigger and baggier styles, more hoods and cords, and more prominent logos and the Hilfiger name.  TOM’s corporate strategies have been ahead of those of many of its competitors and have always stressed the acceleration of product delivery, new forms of retailing partnership, innovative EDI usage for inventories and customer tracking, and speedy and timely introduction of new lines and redesigned goods, assuring consumers a wide range of product choices.  (Source:  “Tommy Hilfiger in the Age of Mass Customization,” in No Sweat by Paul Smith, edited by Andrew Ross)

For the nine months ended 12/31/03, Tommy Hilfiger’s net revenues fell 2% to $1.37 billion.  Net income before accounting change rose from $30.2 million to $105.3M.  Revenues reflect fewer Wholesale segment sales in the men’s, women’s, and children’s product categories.  Net income reflects the absence of $84.9 million in store closure-related special charges.

The Gap, Inc.  (www.gap.com)

The Gap, Inc.  is a global specialty retailer operating stores selling casual apparel, accessories and personal care products for men, women and children under the Gap, Banana Republic and Old Navy brands.  The company operates stores in the United States, Canada, the United Kingdom, France, Germany and Japan.  As of February 1, 2003, the company operated a total of 4,252 store concepts at 3,117 locations.  The company’s stores aim to offer a shopper-friendly environment with an assortment of casual apparel and accessories that emphasize style, quality and good value.  Gap stores are generally open seven days per week (where permitted by law) and most holidays.  All sales are tendered for cash, personal checks, debit cards or credit cards, including Gap, Banana Republic, and Old Navy private label credit cards, which are issued by a third party.  Gap designs virtually all of its products, which in turn are manufactured by independent sources, and sold under the company’s brands.

Since The Gap’s founding in 1969, the company has been built upon a culture of passion, creativity, energy, and entrepreneurial flexibility.  These characteristics have helped The Gap continually evolve, to learn from its challenges, and to make the changes necessary to create long-term, quality growth.  The Gap, Old Navy, and Banana Republic are three exceptional brands with strong emotional appeal.  These clothing lines provide customers with clothes and accessories that enhance personal style – clothes that are simple, sexy, and cool.  The power of these brands and the important place they hold in the everyday life of people around the world provide the company with tremendous opportunities to maximize this unique brand affinity.

For the fiscal year ended 1/31/04, The Gap’s net sales rose 10% to $15.85 billion.  Net income totaled $1.03 billion, up from $477.5 million.  Results reflect an increase in comparable store sales, improved merchandise margins and lower occupancy expenses.

Abercrombie & Fitch (www.abercrombie.com)

Abercrombie & Fitch Co.  is a specialty retailer that operates stores selling casual apparel, personal care, and other accessories for men, women, and kids under the Abercrombie & Fitch, Abercrombie and Hollister Co.  brands.  As of February 1, 2003, the company operated 602 stores in the United States.  The company’s stores and point-of-sale marketing are designed to convey the principal elements and personality of each brand.  The store design, furniture, fixtures and music are all carefully planned and coordinated to create a shopping experience that is consistent with the Abercrombie & Fitch lifestyle.

The company has become the clothier of choice for the young and fashionable, and is no longer “your father’s Abercrombie & Fitch.” The music alone does as much to repel undesirables – say, anyone over 25 – as attract target customers.  Once a respected retailer, the company has attracted controversy with these objectives.  Issues of A&F Quarterly read like a cross between a catalog and hustler magazine.  Featuring nude models in suggestive poses, A&F Quarterly has carried reviews of erotic books and an interview with a porn star, complete with professional tips.  The catalog comes enclosed in shrink-wrap and stamped “XXX,” you must be 18 to buy a copy.  Recently, the company’s bottom line was hit hard by a nationwide boycott and bad press generated by the pornographic catalog, A&F Quarterly.

For the fiscal year ended 1/31/04, Abercrombie and Fitch’s net sales rose 7% to $1.71 billion.  Net income rose 5% to $205.1 million.  Revenues reflects the addition of new stores and continued increases in the women’s market.  Net income was partially offset by higher general, administrative and store operating expenses.

Jones Apparel Group, Inc.  (www.jny.com)

Jones Apparel Group, Inc.  designs and markets branded apparel, footwear and accessories.  The company’s brands include Jones New York, Lauren by Ralph Lauren, Ralph by Ralph Lauren and Polo Jeans company licensed from Polo Ralph Lauren Corporation, Evan-Picone, Rena Rowan, Norton McNaughton, Gloria Vanderbilt, Erika, l.e.i., Energie, Todd Oldham, Nine West, Easy Spirit, Enzo Angiolini, Bandolino, Napier and Judith Jack.  Jones Apparel also markets costume jewelry under the Tommy Hilfiger brand licensed from Tommy Hilfiger Corporation and the Givenchy brand licensed from Givenchy Corporation, as well as footwear and accessories under the Espirit brand licensed from Esprit Europe, B.V.  Each brand is differentiated by its own distinctive styling, pricing strategy, distribution channel and target consumer.  Jones Apparel operates four segments: wholesale better apparel, wholesale moderate apparel, wholesale footwear and accessories and retail.

Jones aims to gain stability in the apparel industry as well as retail markets through building “complete lifestyle brands serving a wide breadth of consumers in a wide range of income levels and shopping destination preferences.”  (Source:  PR Newswire, 2/7/01.)  The company has a multi-brand, multi-distribution business strategy.

For the fiscal year ending 12/31/03, Jones’ net sales rose 1% to $4.38 billion.  Net income before accounting change decreased 1% to $328.6 million.  Revenues reflect the acquisition of Gloria Vanderbilt which provided healthy sales.  Earnings were offset by a decrease in gross margin and a decrease in operating margin.

Polo Ralph Lauren Corp.  (www.polo.com)

Polo Ralph Lauren Corporation designs, licenses, contracts for the manufacture of, markets and distributes men’s and women’s apparel, accessories, fragrances, skin care products and home furnishings.  The company’s sales are principally to major department and specialty stores located throughout the United States and Europe.  It also sells directly to consumers through full-price and outlet Polo Ralph Lauren and Club Monaco stores located throughout the United States, Canada, Europe and Asia.  Polo is also a party to licensing agreements, which grant the licensee exclusive rights to use its various trademarks in connection with the manufacture and sale of designated products in specified geographical areas.

The Polo Ralph Lauren company was established in 1967 with a line of men’s ties.  From the onset, founder Ralph Lauren believed in defying convention to bring about unique, yet timeless styles that decades later have become the company’s trademark.  What began with a tie 33 years ago has grown into an entire world and lifestyle that has redefined how American style and quality are perceived.  Polo Ralph Lauren has built an international mega brand by selling fashions and fragrances to the well heeled through department stores.

In 1999, the company acquired Toronto-based Club Monaco after learning that “something is considered in vogue when it reflects a prevailing social mood – these days, ‘corporate’ is definitely not cool.”  The acquisition of Club Monaco, a much smaller business, was the door to the younger consumers’ market and presented an effective way for the company to capture customers not normally attracted to the clean all-American look of the Ralph Lauren line, without alienating its loyal base of supporters.  The Club Monaco chain offers fashion basics with a European flair at prices well below name designer wear.

For the 39 weeks ending 12/27/03, Polo Ralph Lauren revenues rose 5% to $1.83 billion.  Net income decreased 7% to $94.4 million.  Revenues reflect an increase in retail net sales.  Net income was offset by higher S/G/A expenses due to increased selling salaries and related costs and higher restructuring charges.

Liz Claiborne, Inc.  (www.lizclaiborne.com)

Liz Claiborne, Inc.  designs and markets an extensive range of branded women’s and men’s apparel, accessories and fragrance products appropriate to wearing occasions ranging from casual to dressy.  The company operates the Wholesale Apparel, Wholesale Non-Apparel and Retail business segments.  Wholesale Apparel consists of businesses that design, manufacture and market to the company’s wholesale customers women’s and men’s apparel.  Wholesale Non-Apparel designs, manufactures and markets accessories, cosmetics and jewelry products.  Retail consists of businesses that sell merchandise designed and manufactured by the Wholesale Apparel and Wholesale Non-Apparel segments to the public through company-operated specialty retail and outlet stores, and concession stores where its products are sold in third-party-owned locations.

The company, founded by Elizabeth Claiborne Ortenberg in 1976, designed and produced moderately priced sportswear for women.  The company’s aim was to provide clothes appropriate for either work or leisure, and Elizabeth’s designs were marked by cleanly sculptured silhouettes and splashes of color; these quickly supplanted the dark, tailored suits then popular.  In 1980, Claiborne was named the fashion industry’s first Entrepreneurial Woman of the Year.  A year later, her firm made a public stock offering, after which the company began to diversify, adding petite, dress, and shoe divisions.  In 1986, the company was listed among the Fortune 500 for the first time.

For the 40 weeks ended 10/4/03, Liz Claiborne net sales rose 18% to $3.21 billion.  Net income increased 19% to $206.6 million.  Revenues reflect the addition of stores and the acquisition of MEXX.  Net income also reflects an increased gross profit margin due to improved company-wide inventory management and improved product performance. 

Nautica Enterprises, Inc.  (www.nautica.com) (www.vfc.com)

Nautica Enterprises sails the deep blue seas of men’s apparel.  The upscale clothier designs and markets sportswear, outerwear, and sleepwear for men, as well as jeans, and childrenswear.  Nautica also globally licenses products such as fragrances, watches, dinnerware, eyewear, rainwear, swimwear, and home furnishings.  The company’s brands include Nautica, Earl Jean (women’s denim), John Varvatos (men’s sportswear), and E.  Magrath and Byron Nelson (golf apparel).  Nautica sells through some 2,300 retailers in the US, 1,500 in-store shops, its flagship store in New York, a handful of direct retail stores, and over 100 of its own outlet stores.  On August 28, 2003, a merger between Nautica Enterprises, Inc.  and VF Corporation (NYSE: VFC) was completed.  As a result of the merger, Nautica is now a wholly-owned subsidiary of VF Corporation.

Since its founding, Nautica has taken pride in an authentic American heritage that draws people together.  The foundation for the connectedness is rooted in the company’s core values – classic, confident, adventurous, approachable.  Nautica, a modern American classic, offers quality, design and value while capturing the essence of an active, adventurous and spirited lifestyle.  Earl Jean offers uniquely styled women’s denim and apparel collections with particular appeal to fit-conscious, fashion-savvy teens and urban professionals.  The John Varvatos Collection of apparel and accessories for men reflects a modern attitude.  Combining the highest-quality European fabrications and design details, this collection redefines American style.

V.F.  Corporation, the parent corporation for Nautica Enterprises, Inc., through its operating subsidiaries, designs, manufactures and markets branded jeanswear, intimate apparel, occupational apparel, knitwear, outdoor apparel and equipment, children’s playwear and other apparel.  The consumer apparel segment includes jeanswear and related products, women’s intimate apparel and children’s apparel, all having similar characteristics of economic performance, product type, production process, method of distribution and class of customer.  The occupational apparel segment is distinguished from the other segments because of a different class of customer.  The outdoor apparel and equipment segment consists of the company’s outerwear and adventure apparel, plus daypacks and technical equipment, and is therefore distinguished from the other segments by type of products.  The all other segment consists primarily of the company’s licensed sports apparel and distributor knitwear operations.

For the fiscal year ended 1/3/04, Nautica’s sales rose 2% to $5.21 billion.  Net income from continued operations before accounting change rose 9% to $397.9 million.  Revenues reflect higher Outdoor Apparel and Equipment segment sales.  Earnings also reflect lower interest expense.

FUBU Corporation (www.fubu.com)

FUBU took the fashion industry by storm when its label, specializing in urban gear, helped define the look of young America.  FUBU – “For Us, By Us” – is considered one of the hottest urban clothing lines in the fashion industry.  Its owners are neighborhood friends Daymond John, Carl Brown, J.  Alexander Martin and Keith Perrin.  The FUBU label was established in 1992 when John, the company’s CEO, began working out of his mother’s home in Queens to make tie-top hats embroidered with the FUBU logo.  John later recruited Brown, Martin and Perrin, took out a $100,000 mortgage on his mother’s house and moved his operation into the basement.  The partners gradually expanded their line to include hockey jerseys, T-shirts and baseball caps.  After finding it difficult to market their clothing through traditional advertising channels, the foursome succeeded in promoting its line by using celebrities and hip hop artists.

The company’s newest licensed lines include Platinum FUBU; FUBU Footwear for Ladies; Intimate Apparel & Activewear; Swimwear; Watches; the FUBU suit, shirt, and tie collection; and for those special occasions, the FUBU tuxedo.  FUBU has received several honors for their entrepreneurial achievements, including two Congressional Awards, two NAACP Awards, Pratt Institute Award, Christopher Wallace Award, Online Hip Hop Award, and a Citation of Honor from the Queens Borough President.

FUBU’s headquarters are now in New York’s Empire State Building, and the company has added womenswear, footwear, suits, and accessories.  The label is carried in more than 5,000 retail stores in 26 countries.  In 1999, FUBU reported an annual sales volume of $200 million from its menswear business and $150 million from its licenses.

4.3.4 Financial Risks and Contingencies

As with any start-up business, ReHabiliments is subject to certain risks, both known and unknown, including changes to general economic conditions, changes in the level of consumer spending on or preferences in apparel, the company’s ability to successfully implement various new supply chain and merchandising systems in a timely and cost effective manner, unseasonable weather trends, and greater than planned operating expenses.  Some of the more predominant risks include:

Style Piracy:  Because design and styling ideas are such important competitive weapons, they are often stolen.  Fashion piracy is so common that it is considered an integral part of the garment trade.  While trademarks and names can be registered, laws against style piracy are of little practical value.

Copying creative work is standard practice for some firms, especially the smaller and budget houses.  A style produced by many manufacturers and “knocked-off” at successively lower price levels is often referred to as a “ford.”  This term is often applied to runaway best-sellers as well.

To mitigate risk from style piracy, ReHabiliments will ensure that all of its designs are copyright protected.  To date, this is the best solution to design piracy because the application process is cheap and expeditious, and the copyright protects the creative works of fashion designers for a limited term under copyright law.  Due to the short life span of apparel designs, patent protection is neither available nor appropriate.

Market Risk:  Market risk is the risk of loss due to adverse changes in investment from market fluctuations directly related to ReHabiliments’ products, services, and market segments.  As the complexity of the business increases, risk management becomes increasingly important and difficult.  Market fluctuations could aversely affect the results of ReHabiliments’ operations and financial conditions.  To mitigate exposure to market risk, ReHabiliments will use various econometric and statistical analysis tools to monitor the movement of the market interest, perform analyses on the current trends, and forecast results.  In this manner, management can make the necessary adjustments in the asset and liability structure of the company.

Economic Stability Risk:  Changes in the economy will require that the company adjust its operations to account for financial and economical fluctuations.  ReHabiliments will pursue various business strategies, including horizontal integration and economies of scale, geared toward reducing economic risk.  To ensure continued profits during economic instability, the company will control the environment in which it operates by reducing uncertainty, minimizing expensive competition, and capturing a larger share of the market.

Operational Risk:  ReHabiliments, like all large companies is exposed to many types of operational risks, including the risk of fraud by employees or outsiders, unauthorized transactions, and errors relating to computer or telecommunications systems.  To mitigate operational risks, ReHabiliments will maintain a system of controls that is designed to keep operating risk at a minimum, such as limiting authority to conduct business activities to the appropriate functional departments/branches .

Supply Chain/Merchandising Risk:  Due to recent events, such as terrorist attacks and political instability in third world countries, supply chain risks have been introduced or heightened, with pressure to enhance productivity, eliminate waste, remove supply chain duplication, and drive for cost improvement.  To mitigate supply chain risk, management will construct and optimize “what if” scenarios about the company’s future.  These “what if” scenarios will serve as models by which ReHabiliments can refine and extend managerial intuition about major strategic decisions.  Statistical models and methods for developing long-term, supply chain forecasts will support these scenarios.

Early Stage Business:  As a start-up company, ReHabiliments has limited operating history beyond the industry experience gained by the founder.  To mitigate risks relating to inexperience, the company will leverage the experience of external advisors to provide support for management decisions, as well as industry expertise and day-to-day operations.

Brand Identity:  Since brands do not live in vaults without time or threat, brand risk is threatened by the loss of value due to a change in consumers’ perceptions of the company.  Establishing, building, strengthening, and maintaining ReHabiliments’ brand, regardless of product or service, is important to its ability to attract and retain customers.  Brand recognition is key to the success of ReHabiliments in local, regional, national, and international markets.  To mitigate the risk associated with brand, ReHabiliments will ensure that the company’s brand is clear, specific, and unique to its product and service offerings, and will build brand strength through leadership, stability, market, geography, trend, support, and protection.

Intellectual Property:  ReHabiliments’ copyrights, trade-marks, trade secrets, methodologies, practices, tools, and other intellectual property rights are critical to success.  The company relies on a combination of trademark and copyright laws, trade secret protection, nondisclosure agreements, and other contractual agreements with its employees, affiliates, clients, strategic partners, acquisition targets, and others.  ReHabiliments’ management will prudently monitor the company’s intellectual property and ensure that adequate measures are taken to protect intellectual property belonging to the company.

4.3.5 Industry Participants

The Apparel Industry is made up of small firms.  The average number of employees in an apparel business is 38, and two-thirds of all establishments employ fewer than 20 workers.  The average establishment size, however, varies considerable across product sectors.  With 109 employees, the average men’s wear establishment is more than three times the size of the average women’s wear establishment.  Establishment size had been growing until the early 1980s, when this trend reversed across all product categories.  Firms with fewer than 20 employees now account for less than 10% of the industry’s workforce, while 37% of the workforce is employed in establishments with 250 or more employees.  (Source:  “U.S.  Industry in 2000:  Studies in Competitive Performance (1999),” Peter Doeringer and Audrew Watson, Boston University)

The U.S.  apparel market can be divided into two tiers: national brands and other apparel.  National brands are produced by approximately 20 sizable companies and currently account for some 30% of all U.S.  wholesale apparel sales.  The second tier, accounting for 70% of all apparel distributed, comprises small brands and store (or private-label) goods.

Apparel is sold at a variety of retail outlets.  Based on data from NPD Group, discount stores, off-price retailers, and factory outlets accounted for 30% of 1998 apparel sales, while specialty stores and department stores accounted for 22% and 18%, respectively.  Another 17% were sold at major chains, and direct mail/catalogs accounted for 6%.  The remaining 7% of apparel sales occurred through other means of distribution. 

The major players in the apparel industry are the large manufacturers headquartered in the U.S.  There are also many local manufacturers that are much smaller and who usually specialize in a particular area of apparel.  Sports wear, active wear, and other related products are offered for sale at specialty outlets as well as in retail stores nationwide.  Such outlets are able to cut one-third off the garment price at a retail store.  Apparel is available to consumers through multiple avenues: e-commerce, retail stores, outlets, and wholesale through the manufacturer for mail order catalogues and smaller boutique style outlets.

The company has developed a strategy that will ensure the long-term growth and success of ReHabiliments in the apparel industry.  This strategy will continue to evolve and initially includes:

• Focusing on target markets and aggressively marketing the full-range apparel collection as an alternative to existing clothing lines.
• Differentiating the company’s products through exclusiveness and brand awareness, thereby fulfilling the promise of “ReHab Your Wardrobe-ReHab Your World.”
• Developing partnerships with both industry leaders and competitors.  In this manner, the company can neutralize its competitors by treating them as allies.
• Building a relationship-oriented business that fosters long-term seller/customer relationships, not “single-transaction” deals.
• Fostering social responsibility within the company through commitment to programs that transform the lives of the less fortunate.  In support of this strategy, ReHabiliments donates 5% of all proceeds towards “Feed the Children” and other charities.

5.1 Competitive Edge

The debut of the FUBU Corporation in 1992 was based upon the a slogan, “For Us, By Us” (FUBU), that expressed the founder’s purpose of creating a line of popular clothing designed for African-Americans, by African-Americans.  At the time of FUBU’s inauguration, numerous clothiers were targeting black consumers for their urban wear; however, none of these companies was black-owned or operated.  The company’s earliest collection consisted of T-shirts, rugby shirts, hockey jerseys, and baseball caps, all embroidered with the FUBU logo.  By 1999, the company reported an annual sales volume of $200 million from its menswear business and $150 million from its licenses.  What had originally begun as a clothing line for African Americans had developed into a multi-cultural base of customers, all wearing FUBU’s clothing.

The underlying foundation of ReHabiliments, and its clothing line is based upon the principle of harmony – harmony of thought, harmony of purpose, and harmony in humility.  The company’s name, ReHabiliments, and its clothing line, ReHabiliments Apparel, are competitive advantages in themselves.  The name is not attached to any particular group of customers, which allows the company entry into different segments of the apparel industry.  Another competitive advantage stems from ReHabiliments’ partnership with the entertainment industry and the use of mainstream celebrities in advertising and promoting the company.

In a market where consumers are barraged by advertising and marketing campaigns delivering an onslaught of lifestyle and fashion messages, a brand name is a powerful weapon.  Established brand names, with a quality image, make the consumer’s shopping experience easier and faster.  For manufacturers, brands build consumer loyalty, which translates into repeat business.

5.2 Marketing Strategy

People want to think of themselves as belonging to a group that they admire or respect, and will dress as they think a member of that group would dress.  Although they may believe their object is to reflect their individuality, the differences they stress in choosing a clothing style are really between their own chosen group, and all others.

The “message” of clothing is therefore directed primarily to its wearer.  People associate the way they dress with the way they feel.  For many individuals, their choice of clothing may not be the most becoming outfit they could wear; however, they are expressing their membership in a class of other people with whom they feel a connection, expressing it to themselves and to whomever may be looking. 

ReHabiliments’ marketing strategy is based on the following:

• Product differentiation based upon “ReHab Your Wardrobe-ReHab Your World.”
• Building a relationship-oriented business.
• Fostering corporate social responsibility.
• Focusing on the diversified “communities” as the company’s target markets.

ReHabiliments’ brand and marketing message are not directly attached to any particular group of customers, but rather to a diversified community of consumers who believe in humanitarianism and equal opportunities and choices for everyone.  The company does not simply offer products that clothe the body, but rather products that clothe the soul – clothing that supports people, either directly or indirectly, through difficult situations.

The company’s primary marketing strategy is to establish itself as the “Apparel Company of the Future.” With management’s deep roots in humanitarianism coupled with a firm belief in harmony and honesty in business and advertising, ReHabiliments will greatly increase the marketability of its apparel line.

5.2.1 Pricing Strategy

ReHabiliments’ pricing strategy remains competitive with all other high quality apparel companies , but offers much more in terms of meeting the company’s mission and purpose for existing.  As a general rule of thumb, 50% of each garment’s cost is consumed in actual manufacturing, divided among labor and materials.  The other 50% is allocated overhead and shipping expenses.*  Average mark-up is 40% of cost.

Currently, all of the company’s products are on target in price, as compared to other similar branded apparel.  ReHabiliments with regularly monitor its operating expenses, delivery costs, cost of sales, trade discounts offered, damage allowance, hazards, and other variables to ensure that the company’s pricing strategy remains competitive with industry standards and expectations.

*Note: overhead includes non-payroll operating expenses as well as purchase and replacement of production equipment, included here as part of start-up assets.

5.2.2 Promotion Strategy

ReHabiliments’ brand is a competitive advantage in itself, as it is not directly attached to any particular group of customers and allows entry into different segments of the apparel industry.  In addition, the company has an established marketing strategy that relies upon celebrities, market specific advertising, product promotion, and “giveaways” that have established ReHabiliments’ presence in the apparel industry.

ReHabiliments will depend upon several promotion strategies to reach new customers.  These strategies include:

• Advertising – ReHabiliments will utilize industry-wide apparel magazines and newsletters as primary sources of advertising.
• Magazines/Newsletters:  Industry magazines and newsletters are considered to be effective advertising media because they consistently reach the company’s target markets.  Because magazines and newsletters are tangible media, they help advertisers relate intangibles, such as believability, quality, and prestige.  These types of media are non-intrusive, quiet, personal vehicles that usually have a long life.  Their primary audiences pass them along to secondary readers, so that their reach builds over long periods of time, making them a long-term investment.
• Direct Mail – ReHabiliments will explore the benefits of incremental, coordinated, direct mail campaigns which ensure that the company’s advertising is:
• Targetable:  When using direct mail, each customer is carefully selected.  This enables ReHabiliments to “speak” to the customer in their own language and about their individual needs.  In addition, the company can time its direct mail efforts to coincide with critical points in the customer’s buying cycle.
• Efficient:  Direct mail ensures that ReHabiliments knows that every dollar spent is being directed at people who are genuine prospects for the company’s services.
• Flexible:  Direct mail is capable of handling a variety of advertising or marketing tasks.  In addition to being able to sell directly, it is a medium that can deliver a sample right to the customer regardless of whether the sample is an actual product or a demonstration of a product.
• Measurable:  With a direct mail campaign, there is no guesswork when it comes to the results and virtually no waiting – when ReHabiliments has a winning product, management will know immediately!
• Accountable:  As responses pour in, the value of the direct mail campaign speaks for itself.
• E-Mail – ReHabiliments’ e-mail campaign will extend the company’s marketing reach and visibility with minimal resource allocation.  As ReHabiliments builds its customer database, it will gather e-mail addresses with opt-in permission to contact current customers and prospective customers via e-mail and other electronic means.  Many of the benefits of a direct e-mail advertising campaign include:
• Great Direct Response Vehicle:  If the customer is receiving the e-mail, the customer has already demonstrated his/her interest in the content they are receiving.
• Timely:  E-Mail is the perfect tool for targeting specific dates.
• Placement:  ReHabiliments’ advertising will have little competition.
• Media – ReHabiliments will initially develop a local media campaign, including radio and television, built around service innovation.  This campaign will begin with a “Who We Are” statement and be supported by other advertisements that reinforce the company’s marketing message to consumers of casual, active, and sports apparel.
• Radio:  One of radio’s greatest strengths is its ability to deliver a marketing message to a selective audience.  The media is portable, free, and very accessible – at least one radio exists in most American homes.  ReHabiliments’ radio campaigns include advertising with WMCA 570 and WWDJ 970, which are two of the largest radio stations.
• Television:  Nearly 31% of total TV households watch prime-time television (ABC/NBC/CBS affiliates), a share change of 38.8% since 1985-1986.  People spend more time with TV than with any other medium, which due to its sight and sound uniqueness, creates awareness, interest, and desire.  Executed properly, ReHabiliments’ TV campaign will lend prestige and glamor to the company’s marketing message.
• Cable Television:  Cable television service is available to 95% of all television households in the United States, and about two-thirds of all television households subscribe to it.  Most of those systems offer at least 30 channels (57% have between 30-53 channels and 13% have 54 of more channels).
• Trade Shows/Trade Fairs – ReHabiliments will actively participate in industry and Chamber of Commerce trade shows to promote the company’s products.  By taking advantage of trade show participation, the company enhances its opportunities to learn, grow, and connect with potential clients and other businesses in the apparel industry.  Trade Shows/Fairs are a marketing tool for communication promoting dialogue between retailers and manufacturers and will allow the company to exploit its unique clothing line to a concentrated group of buyers.

5.2.3 Distribution Strategy

The primary distribution channel in the apparel industry is still the bricks and mortar store, augmented by catalogues and direct selling.  The incredible success realized by other industries in Internet e-commerce has not followed into apparel.  Existing limitations from product licensing and distribution agreements to fit and trial issues have stunted the growth of the industry in the Internet space.  The most successful players tend to be those with a ‘click and mortar’ strategy such as The Gap, or those companies with a strong background in catalogues and direct selling such as Lands’ End.  The fit and trial issues and difficulties with color and texture perception on computer monitors, however, continue to be issues that keep Internet sales relatively low compared to the total market for companies.  Another area to see some success is that of off-price and discount clearing houses like Bluefly.  This is an example of how the inefficiencies of the existing industry model for apparel has spawned a whole new category of retail both on-line and off-line in factory outlets and clearing houses. 

ReHabiliments has several potential methods of penetrating the Tri-State Area market.  They are, from least resource-intensive to most resource intensive:

1. Sell directly to stores or contact buying offices to be placed on their lists.
2. Present the company’s merchandise at trade shows or hire a sales representative.
3. Open a store.

ReHabiliments will begin with options 1 and 2, above, and open a store when we have the available resources and growth to warrant it.  For now, the company plans to use a direct sales force, the entertainment industry, retailers, and the Internet to reach its target markets.  These channels are most appropriate because of time to market, reduced capital requirements, and fast access to established distribution channels.

5.2.4 Positioning Statement

For men, women, and children seeking clothing with style, selection, differentiation, and “substance,” ReHabiliments offers a unique clothing line that is affordable, trendy, exclusive, and fashionable while meeting both the physical and emotional needs of the consumer.  Unlike ReHabiliments’ largest competitor, FUBU Corporation, the company offers affordable, trendy “ReHab Your Wardrobe-ReHab Your World” clothing that promotes the principle of harmony and dedicates a portion of the company’s clothing proceeds towards ongoing humanitarian efforts.

5.3 Sales Strategy

ReHabiliments’ sales team will be tasked with generating sales leads on a local, regional, and national basis.  They will also be responsible for establishing connections with other wholesaler and retail outlets.

A key factor in the success of ReHabiliments will be its distribution.  The company plans to use the following retail distribution channels:

• Supercenters, such as Wal-Mart
• Department Stores, such as Dillards and Foley’s
• Apparel Specialty Stores, such as The Gap
• Boutique Clothing Stores
• Internet Store

Consumers buy apparel from a variety of retail outlets.  In 1998, discount, off-price, and factory outlet stores accounted for 30% of apparel sales, specialty stores accounted for roughly 22%, department stores for 18%, and major chains for 17%, according to data from NPD Group Inc.  The remaining 13% was sold through mail order and other means.

Differences exist in the distribution mix for men’s, women’s, and children’s items.  For example, more women’s apparel is purchased in specialty and department stores than is the case for men’s apparel.  Men’s apparel is more prevalent in discount stores and general merchandise chains.  In the children’s segment, a considerably higher portion of apparel is purchased in discount stores.

Catalogues are another important method of distribution.  Consumers have less time to shop, and for some, catalogue shopping offers a more convenient and pleasant alternative.  In 1996 (latest available) an estimated 13.3 billion direct mail catalogs were printed in the United States – more than 50 for every man, woman, and child in the nation.  According to NPD Group, approximately 6% of apparel retail sales were through direct mail/catalogs in 1998, representing a 29% decline from 1997.

The distribution channel that has received the most attention recently is the Internet.  Although it now represents only a small portion of apparel sales, this distribution channel has the most potential for growth.  Consumers like the convenience of being able to shop from anywhere and at anytime they wish.  Manufacturers with websites use them for marketing and informational purposes.  With expected technological advances in hardware, software, and data pipelines in the future, shopping for apparel should gain popularity.

Currently, however, due to technological and infrastructure limitations, consumers are not fully satisfied with the speed, quality, security, and cost of Internet shopping.  Another hindrance to wider acceptance is the fact that consumers cannot see and touch the product.  Although some manufacturers have started to sell directly to consumers on the Internet, many of them are being cautious not to alienate their retail (brick-and-mortar) customers.  ReHabiliments expects these issues will be resolved eventually, which will make the Internet an important method of distribution in the future.

5.3.1 Sales Forecast

The following table shows our projected yearly Sales revenues.  Cost of Sales here represents only inventory purchases (including shipment of inventory from abroad); totals for labor, shipping, and overhead can be found in the Profit and Loss statement.

We anticipate moving a higher number of products through wholesale contracts with retailers, but the higher price we can charge with direct sales (Internet and, eventually, retail) means the revenue streams from these lines will be roughly equal.  We are forecasting 50% of sales values on a cash basis, and 50% as accounts receivable.

5.4 Strategic Alliances

ReHabiliments currently has strategic alliances with both Music Records and the Entertainment Group.  These alliances are critical to the company’s marketing strategy, as they provide the exposure for the company’s apparel line and associate ReHabiliments’ products with celebrities.  Celebrities are valuable strategic allies, as they receive free apparel for their participation in interviews, concerts, and music videos.

Current and potential product line representation and advertising contracts are as follows:

• Wal-Mart
• Infinity Broadcasting
• WMCA 570 & 970 DJ
• Crystal Blue Media
• BulkWorks.com
• K’s Corporation, Japan
• Shop America Network, Inc.

In addition, ReHabiliments has a promotional collaboration with one of the hottest disc jockeys in America, “Degas VanGO.”  He travels throughout the world entertaining listeners, aged 13 to 40, on New York Radio 107.5 WBLC, FM.  Degas VanGO has his own radio show and is very well known.  He is well connected in the music industry, which is one of ReHabiliments’ primary target market areas, and has used his connections to forge a relationship between ReHabiliments and Virgin Records America, Inc.

Through our affiliation with Degas VanGO, Virgin Records has allowed ReHabiliments to use their famous logo on promotional items, such as leather jackets, hats, and T-shirts.  This affiliation sends a very powerful message to investors and customers alike.

ReHabiliments has the earning potential to become the fastest growing, most universally accepted clothing line since FUBU.  The partnership with Degas VanGO is the golden key to countless hundreds of thousands of dollars in sales, as well as a direct promotional channel.

5.5 Milestones

The following table lists important program milestones, with projected start and finish dates, the names of the individuals in charge of completing each milestone, and budgets for each milestone.  The milestone schedule indicates the company’s emphasis on planning and implementation of the business.

What the table doesn’t show is the commitment behind each milestone.  ReHabiliments’ business plan includes complete provisions for plan-versus-actual analysis, and the company will hold monthly follow-up meetings with key management to discuss any variances and to plan a course of action to resolve those variances.

Clearly defining the goals and plans for ReHabiliments’ website are important steps toward the company’s success.  Implementing a web presence as part of the company’s active marketing plan is critical to the visibility of the company in its local, regional, national, and global markets, and allows the company to inexpensively advertise its products and promote sales to a variety of “virtual” customers. 

The company’s corporate objectives for its website are:

• To provide current and potential customers, public relations, and media entities with an efficient, secure, interactive means by which to communicate with ReHabiliments and obtain relevant information about the Company, its mission, and its products.
• To provide customers with efficient, user-friendly, automated processes that allow them to easily browse the company’s products and to place orders for products through the website, thereby effectively reducing administrative costs associated with mailing product information.

ReHabiliments foresees its Internet presence as a tool that will allow the company to effectively manage its customers and their buying patterns and to track and manage corporate activities as they relate to different market opportunities.  Through the company’s website, ReHabiliments will be able to swiftly respond to sudden shifts in demand, new market trends, and changes in customer needs and demands.

6.1 Website Marketing Strategy

It is not enough for ReHabiliments to build a website and then expect customers to flood to the company’s new online presence.  Since the Internet is growing exponentially, ReHabiliments’ direct competitors are also vying for pole positions in their respective markets and doing their utmost to advertise and promote their sites to the Internet’s global audience.

ReHabiliments’ business strategy will lead the way in determining the company’s online objectives for promotion and development of the website.  The Internet and the technology behind it will provide business opportunities to create customer services and develop promotional opportunities that would be impossible in the “physical world.”

The company will rely upon a combination of offline and online methods to promote its website.  Offline methods include:

• Business Cards
• Printed company Materials
• Local Newspapers
• Presentations
• Conferences/Events/Seminars
• Radio/Television/Press/Cinema
• Internet/Web Journals

Online marketing methods include:

• Usenet Groups
• Reciprocal Links
• E-Mail Signatures
• Search Engines
• Web Directories
• company Specific Domain Name
• Portal Sites
• Banner Advertising
• E-Mail Marketing
• Online Competitions
• Affiliate Partnerships

ReHabiliments will ensure that the company’s website carries masses of useful product and company information that is not only interesting, but informative.  This will contribute to the customer’s overall experience of the website, as well as internally promote other sections of the site through relevant links that are strategically placed on the page and allow customers to “chase up” information.  For example, if ReHabiliments provides a series of web pages that describe the company’s products in detail, at the bottom of each page will be included a standard set of useful, follow-through hyperlinks, such as:

• Place an order with us now!
• Need detailed product information?
• Want to contact a salesperson?
• Read customer reviews on our products!

By investing time, effort, and money to maximize ReHabiliments’ business presence on the Internet, management can ensure that the company’s website effectively promotes its products and positively contributes towards the success of the company.  Build it, market it, and they will come.

6.2 Development Requirements

Realizing that every business is different, with different e-commerce needs, ReHabiliments has opted to contract out its web development services to ensure that the company’s final website meets specific e-commerce needs.  Once completed, the website will include:

• A Web hosting account.
• A registered domain name
• A secure SSL Certificate that allows the browser to create an encrypted connection to ReHabiliments’ website and the shopping system.
• The shopping cart system.
• A merchant account that is tied to ReHabiliments’ checking account and allows the company to accept credit card payments.
• Terminal software that allows ReHabiliments to process credit cards.
• A payment gateway account that allows ReHabiliments to take credit cards using automated processing and approval with the shopping cart.

Final development costs for the entire e-commerce website will range between $5,000 and $8,000 for a fully enabled, e-commerce website.

ReHabiliments’ management philosophy is based upon responsibility, mutual respect, and profitability, and the founder believes that the company’s present and future growth are based upon:

• Exceptional People
• Social Responsibility
• Uncompromising Commitment to Customer Service
• Excellence
• Commitment to Core Values

7.1 Management Team

Mr. L. Owerd Emlynes – Chief Executive Officer (CEO).  As the CEO, Mr. Emlynes will report to the Board of Directors and/or be assisted by a Board of Advisors.  He will have overall responsibility for all aspects of the company, including operations, marketing, strategy, financing, company culture, human resources, compliance regulations, sales, and public relations.  Mr.  Emlynes’s most important role is in setting the strategy and vision for ReHabiliments.  In addition, he will be responsible for steering the organization in budgets, partnerships, making final decisions on product/service lines, and industries.  Mr.  Emlynes has over thirteen years in the music and production industry in capacities ranging from bass guitarist musical director to choreographer and production manager.  In addition, he has extensive experience in fashion and design, working for Bonds Men’s Clothing Store for a number of years.  Although paralyzed from the chest down, L. Owerd is a motivational speaker, a professional racecar driver, a professional musician, an amateur body builder, a teen mentor, and an entrepreneur.

Ms. Ravel d’Eddge – Vice President of Business Development/Strategic Alliances.  The VP of Business Development/Strategic Alliances identifies, evaluates, and pursues the strategic and financial prospects of new market opportunities.  Ms. d’Eddge will direct the assessment of future markets and be responsible for coordinating commercial input to specific programs as necessary.  She will establish new strategic partnerships, joint ventures, and alliances, and follow through on all partnership activity, including the tracking, documenting, and status reporting of all collaboration along the business development pipeline.  Ms. d’Eddge will establish and implement appropriate development strategies, interact with existing corporate contacts, facilitate communication, track milestones, and identify opportunities for enhancing these relationships.  In addition, she will oversee the planning and execution of a comprehensive marketing strategy, including responsibility for the preparation of presentation and marketing materials for professional meetings, seminars, and conferences.  Ms. d’Eddge has a Master of Arts in Computer Resources and Information Management and a Master of Business Administration.  She has over eighteen years of experience in information management/technology and business, systems management and administration, business procedures documentation, business planning/development, and currently owns a business planning and development consulting business. 

Unfilled positions
Other management positions have not yet been filled.  We are currently talent scouting, and will begin the hiring process in April, 2004.  All management positions will be filled by June 1st, 2004.

7.2 Management Team Gaps

ReHabiliments lacks “seasoned” professional management (e.g., what investors call the “gray haired factor”) with experience in the retail apparel industry.  The company will require a strong finance manager to closely guard cash flow to ensure potential partners and investors that ReHabiliments’ finances are strong and support future growth.  As the company matures, it will actively pursue adding more experienced individuals to the team that meet “gray haired factor” requirements.

Additional, senior level positions that are currently open and have yet to be filled include: 

Chief Financial Officer (CFO).  This position is currently open within ReHabiliments.  As the CFO, the potential candidate will be responsible for day-to-day operations, including development of guidelines, distribution of resources authority consistent with planning, continuous review, and evaluation of performance, as well company overview of commitments against available financial resources and established schedules.  He will direct the development of and implement changes to financial reporting and management systems that are subject to frequent and major modifications, as well as recommend financial policies and procedures.  This individual will provide professional consultation to management regarding financial matters and in the application of information technology to support the operation of various accounting, auditing, or budgeting reporting systems and requirements.  In addition, he will serve as the primary contact for investors and investor-related issues.

Vice President of Product Management (VP/PM).  This position is currently open within ReHabiliments.  As the VP/PM, the potential candidate will establish current and long range objectives, plans, and policies, subject to approval by the Board of Directors, to create a technical vision for ReHabiliments.  This individual will plan for implementation of new products and/or product lines, dispense advice, guidance, direction, and authorization to carry out major plans and procedures consistent with established policies.  He will work with product/service development, sales, and marketing to discern competitiveness of new products, review operating results of ReHabiliments, and compare them with established objectives, create technical budgets, allocate resources, and determine schedules.

Vice President of Marketing.  This position is currently open within ReHabiliments.  As the VP of Marketing, this individual will be responsible for developing and implementing marketing programs to drive sales and raise community awareness.  The person in this position will define, analyze, and implement print and media programs and monitor the results of such programs; mentor and train operations personnel on marketing terms, rationales, and strategies with emphasis on the operations role in effective marketing execution; and support new product/service rollouts with strong unit communications and public relations activities.  This individual will develop and implement new unit opening programs and grand re-openings, as well as be aware of new industry trends, economic factors, new marketing programs/strategies, and media tools.  The VP of Marketing will provide assistance with new sites, relations, and closings, as well as develop subordinates such as Marketing Supervisors/Assistants.  This individual will be a brand and position expert and manage both internal and external public relations.  In addition, he will possess relevant marketing emphasis and Internet experience including sponsorships, affiliate programs, search engine optimization, e-mail, and electronic newsletters.

Vice President of Sales.  This position is currently open within ReHabiliments.  As the VP of Sales, the potential candidate will be responsible for developing the company’s sales strategy, acquiring of customers, planning sales compensation, and building the sales organization and infrastructure to support the sales strategy.  This candidate must have experience executing the entire sales cycle, from generating prospects, to closing the sale, and must have the ability to sell strategically to key decision makers (CFO, CTO, CIO, VP IT) as well as tactically at the operational level.

Additional positions will be identified as necessary.  As necessary, ReHabiliments will rely on external advisors and consultants to provide support for management and financial decisions, as well as provide industry expertise for day-to-day operations.

7.3 Personnel Plan

The following table summarizes the company’s personnel expenditures for the first three years.  The company believes this plan is a compromise between fairness and expedience, and meets the commitment of the company’s mission statement.

ReHabiliments’ Financial Plan has the potential of providing expansion of the business, paving the way for new investments or loans, or changing the way in which the company conducts business.

ReHabiliments’ financial objectives are:

• To secure financing from an SBA lender.
• To reinvest profits for market share growth in the restaurant industry.
• Based upon market growth projections, to generate very healthy sales revenues in Years 2005, 2006, and 2007.

Financial projections are based upon sales volume at the levels detailed in the sales forecast and represent, to the best of management’s knowledge and belief, the company’s expected assets, liabilities, capital, revenues, and expenses.  Furthermore, these projections reflect management’s judgment of the expected conditions and the company’s expected course of action, given the financial assumptions.

8.1 Key Financial Indicators

The following chart shows some key benchmarks for the business.  We anticipate gross margin remaining relatively steady, despite increasing sales, because of our commitment to secure raw materials from ethically sound producers.

8.2 Break-even Analysis

The company’s break-even analysis is based on the first year of operation, from April 1, 2004 through March 31, 2005.

ReHabiliments’ estimated fixed costs include, but are not limited to, the following items:

• Salaries
• Rent
• Utilities
• Insurance (Vehicle and Business)
• Depreciation on Equipment
• Meetings/Dues
• Advertising/Business Promotion
• Office Supplies
• Miscellaneous Repairs
• Taxes
• Legal/Professional Fees

Average percent variable cost takes into consideration variable costs of inventory that will fluctuate with the products provided to the customer.

8.3 Projected Cash Flow

The Projected Cash Flow table represents ReHabiliments’ cash flow for the next four years (e.g., 2004, 2005, 2006, and 2007).  The related bar chart illustrates monthly cash flow in the first year, with one bar representing cash flow per month and the other representing the monthly balance.  Annual cash flow figures are included in the Projected Cash Flow table, with monthly cash flow projections included in the appendices.

8.4 Projected Profit and Loss

ReHabiliments is in its early stages of development.  Therefore, initial projections are based upon industry statistics, demographics in the Tri-State Area, and on the most important market segments believed to drive the income statement.  As the company matures and gains operational history, management will track planned versus actual financial figures.

The following table and associated charts illustrate ReHabiliments’ projected profit and loss.  Monthly projections are included in the appendices.

8.5 Important Assumptions

ReHabiliments’ main assumptions and projected forecasts are based upon similar products and on the operational history of its competitors.  Interest rates, tax rates, and personnel burden are based on conservative assumptions.

The more important underlying assumptions are:

• A strong economy, without major recession.
• That there are no unforeseen changes in the apparel industry that would make the company’s products immediately obsolete or uneconomical to produce.
• Access to equity capital and financing options sufficient to maintain the company’s financial plan as outlined in this Business Plan.
• That first round funding will be obtained through a combination of equity, debt, and investment strategies.

All assumptions made about the company’s market are supported by industry standards, relevant market research, market trends, surveys, and personal interviews.

8.6 Projected Balance Sheet

The Projected Balance Sheet shows healthy growth of ReHabiliments’ net worth and strong financial position.  Monthly projections are included in the appendices.

8.7 Business Ratios

Standard business ratios for ReHabiliments are included in the following table, along with ratios for the Women’s and Children’s Clothing Industry (SIC Code 5137) for comparison.  ReHabiliments differs from these industry standard ratios in a number of ways, since no industry code exactly matches our business type. 

These ratios show a plan for balanced, healthy growth.  One of the more important indicators is the increase in working capital, which is critical to the growth and financial health of the company.  Although there are significant differences between ReHabiliments’ ratios and the standard industry ratios, these differences reflect our mixed business type.  We manufacture, distribute (wholesale) and sell our products directly to consumers (retail).  Our asset structure, in particular, reflects that of a manufacturer rather than a retailer or distributor, since we need both inventory (raw materials) and production equipment. 

ReHabiliments’ competition in the apparel industry is widely varied.  Direct competitors are other established brand manufacturers, such as Tommy Hilfiger, Inc.; The Gap, Inc.; Abercrombie & Fitch; the Jones Apparel Group, Inc.; Polo Ralph Lauren Corp.; Liz Claiborne, Inc.; and Nautica Enterprises, Inc.  The closest competitor in terms of popularity, growth, and product line is the FUBU Corporation.

In such a climate, the best investment opportunities will be awarded to companies that have the ingenuity and creativity to meet the customers’ demands for fashion in an industry driven by economic conditions, demographic trends, and pricing.  The industry has moved from a “buy now, wear later” consumer to a “buy now, wear now” consumer.

The company’s management is confident that the ReHabiliments can achieve its aggressive sales forecasts, generating total sales of approximately $5.5 million $9.9 million and $10.6 million in years, 2005, 2006, and 2007, respectively.  In addition, ReHabiliments’ management has carefully considered its market, potential customer base, and its ability to grow its sales average to capture 10% of the branded urban apparel industry.

ReHabiliments has the potential to become a highly regarded resource in local, regional, national, and international markets.  Due to the company’s aggressive marketing strategy, establishment of the company as a “unique” entity in its industry, careful development of its products coupled with strategic partnerships with some of the industry’s retail clothing outlets, and the company’s profitable revenue model, ReHabiliments has the potential to provide lucrative returns to potential investors.

For ReHabiliments to achieve status as an industry leader, it must secure initial capital.  This capital will be used for start-up costs, to establish a reputable storefront, and to further develop the business, business infrastructure, internal systems, product development, and extensive marketing and geographic positioning.  Providing that the company is able to acquire its funding requirements, ReHabiliments should be able to achieve operational success for many years to come.