U.S. Sourcing Perspective Today April 27, 2011

Outlook for the Global Economy Outlook for the Global Economy Consumer Confidence Consumer Confidence Rising Costs Rising Costs Cotton Cotton Big Issues Today

More recently, however, we have seen increased evidence that a self-sustaining recovery in consumer and business spending may be taking hold. … a more rapid pace of economic recovery in 2011 than we saw last year. Ben Bernanke, Chairman of the Board of Governors of the Federal Reserve System, February 3, 2011 Outlook for U.S. Economy

Report from the NCTO Annual Meeting U.S. textile executives, operating in a recovery and expansion mode for the first time in a while, are looking for ways to consolidate their gains without losing profit margin to historically high cotton prices and market share to pending trade agreements. WWD April 19, 2011 Outlook for U.S. Textile Industry

Report from the NCTO Annual Meeting Last year, would anybody have guessed that cotton prices would have tripled, polyester would have been up by more than 30 percent and importers would begin to seriously double China and turn back to the Western Hemisphere and that we would actually run into capacity issues for some of our products? David Hastings, President CEO of Mount Vernon Mills, outgoing NCTO Chairman, April 19, 2011 Outlook for U.S. Textile Industry

Strong customer service, innovative marketing and original, differentiated product are the keys to success, and department stores, a sector that recently has shown signs of increased differentiation, understand that. Citi Broadlines Analyst, Deb Weinswig WWD April 7, 2011 U.S. Retail Outlook

Clothing is something that is more price elastic, so that if your spending power is squeezed by food and energy prices, and on top of that you see clothing prices go up, then you…wait on buying clothing and hope for more reasonable prices in the future. WWD April 17, 2011 U.S. Retail Outlook

Consumer Confidence Seventy-four percent of Americans believe higher prices could curb their spending in the months ahead, and 53 percent see spring merchandise prices as inflated, according to a Deloitte survey released Wednesday. It’s currently up only a few percentage points, but inflation on most apparel is expected to be up 10 to 15 percent for fall due to higher raw material and labor costs. Higher energy costs, higher medical costs, unemployment levels and job concerns — and political unrest in Africa, the Middle East and Asia — are further driving down the will to spend. WWD April 14, 2011

Consumer Confidence

Rising Costs According to a AlixPartners study, apparel inflation is averaging 17.4 percent for most retailers, with some seeing increases as high as 30 percent. WWD April 18, 2011

Rising Costs

Obama Administration Trade Agenda National Export Initiative National Export Initiative Free Trade Agreements Free Trade Agreements Colombia Colombia Panama Panama Korea Korea Trans-Pacific Partnership Negotiations Trans-Pacific Partnership Negotiations

More than $70 Billion From More Than 100 Countries U.S. Apparel Imports

Top Apparel Suppliers Year Ending January 31, 2011 RankCountryMillion SMEMillion $% Share% Growth 1China10, , Vietnam1,943.75, Bangladesh1,655.04, Honduras1,283.52, Indonesia1,283.34, India977.83, Cambodia970.12, Mexico958.93, El Salvador827.61, Pakistan709.71, Thailand462.21,

RankCountryMillion SMEMillion $% Share% Growth 12Nicaragua367.61, Philippines361.01, Guatemala317.71, Sri Lanka317.31, Haiti Dom. Rep Egypt Jordan Taiwan Peru Colombia Top Apparel Suppliers Year Ending January 31, 2011

Major Apparel Suppliers China Remains Top Supplier But Opportunities Remain for Western Hemisphere Producers

Peru U.S. Imports of $ 679 million Ranks Twenty-fourth for Apparel

U.S. Imports from Peru

U.S Peru Imports, by benefit

HTS No.ProductCategoryYE Feb 2011 Value Men's Knit Cotton Shirts ,597, Women's or Girls' Knit Other Cotton Other Pullovers ,864, Men's Knit Cotton Other T- Shirts, except Underwear 33863,386, Men's or Boys' Knit Other Cotton Other Pullovers 33855,768, Women's Knit Cotton T- Shirts, except Underwear 33935,948, Women's Knit Cotton Blouses and Shirts 33932,258, Men's Knit Other Man-made Fiber Shirts 63820,967, Women's or Girls' Other Man-made Fiber Other Pullovers, etc., Other 63918,211, Boys' Knit Cotton Other Shirts 33823,477, Men's or Boys' Knit Cotton Other Shirts, Not Underwear, T-shirts, Tanktops & Singlets 33812,150,811 Top U.S. Imports from Peru Year Ending February 28, 2011

RankCountryMillion SMEMillion $% Share% Growth 1 Pakistan4,115,320169, China3,231,456215,003, India3,062,535169,554, Vietnam2,667,030154,795, Indonesia2,154,178107,168, Bangladesh1,134,52451,455, Peru890,488113,597, HTS No Men’s Knit Cotton Shirts Year Ending February 28, 2011

RankCountryMillion SMEMillion $% Share% Growth 1 China29,895,7861,759,678, Vietnam19,338,969746,791, Indonesia13,770,311517,507, Guatemala9,623,132280,589, Cambodia8,665,314281,712, Nicaragua5,263,060177,710, India5,024,614214,240, Peru2,082,019119,864, HTS No Women’s or Girls’ Knit Other Cotton Pullovers Year Ending February 28, 2011

RankCountryMillion SMEMillion $% Share% Growth 1 Honduras11,765,749215,548, El Salvador8,444,190162,885, Haiti6,104,81998,475, Mexico5,554,509143,023, Bangladesh3,897,43561,093, Pakistan3,810,86979,480, China3,617,129105,993, Peru867,56163,386, HTS No Men’s Knit Cotton Other T-Shirts, except Underwear Year Ending February 28, 2011

U.S. Exports to Peru

Garment Costs Material is about 40 percent of the overall costs, trims add one-third to the price of the garment, and then labor and finishing and transportation become more impactful as they go up. David Bassuk, global retail practice, AlixPartners Sourcing Outlook

Multi country sourcing for maximum flexibility Multi country sourcing for maximum flexibility Strong supplier partnerships Strong supplier partnerships Social compliance Social compliance Quality product at a value price Quality product at a value price Sourcing Outlook

Julia K. Hughes Contact Info : Thank you