No company, big or small, can escape the business cycle altogether. All stocks are affected by macroeconomic factors beyond management control. Therefore, guidance about a relatively staid year should not deter the long-term and professional stock investor. Buy, hold, and sell decisions must sometimes be based on management statements, rather than on numbers alone. This company is a typical example of stock support based on earnings guidance.

The recent management statement about this company’s prospects in 2008 are as reassuring as calming words from the cockpit of an aircraft approaching turbulent weather. There is no doubt that near-term business prospects are less than ideal. Rising unemployment and inflation cannot be changed by a single company management team. It is bound to affect the world’s Apparel/Accessories Industry. Investors consider investing in stocks which make the right moves at this difficult juncture.

This company has decided to put inventory turnover ahead of market share. It has scaled back purchasing to meet the expected slack in demand. This is precisely the kind of risk management approach that stocks deserve. Simultaneously, the company has decided to invest in new stores at prime locations. It will occupy top real estate at bargain prices, and stand ready for the eventual demand surge. The management has also prepared a new mass communication package that should enhance its core brand values.

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