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) -- Apparel stocks are poised to report strong third-quarter earnings, but the real interest will be fourth-quarter guidance and any inside peaks into 2011.

Cost pressures are expected to get tougher moving into the end of the year and start of 2011, which will be on investors' minds as


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kicks off earnings on Wednesday.

"While the story for 2010 was primarily of easy inventory comparisons and the return to prominence of the department store sector, we believe 2011 will be a case of the 'big getting bigger,' as dominant players take further market share and international players capture further high margin expansion, Brean Murray analyst Eric Beder, who has a buy rating on the apparel universe, wrote in a note.

There's plenty of upside for apparel makers in the third quarter, with easy inventory comparisons, strong department store results, the weak dollar and still limited cost pressures.

While the fourth quarter will continue to see easy inventory comparisons, it will begin to stiffen going forward and become negative in 2011, Beder wrote.

So who are the dominant players of the apparel universe?

Here's a look at how apparel stocks are poised to fair heading into third-quarter earnings....


The biggest concern heading into


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earnings is how the underwear maker will deal with rising cotton prices.

Hanesbrands management has already warned that it will raise prices if cotton remains expensive, and Beder believes that the company is already in the process of gearing up for price hikes for 2011.

Despite higher cotton costs, Beder still believes Hanesbrand stock is not being respected by Wall Street. "As the company continues to demonstrate its ability to drive solid bottom-line growth via internal improvements, debt paydown and further market share gains, we believe that the company will garner a higher valuation from investors," he wrote.

Analysts are calling for a third-quarter profit of 62 cents a share for Hanesbrands on revenue of $1.16 billion.


Calvin Klein and Chaps remain a winning combination for




Calvin Klein is expected to continue to be a driver of growth internationally. "The recent launch of X brand denim, probably the skinniest and most fashion-forward looks in Calvin Klein denim in recent history, should increasingly satisfy the core international customer," Beder wrote.

Warnaco has been purchasing franchisees, most recently buying 22 Calvin Klein jeans stores from its biggest Italian franchisee L'Innominato SpA. The company said the stores are expected to generate about $38 million, at current exchange rates, during fiscal 2011.

This purchase should add material organic growth potential, Beder notes.

With Chaps, Warnaco still has a solid domestic growth vehicle, as the brand introduces new categories, like denim, and expands aggressively into new locations.

Warnaco will report third-quarter earnings on Nov. 2, and analysts are expecting a profit of 94 cents on revenue of $5890.6 million.




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key players ramping up merchandise again, the stock remains one of the best bets in the apparel space.


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, its major partners, are focused on unit expansion mode, which is one of the biggest positives for Iconix. "Unlike last year, when limited visibility at Wal-Mart was a key issue, we believe

that with over a full year of results under their belt, that Iconix has a much better feel for the flow of the business," Beder wrote.

Iconix, which owns brands such as Candies and London Fog, is relatively unaffected by commodity of manufacturing pricing pressure due to its licensing model. This means, if inflation holds, Iconix will still be able to drive material incremental revenue and margins, Beder wrote.

The company's biggest focus has been on driving upside through deals, homing in on one deal a quarter. This should continue to be a focus during the third-quarter conference call, and investors will be especially interested in plans for acquiring

Kenneth Cole Productions



Reports surfaced on Monday that Iconix is halting its plans to purchase the designer brand, though neither side confirmed these rumors.

Iconix is a play for investors who want some exposure to the apparel space but are not comfortable with cost pressures, Beder advises.

Maidenform Brands



continues to steal market share in the shapewear category, even as demand has waned slightly in department store orders.

Surprisingly, cotton isn't an issue for Maidenform, as it uses limited levels in its product. But the company is affected by higher labor costs in China and shipping, and Beder expects Maidenform to raise overall prices as new lines are introduced.

Maidenform is scheduled to report third-quarter earnings on Nov. 8, and analysts are forecasting EPS of 53 cents a share on revenue of $146.9 million.

"We believe Maidenform, with a highly defensible niche as an innovator in the innerwear space, and a continued shift to higher-margin international and shapewear revenue, is deserving of a multiple in the high-end for apparel players," Beder wrote.

Perry Ellis

Perry Ellis

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remains well positioned for growth into 2011.

The company is continuing to roll out its Calloway Golf brands; is expanding further into K-Mart; is growing its Hispanic brands at


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, Kohl's and K-Mart; is cleaning up and expanding company-owned stores; is making steps toward reviving contemporary brands like Original Penguin and Laundry; is seeing strong initial swim orders; and is further expanding its namesake brand.

During the quarter Perry Ellis extended its deal with


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to design, produce, manufacture and distribute swimwear, apparel and swim equipment through 2014.

Perry Ellis has already begun upping prices for 2011, and department stores have been accepting of these initial upticks.

Beder lifted his target price on the stock to $33. "For a small-cap stock, Perry Ellis is a somewhat complicated story, with multiple brands and markets," he wrote. "That said, we believe it is worth the effort and fully deserving of a valuation at the high end of our apparel players."

For the third quarter, Wall Street is forecasting earnings of 34 cents a share on revenue of $192.1 million. Perry Ellis is scheduled to report its results on Nov. 15.

--Written by Jeanine Poggi in New York.

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