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The weakness of the men's clothing business is

well established. Chains from the


(GPS) - Get Report


Federated Department Stores


have blamed the menswear department for their soft earnings in recent years.

Among the big problems for retailers has been the trend toward so-called business casual clothes. Because a polo shirt and khakis can be had for less than $100 practically anywhere, vs. hundreds of dollars for suits and sportcoats, this widely acclaimed trend -- associated with the rise of dot-coms and the destratification of the workplace -- translated into slumping sales across the industry.

But now, a growing number of retail experts see men trading back up to dressier attire. The end of the late-'90s tech revolution means that showing up in a suit is no longer a no-no -- and it's even getting to be cool in some precincts. "It goes in cycles, and there's a good chance men are going to begin refocusing on their closets," says Todd Slater, an apparel and retail analyst at Lazard Freres.

So companies that focus on the blues and grays of traditional menswear could get a boost, while those still loading up on casual wear will probably suffer. Some Wall Streeters are particularly fond of two potential gainers under this scenario:

Men's Wearhouse



Phillips-Van Heusen

(PVH) - Get Report


"Our feeling is that casual wear has bottomed out and that in 2002 men will be refurbishing their wardrobes," says David Wolfe, creative director for apparel consulting firm the Doneger Group, which advises clients such as


(JWN) - Get Report




. "The things we're hearing are that men's specialty stores have been doing well because they are the only stores in town with traditional clothing."

Men's Wearhouse fits that description to a T. The Houston-based chain sells suits, ties and dress shirts; its shares are off roughly 30% on the year, in part because the weakening economy has dashed sales growth. U.S. same-store sales plunged 14.7% in November.

But hope for an economic recovery, along with the change in the fashion winds and a sharp rise in job-hunting, could portend better times ahead.

"The economy will improve, and men will return to the store to replenish their wardrobes," says Richard Jaffe, who covers the company for UBS Warburg. "The question is timing."

The company has a 16% market share for tailored clothing, a figure Jaffe says will likely increase as department stores reduce their stock of men's wear-to-work clothes. (Jaffe has a strong buy on the stock, and his firm doesn't have a banking relationship with the company.)

Time for a Break?
Tracking two woebegone stocks: daily closes

Source: Detox.

What's more, the stock appears cheap. Based on recent levels, shares are trading at about 16 times next fiscal year's estimated earnings, a discount to its projected annual growth rate of 20%, according to Thomson Financial/First Call.

Another company that could also benefit from this trend is Phillips-Van Heusen, which sells dress shirts under its own name plus brand names such as

Geoffrey Beene



. It, too, has seen sales slow this year, and its shares are off roughly 18% on the year. The company's earnings will likely fall this year -- they are expected to come in at 85 cents a share, compared with $1.10 last year -- but could grow to $1.50 in a few years, estimates Thomas Lewis, an analyst at CL King. If so, the stock is remarkably cheap: just seven times earnings.

The bell's ringing -- get to your seat.