We can expect higher apparel prices next year, according to Investors.Com. The supply/demand factor in raw cotton will be a key mover. Cotton futures hit a 140- year high earlier this month. Apparel manufacturers have yet to deal with the spike in prices. Many companies have not purchased their supply of cotton and are hoping that prices will come down. That may be wishful thinking. Analyst Tracy with FBR Capital said: "There is still an underlying supply and demand problem for cotton. Cotton should stay at elevated levels."

The second big factor coming to bear on the apparel industry is the rising inflation in China. Labor costs have risen 20% to 25%. In addition, shipping costs are also higher.

"Why are we seeing strength in select retailers such as AnnTaylor (ANN), Philip-Van Heusen (PVH) and Talbots (TLB)? asks Mike Cintolo.

The editor of Cabot Top Ten Report explains, "The world of retail is a harsh and unforgiving one, especially when the U.S. and global economies are still technically in a recession. But investors are always looking ahead, and right now they like what they see.

After filing for bankruptcy protection a month ago, Eddie Bauer Holdings Inc. (OTC: EBHIQ) is already seeing the suitors line up. Iconix Brand Group Inc. (NASDAQ: ICON), which owns Rocawear, is showing some interest. Hilco Consumer Capital and Gordon Brothers Group LLC are also looking to make a joint offer for the embattled clothing retailer, and Golden Gate Capital is said to be interested. Hudson Capital Partners LLC may throw its hat in the ring, as well.

Tomorrow's the bidding deadline, and there's an auction lined up for Eddie Bauer's assets on Thursday.

Already in the game, CCMP Capital Advisors ponied up $202 million in a "stalking horse bid," meaning that it will make the acquisition if nobody else beats its offer.

For now, Bauer's is living on borrowed time -- and cash. The company got court permission to take a loan for $100 million to keep the operation moving until an acquisition or auction is complete.

The private equity firms rumored to be eyeing Eddie Bauer have retail and apparel companies in their portfolios, which suggests a possibility that the company could be turned around with the right investment and management team. If not, I wonder if they'll sell the window decorations at the auction . . . always wanted my living room to look like a mall.

In a time where young, fiscally-minded shoppers still want to look trendy, they are fleeing across the shopping centers from Abercrombie & Fitch Co (NYSE: ANF), they are heading to the likes of The Buckle, Inc. (NYSE: BKE) and Aeropostale, Inc. (NYSE: ARO). Both delivered impressive earnings on Thursday and both are still in the green as the week winds up.

BKE said first-quarter earnings reached 58 cents per share, topping estimates by eight cents. Revenue surged 24.6%. ARO, meanwhile, banked per-share earnings of 49 cents, edging past Street estimates by a penny. Revenue jumped 21% to $408 million, while same-store sales for the first-quarter reporting period surged 11%.

"Jos. A. Bank Clothiers, Inc. (NASDAQ: JOSB) matches the value criteria used by our Benjamin Graham stock screening model by 100%," suggests John Reese.

In his Validea newsletter, he assesses stocks based on the strategies of numerous "legendary" stock market investors. Here's his review of the apparel retailing chain.

"Jos. A. Bank is a designer, retailer and direct marketer of men's tailored and casual clothing and accessories through stores, catalog and Internet.

"The company sells substantially all of its products exclusively under the Jos. A. Bank label through its 422 retail stores, as well as through the company's nationwide catalog and Internet operations.

"Our Ben Graham stock selection model requires that the current ratio must be greater than or equal to 2. Companies that meet this criterion are typically financially secure and defensive. JOSB's current ratio of 2.81 passes the test.

Abercrombie & Fitch Co. (NYSE: ANF), Gap Inc. (NYSE: GPS), and Nordstrom Inc. (NYSE: JWN) are scheduled to report earnings next week, offering a chance to see how these apparel retailers have been doing in the lead-up to the holiday season.

Abercrombie hasn't fallen short of Wall Street's earnings expectations since Q2 2006. When it reported second quarter 2008 results back in August, earnings were 88 cents per share, beating the consensus estimate of analysts surveyed by Thomson Financial by a penny, as well as the actual 72 cents per share in the same period a year ago. For the third quarter, analysts expect $1.28 per share, up from $1.11 in the same period a year ago.

Abercrombie's 13.6% earnings per share growth forecast for the next year is better than the S&P 500, and much better than the apparel retail industry average of -0.5%. The analysts' consensus recommendation has been to buy Abercrombie for at least six months, but about half of those analysts rate it a hold. The share price reached a 10-year high of $85.77 earlier this month, before sliding to close Friday at $75.01.

For news about Abercrombie and other retailers that could influence the earnings results, check out BloggingStocks' Abercrombie & Fitch coverage.

Dress Barn (NASDAQ: DBRN) shares are trading nearly 6% higher this afternoon on the heels of its strong third-quarter earnings release. The retailer, which also parents the Maurice's chain of trendy apparel, said quarterly income reached $23.1 million, or 33 cents per share, up from $20 million (29 cents) last year. Sales were 6% higher at $347.9 million. Same-store sales rose 2% during the three-month period, while May same-store sales surged 10%.

Results were mixed in terms of Wall-Street estimates; analysts were expecting per-share earnings of 31 cents on $350 million in revenue.

The future looks bright, as Dress Barn officials lifted the company's full-year guidance to a range of $1.38 to $1.40 per share, up from previous targets of $1.30 to $1.35 per share. Analysts are currently targeting per-share earnings of $1.33.