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Backup Will Benefit Discounters, Suppliers


The port closure isn't hurting all businesses that depend on international trade: Through luck as much as pluck, many local garment manufacturers, off-price apparel sellers and discount stores have found ways to eke out gains.

David Glasberg, president of Vernon-based U.F.N. Textile Group Inc., said that after a very slow summer his phone started ringing with orders from nervous retailers looking to quickly diversify their sources of supply.

Online discount fashion seller Bluefly Inc. is looking forward to a windfall of new designer looks as department stores and other retailers cancel late orders.

And at Commerce-based 99 Cents Only Stores, executives are hoping that proximity to the ports will enable them to buy time-sensitive goods such as Halloween products that might not get to full-price sellers in time.

"We expect that because of what's happening at the ports, we'll have a greater selection of merchandise and at prices that will be more attractive," said Jonathan Morris, executive vice president of Bluefly. "It's unfortunate, but that's the nature of the off-price industry. We tend to benefit when other players in the industry suffer."

For the U.S. economy as well as countless companies and workers across the globe, the shutdown of West Coast ports has taken a painful toll, costing an estimated $1 billion to $2 billion a day and prompting canceled sales, factory closures and job layoffs across the country. Even with ports expected to reopen tonight, many manufacturers and retailers worry that a logjam at the docks will prevent them from getting their products in time for planned promotions and peak selling days.

Other importers and retailers could find themselves oversupplied. Unsure of when the ports would be back in business, some companies duplicated orders for key parts or products and shipped them out via air freight, meaning they soon may be faced with double the number of necessary items.

But one company's excess is another company's bread and butter.

The close-out industry, including 99 Cents Only, Big Lots Inc., Ross Stores Inc. and others, has built its business on buying unwanted merchandise from manufacturers and retailers for a fraction of the original price, saving those companies from total losses when their goods are canceled or don't sell.

"What happened at the ports will certainly be a benefit to the close-out sellers," said Todd Slater, a retail analyst with Lazard in New York.

"Ultimately, the off-pricers are going to be swimming in a sea of available and probably very compelling merchandise."

Big Lots, the nation's largest close-out seller with 1,375 stores, said it anticipates being able to pick up some of the fallout from the port crisis, although much of the excess might not be apparent until after the holiday season, said Al Bell, Big Lots' vice chairman.

The Ohio-based company, which recently renamed its Pic 'N' Save stores Big Lots, has been able to avoid delays in most of its direct imports, Bell said, by shipping through the Panama Canal to the East Coast.

With Thanksgiving falling six days later this year than last, retailers were already facing a shorter holiday selling season. If key products are delayed as a result of the backup on the docks, that means even less time in front of the shopping public and more likelihood that goods will eventually filter down to the discount sellers, Bell said.

At 99 Cents Only, President Eric Schiffer is hoping that his stores will be able to pick up some of the excess merchandise at the ports sooner than that. In addition to delayed holiday items, Schiffer said, the company also can quickly turn around products that were intended for overseas buyers but have since been canceled.

"These unusual situations create unique opportunities for us, and we're on the lookout for those," Schiffer said.

Some businesses counted their gains long before disruption occurred at the ports. Local sewers and knitters started getting new accounts last winter, when retailers and designers first got wind of possible port troubles and wanted to ensure their goods would make it on time, Ilse Metcheck of the California Fashion Assn. said.

U.F.N. Textile's Glasberg said orders for fabric and clothing started pouring in as nervous retailers who rely on Asian-made goods looked to quickly diversify their sources of supply.

Los Angeles-area apparel makers, which specialize in rapid production, have seen that happen before. After the Sept. 11 terrorist attacks last year, some local shops saw a temporary surge in orders when foreign-made goods got bottled up at the ports. But the domestic industry can't continue to exist indefinitely waiting for disasters, Glasberg said.

"A few days ago they ignored me. Now I'm the good guy," Glasberg said. "I hope this makes the big retailers realize that there are big risks to producing everything overseas."

Bob Landfield, a Los Angeles apparel broker who distributes close-out goods, said businesses such as his may do well in the aftermath of the ports closure, but added that the gains probably will be short-lived and less than satisfying.

"You don't wish this on anyone, but we will probably be very busy," he said.

Times staff writer Marla Dickerson contributed to this report.

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