This is referred to as the "fast fashion" business model. H&M and Zara in Europe has been doing it for quite a while already. Wikipedia article here: http://en.wikipedia.org/wiki/Fast_fashion

It's not so surprising that they go for this business model, since "fast fashion" retailers have an average profit margin of 16%, compared to 7% for typical retailers, at least according to this source: http://www.google.com/url?sa=t&rct=j&q=&esrc=s&#...

Basically it's "just-in-time" production coupled with "agile"-type response with regards to fashion trends and customer wants.