Needham & Company on Retail Apparel: Hanging Out at the Mall - Fall Wardrobing Begins
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Rating Summary:
4 Buy, 9 Hold, 5 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
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Needham & Company on Retail Apparel: Hanging Out at the Mall: Fall Wardrobing Begins: Cooler Weather & Arrival of Fall Result in Higher Traffic vs. Last Week
Needham analyst, Christine Chen, said, "Traffic and conversion increased vs. last week, driven by Fall wardrobing events and the arrival of seasonally cooler weather in most of the country, other than the West Coast. Fall promotions focused on key seasonal items, such as sweaters and denim. Department stores drove traffic with various Fall launch events. We noticed an uptick in Women’s retailers as the adult customer shifts focus to herself after several weeks of BTS shopping. Guess? (NYSE: GES) and Zumiez (Nasdaq: ZUMZ) remain the least promotional retailers but are driving conversion due to compelling and differentiated product. We believe that A&F and Hollister continue to take share and remain the busiest teen stores at the mall (particularly now that American Eagle (NYSE: AEO) is no longer running 40% off entire purchase), driven by purchases of full price product given the compelling fashion assortment."
On bebe (Nasdaq: BEBE): "...Most notable, for the 2nd weekend in a row, bebe did not have signs up broadcasting discounts, nor did store associates offer it upon store entry (as in the past when sales trends were difficult), which did not seem to have an impact on traffic or conversion, which appeared to be up. This suggests to us that sales trends are likely running above plan and margin preservation is a consideration as inventory levels continue to be lean..."
On Coach (NYSE: COH): "Given that the penetration of handbags greater than $400 is increasing (17% vs. 11% LY in F4Q (Jun) and the penetration of handbags under $300 was ~51% as of F4Q (Jun), 68% of the handbag assortment is essentially being offered at better margins vs. LY, while 32% at most is being offered at slightly lower margins (assuming the customer only buys 1 handbag). We think the promotion has the potential to convert the more value sensitive customer, while the higher end customer needs less of an incentive."
On Urban Outfitters (Nasdaq: URBN): "Anthropologie ended its 2nd weekend of 25% off Full Price sweaters, which was incremental to LY in order to move through units in a category which has been challenged, along with knit tops."
Needham analyst, Christine Chen, said, "Traffic and conversion increased vs. last week, driven by Fall wardrobing events and the arrival of seasonally cooler weather in most of the country, other than the West Coast. Fall promotions focused on key seasonal items, such as sweaters and denim. Department stores drove traffic with various Fall launch events. We noticed an uptick in Women’s retailers as the adult customer shifts focus to herself after several weeks of BTS shopping. Guess? (NYSE: GES) and Zumiez (Nasdaq: ZUMZ) remain the least promotional retailers but are driving conversion due to compelling and differentiated product. We believe that A&F and Hollister continue to take share and remain the busiest teen stores at the mall (particularly now that American Eagle (NYSE: AEO) is no longer running 40% off entire purchase), driven by purchases of full price product given the compelling fashion assortment."
On bebe (Nasdaq: BEBE): "...Most notable, for the 2nd weekend in a row, bebe did not have signs up broadcasting discounts, nor did store associates offer it upon store entry (as in the past when sales trends were difficult), which did not seem to have an impact on traffic or conversion, which appeared to be up. This suggests to us that sales trends are likely running above plan and margin preservation is a consideration as inventory levels continue to be lean..."
On Coach (NYSE: COH): "Given that the penetration of handbags greater than $400 is increasing (17% vs. 11% LY in F4Q (Jun) and the penetration of handbags under $300 was ~51% as of F4Q (Jun), 68% of the handbag assortment is essentially being offered at better margins vs. LY, while 32% at most is being offered at slightly lower margins (assuming the customer only buys 1 handbag). We think the promotion has the potential to convert the more value sensitive customer, while the higher end customer needs less of an incentive."
On Urban Outfitters (Nasdaq: URBN): "Anthropologie ended its 2nd weekend of 25% off Full Price sweaters, which was incremental to LY in order to move through units in a category which has been challenged, along with knit tops."
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