Women’s jeans just might be on the cusp of a comeback in the second half of 2015 after years of decline, but for now, the sales figures have continued their downward trajectory and the premium segment of the market continues to suffer the most.
Retailers and wholesalers, particularly at the high end, spent much of 2014 working down their inventories, usually at the expense of their margins, but finished the year with their stock levels in good shape. With the market’s attention focused on ath-leisure, gains were hard to come by for even the most aggressive denim merchants, and emerging trends — destroyed interpretations of the fabric, flared and boyfriend silhouettes and even denim’s take on ath-leisure — made some headway, but hardly enough to offset the decline of megatrends like colored denim that drove the market just two years ago.
The NPD Group Inc. found that sales of women’s jeans dropped 5.5 percent to $7.9 billion from $8.3 billion in the 12 months through April, while units were down 8.5 percent to 305.4 million. That allowed for an upswing in average price, ahead 4 percent to $25.87.
Men’s jeans, a smaller market less dependent on fashion trends, saw sales stabilize at $5.4 billion in the April-to-April period, with units down 0.5 percent in the year. Together, adult jeans sales fell 3.3 percent to $13.3 billion, while units were off 5.5 percent to 511.5 million.
“The weakness in denim is continuing,” said Raya Sokolyanska, an analyst for Moody’s Investors Service who covers a number of denim firms. “Premium is still declining more than denim overall. There is some talk of new fashion trends, but those are hard to predict.
“The declines in earnings should decelerate,” she said of 2015. “With inventories in better shape, I’m expecting the year to be difficult, but not necessarily to the same extent as last year.”
Sokolyanska noted that the return to growth mode is likely to be more difficult in premium, where the purchasing pullback by retailers and consumers has been most marked. According to NPD figures, total U.S. denim sales fell 8 percent in 2014 after a 6 percent drop in 2013, but last year’s decline in the premium segment was between 10 and 15 percent.
The picture is better for companies in the mass and midtier parts of the market. For instance, at constant currency, sales at VF Corp.’s Jeanswear coalition, home to the Wrangler and Lee brands, rose 1.4 percent to nearly $700 million and profits were up 2 percent in the first quarter. Results in the Americas were stronger still. But VF’s Contemporary coalition, which depends on the Seven For All Mankind brand for most of its sales, saw revenues fall 7 percent to $87.5 million.
A growing number of observers, including Janet Kloppenburg, president of JJK Research, believe that the market is ready to take the long-awaited upward turn during the second half of the year.
“I’m optimistic that the category has stabilized, as average unit retail prices have, and that we might see a very low-single-digit increase by the end of the year,” she told WWD. “Inventories are down, which could help AURs, and the market is entering a knit cycle in tops, which will certainly help denim sales. PVH Corp. was positive in its discussion of Calvin Klein Jeans when it reported its first-quarter results, too. If nothing more, the declines are clearly moderating.”