NEW YORK — The bohemian looks have hit the road, and teen and young contemporary stores are looking for the right trend to hitch a ride with for spring.
"The group is lacking a clear fashion direction, forcing them to cast their nets broadly to try to inspire the consumer in a variety of different ways and see what works," said Richard Jaffe, a specialty retail analyst at UBS Warburg.
Last year, sportswear brands for teens and young women had two key categories driving customers to the store: low-rise jeans or bohemian-inspired trends. But no major trends have emerged yet this year and merchants are testing a wide range of spring/summer looks right now, looking for the looks that will capture the imagination and buying power of the $10 billion-plus retail market.
One trend that is emerging is careerwear, especially suiting, which demands a higher price point, setting the stage for margin rewards. Both Charlotte Russe and Bebe are offering more suits in their merchandise mix, with Bebe jumping suiting to 20 percent this spring from 5 percent in 2002.
But like a diversified investment portfolio, Jaffe said the multiple merchandise strategy is best, but said it is too early to tell if CR and WS have a sense of what will work. Still, he noted that these retailers have done a good job at improving their sourcing and their nimbleness to chase trends and "that is clearly going to help them if they find things that are selling at retail."
Saying she is "more negative" on the group, Kindra J. Devaney, a specialty retail analyst at Fulcrum Global Partners, said: "At the end of the day, it is a very competitive environment, made more challenging without a clear trend."
Noting the merchandise mix this spring will run the gamut from career to board shorts, Harriet?Bailiss-Sustarsic, president and chief merchandising officer at Charlotte Russe, said on a recent conference call: "Last spring, fashion was all about prairie tops and denim bottoms, and what began as a seeming broad-based trend resulted in being one dimensional. This year, we anticipate plenty of newness in fashion and in multiple trends this spring at CR and Rampage."In particular, Sustarsic said Charlotte Russe, which sells affordable apparel and accessories aimed at women 15 to 35 years old, is returning to its career roots. Bestsellers in this trend include structured woven shirts, men’s wear vests and jackets and a broad assortment of woven pants.
"This trend has paved the way for our updated wear-to-work assortment," she said.
Other trends at Charlotte Russe include the extreme sport trend, which plays off its strong activewear selling. The key focus here will be on screen-print T-shirts, tank tops, miniskirts, short shorts and knit pants, all in novelty fabrics and bright primary colors. A sexy polo club trend, focusing on polo collars, striped knits, cropped pants, shorts, tennis skirts and denim, should be strong, as well as a mix of casual clothing.
At Rampage, a more expensive cutting-edge concept aimed at a slightly older woman is the focus, she said, such as bright polo tops, dresses, zipped-up jackets, football mesh T-shirts and tennis skirts. Other styles will include lady-like trends embracing the Forties and a rock ‘n’ roll trend embracing the Eighties.
"Just based on the successful response to early spring tests, I believe there is room, if properly merchandised, for all of this, and that has been proven in the past," Sustarsic said.
Charlotte Russe executives and retail observers say the company, with its average store about 7,500 square feet, has for many years prospered when the workwear trend was prevalent.
Fast-fashion firms, like Bebe and Charlotte Russe Seal, have been struggling over the past year and late last month reported a quarterly financial picture with unimpressive results.
San Diego-based CR saw profits rise 0.9 percent in its first quarter ended on Dec. 28 to $7.45 million. New stores helped net sales bounce up 19.1 percent to $133.3 million, as comparable-store sales slipped 3.6 percent in the quarter.
"We enjoyed that business due to that strong crossover customer base," Sustarsic said. "Part of our mantra is the mom and the daughter shop in tandem."
Wet Seal, based in Foothill Ranch, Calif., is also expected to offer a range of merchandise to appeal to its contemporary customers. Dennis Van Zelfden, a specialty analyst at Robinson-Humphrey, said: "With the lack of a major theme like the bohemian look, Wet Seal is going with several looks."WS did not return calls for this article. But Van Zelfden said he is expecting a lackluster spring for Wet Seal.
"In a tough environment, it is nice to have a well-defined theme to give people a reason to go to the mall," he said.
While Wet Seal is not expected to report its fourth-quarter earnings, which ended Feb. 1, last month it had estimated it would break even or turn a modest profit.
Meanwhile, suiting is Brisbane, Calif.-based Bebe’s answer to its recently reported sinking sales and profits.
For the second quarter ended Dec. 31, the retailer saw profits sink 12 percent to $10.8 million, on sales that were up 2.1 percent to $100.8 million.
"Early suiting reads have been encouraging and we anticipate building the assortment in the third quarter," Manny Mashouf, Bebe’s chairman and chief executive officer, said on a conference call on second-quarter financial results. "We are returning to sleek, sophisticated clothing, once a significant look of the Bebe wardrobe."
In addition to suits, Mashouf said the specialty retailer is experiencing positive responses in all categories of sportswear, separates, bottoms, knits, shirts and tops.
Noting that Bebe’s stock price has moved up over 50 percent over the past two months, Brian Tunick, an analyst with J.P. Morgan, said Bebe has always been successful when it is focused on getting suiting. Still, its stock is off about 40 percent since reaching its 52-week high of $25.10 on March 7.
While most recent merchandise failed to make the mark with its core constituents, one analyst said he is more optimistic for a bright spring.
"I think we hit the bottom this quarter and we are going to start to see gradual improvement going forward," U.S. Bancorp Piper Jaffray special retail analyst Jeffrey Klinefelter, who has been more upbeat about the sector than many of his peers, said. "I am more encouraged the backdrop has improved so much we can see not a home run, but a modest improvement in the environment for this group."
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