By  on May 10, 2007

The denim bubble might have burst in 2006, particularly in the women's market, according to a report from research firm the NPD Group.

U.S. jeans sales by dollar volume rose 3.4 percent in 2006, and unit sales increased 3.9 percent, according to NPD, based in Port Washington, N.Y. The results showed a significant slowdown from the double-digit gains reported in 2005 and were driven by growth in the men's market.

Examining sales by market segment revealed troubling data in women's jeans. For the first time in five years, sales of women's jeans were down in 2006, falling 1.8 percent in dollar volume and 2.3 percent in units. Men's jeans posted a 5.4 percent growth rate in dollar volume.

The women's market serves as an early warning sign of where the overall market is headed, said Marshal Cohen, NPD's chief industry analyst.

"As goes the women business, so goes the denim market," said Cohen, noting that female shoppers not only tend to purchase more items, but also influence when items will be bought for men and children. "The women's market is a clear indicator of what is likely to happen in other segments."

Cohen said the data was more troubling, given that the population of single women over the age of 18 has grown. The spending of that demographic, however, has not increased in step.

Handbags and footwear have been the beneficiaries of denim's decline and have become what Cohen described as "signature items" on which women are willing to spend more money.

Cohen expects a cutback in denim to begin in the next couple of months, as retailers make heavy markdowns on the category in July to get rid of inventory.

"Those [retailers] that are diversified to deemphasize denim are the ones that are going to fair the best," said Cohen. "A lot of stores that really don't belong in the denim business will finally get out of it."

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