Women’s Jeans Lift Denim Market

Driven by colored denim and trends like flared legs, category saw sales grow 1.5 percent to $8.55 billion in the 12 months to the end of August.

Women’s jeans are holding their shape.

This story first appeared in the October 19, 2011 issue of WWD.  Subscribe Today.

With the emergence of colored denim continuing to take center stage, and the prevalent skinny silhouette coexisting comfortably with the growing popularity of flared legs, women’s denim bottoms boosted their dollar take by 1.5 percent to $8.55 billion in the 12 months ended in August despite a 0.2 percent contraction in units to 369.2 million, according to figures from The NPD Group.

The strength in women’s was just enough to offset a 2 percent decline in men’s jeans sales, to $5.17 billion, lifting the adult jean market 0.1 percent for the 12-month period, to $13.72 billion. The inflationary pressure from higher cotton, production and distribution costs more than compensated for continuing promotional pressures, lifting the average price of a pair of women’s jeans to $23.17 from $22.78.

While there are a variety of trends permeating different price levels and channels of distribution, analysts, suppliers and retailers agree that the common denominator among all the winning denim looks of the season is newness.

“From everything we’re hearing and seeing, the story is that as long as there’s something new happening, that drives the business,” said Dana Telsey, chief executive officer of Telsey Advisory Group, who noted that “very careful” management of inventories had helped keep a lid on markdown pressures even as the wider-leg silhouette began to supplant the skinny profile as the up-and-coming shape.

“I don’t see the popularity of the skinny jean diminishing, but the flare is starting to gain traction,” she said. “The category is still doing very well.”

As in nearly all areas of consumer spending, midtier and lower-priced channels have faced considerably more pressure than luxury and upper-end retailers.

Christine Chen, equity analyst at Needham & Co. in San Francisco, thinks the growth of the wider-leg silhouette augurs well for the denim market. “Certainly denim has improved since last year, and you need that newness to get the customer to buy yet another pair of jeans,” she said. “There really wasn’t enough last year. Now the skinny silhouette is strong, and it won’t disappear overnight. There’s color in a variety of shades, and the early adopters are picking up on wider-legged bottoms.”

That multiplicity of trends is healthy for a number of reasons, Chen noted. First, a broader range of colors and a changing silhouette will help to spur additional sales of tops, especially as jeans become more outfit-oriented. Second, the life cycle of individual fashion trends has been shortened by the real-time availability of trends — on the runway, on the street and in the stores — on the Internet.

Chen believes retailers’ cautious approach to inventory building will bode well for margins as stores come down the stretch of the holiday season, with stock restraint paying off as it did in 2009. “Department stores don’t have unit-based sales plans; they have dollar-based sales plans, and prices are up this year,” she said. “So units in many cases are down, and if the consumer, particularly the fashion consumer, knows there are fewer units, she’ll be more inclined to pay full price and less likely to wait for markdowns. There’s a psychological issue where you think it’s going to be put on sale and depreciate overnight, and that tends to discourage buying.”

But retailers played their inventories conservatively, as they did in the wake of the recession of 2008. “Like in 2009, you could see less inventory, more reason to buy and better margins,” she noted. “It wasn’t that way in 2010.”

On a conference call last week to discuss disappointing third-quarter profits, Marc Crossman, president and ceo of Joe’s Jeans Inc., said, “While the previous quarter was marked by bringing our stock levels down to match our sales, this quarter we’re seeing that our sales are outpacing our stock levels,” leading department stores to nudge inventories upward. He noted an increase in specialty store business as well, with fashion denim and the company’s collection driving growth in that channel. Additionally, the Joe’s Wild Collection, which included leopard-print skinny jeans, was supported by a cross-platform advertising campaign.

“As a result, our initial production run was sold out and we generated numerous reorders,” Crossman said. “We will continue to identify our best fashion pieces or themes that represent the Joe’s brand each season, place the product in all the best stores and support them with significant advertising campaigns.”

Wayne Shulick, president and chief operating officer of Denim Habit, which launched a store in New York’s Meatpacking District on Tuesday, pointed out the need for diversity and coordination as vendors and stores look to build on the run enjoyed by premium denim in the last few years.

“Premium denim is saturated,” he said. “People want to be shown more outfits than before. We started merchandising sportswear with hanging denim a few years ago. We’re striving for a warmer boutique feeling than the big denim stores.”

Samantha Panella, retail analyst at Raymond James & Associates, said, “Based on our conversations, skinny is still very much on trend, and that’s what the customer is buying, from the teen sector through contemporary, and it’s clear that the color trend is going to be working well into next year. There’s new demand coming from wide legs. As always, there will be winners and losers this holiday but even with unemployment high and the consumer under pressure, when the product is right, something new and different, there’s opportunity. And that’s how things are situated in denim right now.”