After donning leggings for five years, women may be thinking that it’s time for a change.
This past week, specialty apparel retailers Chico’s FAS Inc., Express Inc. and Abercrombie & Fitch Co. all showed improvements in quarterly results – including better margins. Guess Inc. and PVH Inc. also showed strength in apparel if one carved out the negative impact of foreign currency exchange.
The results follow rumblings at Target Corp., Nordstrom Inc. and Stein Mart Inc. that women’s wear, denim and even dresses were performing well.
Whether this indicates a full-blown resurgence in women’s wear is unclear at this point — and the improvement is coming after years of sharp declines in apparel sales. But what’s noteworthy is that shoppers are responding to fashion and feel the need to refresh their closets with looks to include boho, prints and flowing silhouettes. The result is a ray of sunshine for retailers that have been under a cloud of gloomy sales for the past decade.
“I think overall, one of the things helping apparel is product innovation and a response to newness in the product assortment,” Dana Telsey of Telsey Advisory Group told WWD. She noted that the slowness in watches and handbags demonstrates women have shifted from accessory spending to buying denim and boho peasant looks.
It appears to be happening at all levels, after years of slow women’s ready-to-wear sales. Even in March, Karen Katz, president and chief executive officer of Neiman Marcus Group, trumpeted the fashion offerings that were then hitting her store floors. “We believe there is going to be a reason to buy ready-to-wear. We feel pretty positive about the kinds of trends we are seeing,” she said at the time.
Katz acknowledged that it’s been a long time since fashion truly fueled sales. “There is a big movement of this bohemian look,” she said back in the spring. “The Seventies, as a reference period, are all over the runways. We do believe the kinds of ready-to-wear we are seeing on the runway, the kind of shoes, are things customers don’t necessarily have in her closets. There’s a completely different pant silhouette.”
Overall, the second-quarter earnings season was varied, with some retailers finding success, while others struggled. Of the 38 retail companies that have reported their earnings in the last two weeks, 23 companies beat expectations, while 15 missed estimates. But even the retailers that may have posted weaker results seemed optimistic that things were getting better. Currency issues hurt most companies, but stripping out those effects, sales actually looked pretty promising because spring apparel appeared to resonate with shoppers — and early indications are that fall selections are, as well.
The market has shifted, and jeans, dresses and woven tops are selling. Although women are seemingly tired of wearing leggings, they’re unwilling to give up comfort. This has led to renewed interest in stretch jeans, which have the look of denim, but the comfort of leggings. Destroyed denim looks are attracting younger demographics. Not to be confused with distressed, this trend involves huge chunks of jeans missing from the leg.
And why are dresses selling? Because they offer very forgiving shapes. Fit-and-flare makes just about any body look good. Shirtdresses hide many body flaws, as do loose-fitting, boho-style shift dresses. “The emphasis for the flowing shapes comes from the Seventies, as that era’s ease and comfort continues to influence a majority of looks,” said Mike Watson, fashion marketing instructor at The Art Institute of Charlotte.
Analysts have been noting that these designs are comfortable like leggings are, and adaptable to daytime or evening attire. Budget-conscious shoppers like the idea that they can get more than one look out of a dress. “We all desire to stay on-trend and have the latest fashion from the runway, but not all of us can afford it,” said Emilia Valle, fashion director at The Art Institute of Houston.
Guess experienced improved trends in denim, dresses and woven tops and the company has leveraged the destroyed trend in denim. The brand also has seen success with its body-slimming jeans for those with “bombshell” figures.
PVH chief executive officer Emanuel Chirico said during the company’s recent earnings call, “Our women’s business is significantly gaining traction.” Chirico went on to say that AURs for jeans was up 20 percent and stretch denim was very popular.
At Express, ceo David Kornberg said, “The momentum in the women’s business is continuing and men’s is improving.” Denim, woven tops and dresses also delivered for Express. The company said it expects these key trends to continue into fall. While skinny jeans are still represented, flare bottoms seem to be coming on strong as they play off the season’s Seventies-inspired look.
A&F was the leader of the logo-driven, hyper-sexed trend and when consumers moved on, A&F was slow to move with them. The logo shop remains and sales are still down, but the company looks like it’s righting the ship and that has given investors hope. Dresses and jeans were also strong categories for A&F. The lower-priced Hollister brand saw improvements in women’s and said it had positive comps for women’s for the first quarter in some time. A&F is also making progress in women’s, specifically in tops.
Many market watchers seemed surprised at the earnings beat by Chico’s, but the consumer demographic might have few other options. Coldwater Creek is basically gone and The Talbots Inc. has closed many stores. Chico’s comp sales were up as women bought new pant silhouettes, including wide legs and gauchos. Stretch denim and side-zip pants are also popular.
The shift and strong response to fashion doesn’t mean ath-leisure and other trends are dead in the water. In fact, ath-leisure has been a great transition out of leggings. Women wanted to change their look, but not at the expense of comfort. Under Armour, Nike and Lululemon have all enjoyed this trend and it looks as if there is still some life in it. Dick’s Sporting Goods is rolling out an ath-leisure line from country star Carrie Underwood, complete with a New York Fashion Week show. There is a laundry list of companies jumping into the category, including Tory Burch, Kate Hudson’s Fabletics, Urban Outfitters Inc.’s Without Walls and even Chanel with sneakers and sweatshirts.
However, so many brands are entering the now-crowded space that it feels like it’s too many, too late. Some analysts believe the trend is already waning. So, then it’s best to look forward as to what will keep the shopping momentum going into fall.
Fringe is hot and new for fall. It started showing up in the spring, but it’s coming on strong in the fall. The fringe pairs well with all these new jeans. There are fringe bags from Michael Kors, jackets from A&F and even fringe skirts at Chico’s. Nordstrom, which had a great second quarter, has numerous fringe offerings, from bags to shoes and even a fringe bracelet.
Improving apparel sales haven’t been felt across the board, though – and it clearly continues to depend on having the right product at the right price. J. Crew’s shift to high-end eclectic fashion was not well received by its loyal customers and the company is pivoting back to its heritage style. Aéropostale’s men’s wear was too contemporary and while its girls’ business is slowing improving, the teen retailer’s sales plunged 17 percent in the second quarter and the company expects it will continue to lose money in the third quarter.
It’s important to note that investors are hearing this enthusiasm from retailers, and they are responding. The WWD Global Stock Tracker demonstrates it’s been a tough year for these fashion stocks, with 56 stocks in the tracker declining for the past year and only 43 moving higher. However, in the last five days, the SPDR S&P Retail ETF has risen almost 2 percent after being down 2.5 percent year-to-date.
Telsey thinks the later Labor Day holiday will be a big plus for retailers, resulting in better September sales figures. “We’re shaking off the problems of summer and we’re getting set up for a strong back half of the year,” she said.
With more Americans working and women ready for a new look, retailers that are delivering the right looks will dance right into fall and holiday, and investors will likely move right along with them.