This is not a dream: fashion apparel may be on the verge of a comeback.
After years of lackluster apparel sales in a business driven by bags and shoes, the tides might be changing as a handful of retailers across the sector are noting improvement in women’s wear, teens and children’s apparel as well as active wear.
Last week, Nordstrom’s and Stein Mart both said apparel was performing better than it had in recent years. And on Wednesday, Target Corp., American Eagle Outfitters and Citi Trends all noted a much stronger performance from apparel than they have seen in some time. In fact, Target said results in apparel helped move the needle on its same-store sales for the quarter — which rose 2.4 percent — as other categories such as electronics weighed down results.
Regarding the need to be trend right, Brian Cornell, chief executive officer of Target, said on a conference call with investors that its quarterly sales gains “were really driven by mix.”
“And as we’ve talked about, we’ve invested heavily in ensuring the trend, while bringing great quality to the guests we’re accentuating our position to in key categories,” he said. “We’ve seen really strong performance in ready-to-wear. And most recently, a very positive response to the changes we’ve made in denim. So the improvements we’re seeing in those categories are really driven by great quality, and following the trend curves — bringing great style and fashion to our guests. And it is not been driven by or with reliance on pricing.”
With fashion trumping pricing, something is certainly afoot.
At Citi Trends, Jason Mazzola, president and chief executive officer, told investors on a morning conference call that its women’s wear business was a top category in the second quarter. “The ladies’ area delivered a 7 percent comp-store sales increase for the quarter,” the ceo said. “This is the fourth quarter in a row that ladies’ has delivered positive comp-stores sales.”
Apparel spending was once cyclical and somewhat predictable. But over the past decade, that predictability has vanished and nothing is a given. And since the Great Recession, shopping habits have been anchored by a values-driven mind-set as well as one aimed at consumers trading “buying things” for having “experiences,” analysts and economists have said, and which Macy’s noted in its recent quarterly report.
Those experiences include everything from eating dinner out more and taking “adventure vacations” to biking across the county and taking up new sports and hobbies. (Hang gliding, anyone?) Also add in a rise in individuals and families participating in “ecotourism,” which sociologists have also said in various reports that this trend is not limited to Baby Boomers and the requisite midlife crises. It includes Millennials and Generation X-ers seeking out experiences to add a more meaningful dimension to their lives.
For fashion apparel retailers, this trend has been something of a headache as companies muscle one another for shrinking market share. And the numbers back it up. Data from the U.S. Department of Commerce’s Bureau of Labor Statistics has shown a decline in consumer expenditures of apparel of about 2 percent in the past year, which is on top of a similar decline over the prior year, and a whopping 7.6 percent decline from 2011 to 2012.
But something appears to be changing now. Analysts at Telsey Advisory Group said in a recent research report that with the “consumer increasingly receptive to product newness, visibility into fashion trends into the back half of the year is improved relative to the last several years, in our view.”
Fashion trends driving sales is noteworthy. The Telsey analysts went on to say that “[with] boho styling, prints, high-waisted bottoms and loosening silhouettes, we see fashion driving demand in the second half of this year. In the meantime, the long-standing shift away from apparel and towards accessories may be slowing to some degree, and an uptick in denim may benefit the specialty apparel channel.”
By way of outlook, the wind is at the backs of those who can leverage these shifts in spending. IHS Global Insight analysts said in a recent research note that the “consumer spending outlook for the third and fourth quarters is also looking relatively bright, due to real disposable income gains, modest consumer price inflation, lower energy prices, relatively good employment gains and a housing market that is gaining traction.”