Cheap oil has brought more bad than good to fashion retailers.

This story first appeared in the March 9, 2016 issue of WWD. Subscribe Today.

With a barrel of crude at $34 — almost the lowest level since 2004 — U.S. drivers are paying $1.72 for a gallon of regular, down from $2.43 a year ago. Inflation-adjusted gasoline prices are much lower than they were during the Great Depression, according to For every penny the price of gasoline drops, consumers have about $1 billion more in their collective pockets.

Economic observers in the U.S. have been waiting for that financial boon to lift retail spending. The problem is that American consumers seem to be spending it more on experiences, or saving it, than on the latest fashions.

Then there is the regional impact — the ill effects of the oil prices declines are spreading faster than an oil slick in places like Texas, Oklahoma, the Dakotas and more that had seen a spending gusher from the sudden influx of petro-dollars. Plummeting oil prices mean tough times for producers and investors, thinner paychecks for workers, increased apprehension and generally less spending on discretionary items.

“We’re hearing it from retailers that are being affected by the oil problems in Houston,” said Gabriella Santaniello of A Line Partners, a channel-checking research firm. “From the teen guys like Abercrombie & Fitch and American Eagle Outfitters. We’re hearing it also from some of the Macy’s in those areas on the broadlines side and also specialty stores.”

Retailers are finding that it is specific locations that are feeling the pinch. Dallas seems to be doing better than Houston, for instance. Brian Bolke, owner of the Forty Five Ten boutique in Dallas, said, “We’re not seeing significant impact from oil prices specifically. Dallas has a very diversified economy as a result of the oil market implosion in the Eighties.”

Chris Bryan from the Texas Comptroller’s office said the pain was being felt more in the Midland/Odessa area and Houston, with sales tax receipts coming down.

“Houston’s definitely feeling the pain,” said Bill Detwiler of Fernwood Management, a strategic advisory firm. “Calgary in Canada is also affected. These economies ride the boom and bust.”

The bust is definitely here now.

In regions where the economies are driven by oil and gas, the reverberations from collapsing global demand are apparent up and down the price spectrum, from Neiman Marcus to Stage Stores.

“We are feeling the negative effects of lower crude oil prices,” said Karen Katz, Neiman Marcus Group’s chief executive officer, going over last quarter’s numbers with Wall Street. “Many of our customers have direct or indirect oil and gas investments. Lower prices for crude oil adversely affect oil company profits and the personal balance sheet and investment portfolios of our customers who work for or invest in these companies.”

Katz said that even though low oil prices are helpful overall to the consumer, Neiman’s customers are the people who run oil companies or own oil companies.

Worries about the oil crisis are nearly a year old now and are pushing analysts to dig into which retailers are exposed. Macy’s Inc.’s chief financial officer Karen Hoguet said last month, “In terms of the energy markets, they were not as weak as the West Coast, but obviously weather was less of a factor there. So weather was an impact for us, but we didn’t do great in the energy markets either.”

Texas lost 30,000 jobs between September and December, according to the state’s Workforce Commission. The Texas Alliance of Energy Producers believes another 56,000 jobs will be cut in the first six months of this year. The latest company to consider bankruptcy is Houston’s Linn Energy, which said it probably would not be able to make its debt payments.

It’s not just Texas.

Graves & Co. said companies in the sector have laid off 250,000 workers around the globe, while at least 41 U.S. oil and gas companies went bankrupt or liquidated last year. Retailers in oil-economy states including North Dakota, Colorado and Wyoming are all being squeezed.

North Dakota has seen its unemployment rate rise to 2.3 percent at the end of last year, up from a nationwide low of 1.6 percent in December 2014, while Oklahoma’s jobless rate crept up to 1.5 percent from 1.1 percent, according to government statistics. Wyoming saw its 18,400 oil and gas jobs dwindle to 12,700 in just a year’s time. Colorado shed 5,500 energy and energy-support jobs between September 2014 and September 2015, a decline of 15.9 percent.

Boot Barn Holdings Inc. said that its business in Texas was negative in the third quarter and was down significantly in North Dakota. James Conroy, the ceo, noted that there was a lag between dropping oil prices and its impact on their business. The company has reduced its flame-resistant workwear to less-expensive work clothes and seen some growth there. The flame-resistant clothes were favored among workers in the hydraulic fracking side of the oil industry.

Stage Stores Inc. ceo Michael Glazer said during the company’s fourth-quarter call that sales at “oil patch stores” were down 6 percent. Taking a misery-loves-company approach, he pointed to Dillard’s Inc. and Boot Barn as other retailers complaining about their businesses in the Lone Star State. “They’ve all called out Texas…it depends where in Texas you are as well. If you’re totally based in Dallas, you probably aren’t seeing any of the issues,” Glazer said.

Dillard’s Inc. is based in Little Rock, Ark., but is concentrated in Texas and Florida. “The fourth quarter was difficult,” said William T. Dillard 2nd, “As sales came in less than planned, we worked hard to control our inventory during an unusually competitive environment. Sales were particularly weak on the Southern border and in the energy-producing regions.”

VF Corp. said that even though its Wrangler jean business showed solid growth in the fourth quarter, it was offset by declines in Western business in regions where oil and gas exploration took a hard hit. VF’s Bulwark line, which offers flame-resistant gear, was challenged by oil and gas weakness.

“We’ve been through this cycle at least a half a dozen times in the last 20 years where, for macroeconomic reasons or things like the oil industry shutting down — that’s happening right now — we get hurt…that happens pretty quickly. And then it comes back,” said VF ceo Eric Wiseman. “And when it comes back, there’s years of goodness. You’ll recall because we talked about it in 2010 and 2011. Bulwark was our fastest-growing brand.”

Not everyone is feeling so bullish.

The Federal Reserve Bank of Dallas said that manufacturing demand had fallen to recession levels due to reduced capital spending amongst energy firms. Texas produces 11 percent of the total goods in the U.S., second only to California. Sales tax revenue for Texas fell 6.8 percent, with oil taxes dropping a whopping 62.2 percent, according to the Texas Comptroller of Public Accounts. Consumer confidence in Texas dropped 12.4 percent as of February 25 from the previous year, which is twice the decline of 6.7 percent for the U.S. overall. Consumer Confidence in the West/South/Central part of the country has plunged 15.9 percent.

There undoubtedly is more pain to come. Saudi Arabia has vowed to continue pumping as much oil as it can, pointing out that it costs the desert kingdom only about $10 to produce a barrel of oil, while in the U.S. the cost is over $36. The U.S. Energy Information Administration has said crude oil prices will remain relatively low through 2016 and 2017, keeping the pressure on retailers in energy-producing states.

The wait for Wiseman’s “years of goodness” could be a long one.