J.C. Penney

After the U.S. presidential election, it’s clear it’s a world where anything can happen — even an apparel retail rebound.

Whether the drought is definitely ending is tough to say. There’s still plenty of stuff out there and too many stores. Yet the timing seems right. The weather is getting cooler. The holiday shopping season is approaching. Consumers have money in their pockets, with wages up and gas prices low. And there’s no longer the distraction of politics. Pundits say that shopping is a psychological antidote to angst, even a painfully divisive campaign for president.

Category-wise, retailers have been talking up denim the most, where there has been innovation, specifically softer hand, distressed, cuffed, released hems, anything that shows ankle, and colored denim. Merchants cite men’s wear as outperforming women’s, and ath-leisure as still a healthy category, yet some feel the category has plateaued. Footwear has been tough with exceptions being boots, booties and sneakers.

As for the more positive outlook, consider the dialogue that came out of Nordstrom Inc., Macy’s Inc. and Kohl’s Corp. as they reported third-quarter results last week.

Three months ago, Pete Nordstrom said he didn’t think anything has happened “to give us a firm indicator” of apparel rebounding. Yet last week the Nordstrom copresident said, “The women’s apparel business has been pretty good for us. Where we have the best success is the young customer stuff, including Topshop.”

He also cited boots — from fashion-oriented short booties to over-the-knee boots — as a good classification, as well as sneakers, and singled out beauty as performing above the average for all product categories. “The challenges have been in accessory categories,” though designer businesses across shoes and handbags have been strong, Nordstrom said.

Macy’s third-quarter business was paced by shoes, soft home, fine jewelry, fragrances as well as women’s, men’s and kids’ apparel, including denim, active and dresses. That helped offset weakness in handbags, cosmetics and fashion watches.

Macy’s chairman and chief executive officer Terry J. Lundgren is optimistic about the fourth quarter after third-quarter trends fulfilled expectations. He also said that after an extended period of auto-sale surges, consumer spending could shift back to fashion and that the unemployment rate has been declining. “All of these reasons point to an opportunity for consumers to spend in our category,” Lundgren said.

“Our third-quarter top-line results were better than the first half of the year and our sales-driving initiatives continue to gain traction,” he said. “Additionally, the strengthening trend across the apparel businesses, coupled with new initiatives like tech watches from Apple, Michael Kors and others, are good indicators for an improved performance in the fourth quarter.”

At Kohl’s, men’s wear was the company’s strongest business category in the third quarter, with strength in active and tailored looks. According to a report from Cowen & Co., Kohl’s speed initiatives are “beginning to positively impact the women’s business….Thus far the initiative is affecting women’s proprietary brands…first with junior and will be scaled up in other areas. By the end of the fourth quarter, management expects speed to have a major impact on essentially all proprietary women’s brands.” The report, on the other hand, did express concerns about store traffic and headwinds caused by the weather.

Kohl’s chairman and ceo Kevin Mansell said: “We’re very well-positioned for the upcoming holiday season. We have momentum coming out of October. We have considerable newness in our stores and online assortments. Given our much lower inventory position, we’ve created a more appealing selling environment in our stores and we can deliver a substantial amount of new transitional product across the company as we move through the holiday season.”

The strength in fashion is being seen across the board. Zara, T.J. Maxx and Burlington Coat continue to sell plenty of fashion, outperforming other retailers; Michael Kors had a successful launch of its wearable-tech products; Coach is making strides with handbag sales; analysts see Ralph Lauren making progress on turnaround efforts, and Kate Spade indicated that it’s been transitioning consumers over to full-price transactions.

A Wells Fargo report on Ralph Lauren was upbeat, indicating that the business “appears to be on-track in the early stages of their multiyear ‘Way Forward’ strategy…inventory continues to be worked down and management plans to keep levels down double-digits for the remainder of the year.” The report also mentioned that underperforming doors are being rationalized while ceo Stefan Larsson is focusing on reducing the “tail” of distribution.

“All in, the story continues to be intriguing, but at current levels, we need to see more tangible proof of top-line stabilization on the horizon,” the report said.

Still, some companies aren’t experiencing a fashion uptick, at least just yet. Luxury stores such as Neiman Marcus and Saks Fifth Avenue are having a tougher time, though some good news emerged last week when Karen Hoguet, Macy’s chief financial officer, said international tourist traffic, after declining for several seasons, has stabilized in the U.S. That would help Macy’s and Bloomingdale’s flagships in tourist cities, as well as Neiman Marcus and Saks. They’re all very dependent on tourist traffic. “Luxury is coming back,” indicated a Cowen & Co. report on Tiffany, which it upgraded and characterized as “a well-positioned trusted brand.”

J.C. Penney Co. Inc. also said apparel was soft last quarter, offsetting gains in other categories, while Dillard’s sounded disappointed with third-quarter results.

Indeed, retailers learned some lessons after last year’s cold-weather apparel debacle stemming from the record warm winter. The biggest lesson learned was inventory control. Now stores across the board have pared merchandise assortments way down, making them agile enough to seize on fashion trends and best-sellers that emerge. Increasingly, they’re talking about “seasonless” fashion, meaning jackets, sweaters, pants and other items that can be worn for more than one season.

While there are positive reads for how retailers will perform in the second half, and plenty of confidence for a decent holiday period expressed by ceo’s, what’s increasingly noticeable on the racks and retail shelves of fashion retailers are tech products, nonapparel “giftables” and “weatherproof” products such as candles, picture frames, pet accessories, candies and games. It seems they’re not taking any chances and relying less on the usual array of cashmere sweaters, men’s shirts and ties, coats, cold-weather accessories and party dresses.

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