Spring is in the air — at least at certain fashion and apparel retailers.
Although the retail equity analysts at Wells Fargo Securities are seeing a slight uptick in overall promotional activity for the first half of February, the spread seems to have vanished between the companies tracked who are more promotional versus those that are less promotional.
The change could be due to better managed inventories as fashion apparel retailers drive traffic to stores to push spring assortments. The analysts noted in their report that “promotions remain more intense [on a year-over-year basis], though the spread between more/less promotional concepts has largely disappeared.”
“During the first half of February, we deemed 27 percent of our observations to be deeper or broadly ‘more promotional’ while 26 percent of retailers were ‘less promotional,’” the analysts said, adding that the divide followed a similar trend in January.
“We believe the narrowed spread could be driven by leaner clearance inventory out of January, and initial full-price selling of new spring product,” said Ike Boruchow, senior analyst at the firm.
The analysts track about 50 retailers and the companies found to be less promotional included Ulta Beauty; Coach factory stores; Ann Taylor; Abercrombie & Fitch and Men’s Wearhouse; among others. The more promotional retailers so far this month on a year-over-year basis include Kate Spade; Michael Kors and Michael Kors factory stores, and all of the Gap Inc. brands, among others.
“Gap remains slightly more promotional as the brand tries to drive traffic in order to push their new spring product, with incremental, blanket ‘% off’’ purchase offers,” Boruchow said. “Old Navy also appears to be slightly more promotional as well, driving traffic through broader discounts – 40 percent off total purchase this year, versus 40 percent off select items last year.”
And Boruchow said Banana Republic “continues to appear meaningfully more promotional, with excessive clearance levels and a near constant extra 50 percent off women’s clearance.”
The analysts also observed that Free People and Anthropologie “offered incremental additional discounts on their clearance merchandise,” with Anthropologie adding an extra 40 percent off and Free People tagging on an additional 25 percent off already marked-down items.