SMITH BARNEY PANELS SEES DEMAND FOR FASHION RISING
Byline: Mark Tosh
NEW YORK — Demand for women’s fashion is on the rise at department stores and will get another lift this fall from four powerhouses — Ralph Lauren, Tommy Hilfiger, Liz Claiborne and Nautica Apparel.
That was the view of three Smith Barney analysts at a “retailing roundtable” held at the investment bank’s offices here Monday.
“Tommy, Nautica and Ralph Lauren will change the whole landscape and inject a whole new look,” said Faye Landes, a Smith Barney analyst who follows apparel and footwear. “We’ll see a whole new level of excitement in the department store.” As reported, Nautica will roll out a bridge line in August through a licensing deal with Bernard Chaus Inc.; Hilfiger will sell women’s casualwear and jeans lines for fall and Lauren has licensed Jones Apparel Group to produce a better sportswear collection under the Lauren by Ralph Lauren label.
Landes also said that Liz Claiborne has done “a very effective job turning itself around.” She cited the company’s $20 million advertising campaign for spring as an effective weapon against the competition and said Claiborne is also among the labels that should spark department store business.
She noted how Hilfiger and Nautica have used in-store shops and large ad budgets to build their men’s lines.
Richard L. Church, who follows department and discount stores at Smith Barney, said, “I think there is some better underlying demand right now,” noting that some women’s lines are showing strong spring sales. “Liz Claiborne, for example, has come out with some new lines recently that are really moving quite well. They are renewing some enthusiasm on the part of their core customer.”
He believes many retail stocks have risen recently based on the perceptions that excess square footage and inventory have been reduced and because employment and income levels are up while consumer confidence is holding steady.
Another positive for retailers, Church said, is that cost structures have come down over the past few years and operating leverage has improved. “One of the big swing factors that we could have in 1996 for retailing is that companies are approaching their businesses somewhat differently now than they did in 1995,” Church said. “Inventory plans are far more conservative today than they were a year ago, and a lot of the excess merchandise has been cleared out.”
“Name brand products are selling better than generics,” observed Maureen McGrath, a Smith Barney analyst who follows specialty hard-line retailers.