Field Report

Transcription

Field Report

Field Report
July 30th, 2015
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Field Report – July 30th, 2015
Week In Brief
Largely expected, Q2 2015 ended on a highly promotional note. Teen retailers and women’s apparel retailers were most
promotional. Summer categories, shorts and dresses, finally picked up, but experienced significant margin erosion. Early
reads on Back-to-school suggest that denim selling will be difficult again this year. New trends are not broadly appealing
enough yet to off set the still popular legging trend.
Positive:
AE (AEO)
Hollister (ANF)
Lululemon (LULU)
Ross Stores (ROST)
Neutral:
Negative:
A&F / Hollister (ANF)
WH/BM (CHS)
Chico's (CHS)
Old Navy (GPS)
Coach (COH)
Nordstrom (JWN)
Urban Outfitters (URBN)
Key Inflection Points This Week
More POSITIVE: Lululemon (LULU), Ross Stores (ROST), Urban Outfitters (URBN).
More NEGATIVE: WH/BM (CHS) and Old Navy (GPS).
Highlights
!
We still view the American Eagle (AEO - $17.36) offering as “best in class” and significantly improved versus last Back-toSchool (BTS). AE store traffic is typically higher than ANF brands and URBN brands together. But even AE was more
promotional during July versus last year. Despite still weak macro denim trends (similar to LY), we believe that the strength in
tops and men’s can continue to drive sales higher.
DISCLOSURE: I, Research Analyst, Leah Vermulen Lopez, the Primarily Responsible Analyst for this research report, hereby certify that all of the views expressed in this
research report accurately reflect my personal views about any and all of the subject securities or issuers. No part of my compensation was, is, or will be, directly or indirectly,
related to the specific recommendations or views I expressed in this research report.
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Highlights Cont’d.
!
In addition to the expected Q3 2015 “logo abatement,” we are seeing modest improvements in the women’s A&F (ANF - $19.90)
denim offering. U.S. sales are not getting worse. But we are not seeing material improvements in traffic to get excited about BTS
selling. Aside from a new denim fabrication (Feather denim) and a few “sport-to-street” items, A&F largely offers many of the
same fashions offered last year.
!
The Hollister (ANF - $19.90) Back-to-school offering is modestly improved versus last year. The current floor set is closest to
American Eagle’s assortment (fashion and price). But we question if Hollister’s fashions is differentiated enough from A&F.
Though pricing is lower, most of the largely bohemian fashions are similar.
!
At the expense of merchandise margins, we expect that Chico’s (CHS - $15.24) squeezed out a positive July comp. We still view
the offering as generally appealing, but we are concerned that macro fashion trends to cleaner, less embellished fashions are
negatively impacting sales at the chain. We are not convinced that Chico’s has been able to pullback on the promotions as hoped
(online or in stores).
!
Despite improving dress sales versus Q1 2015 (largely helped by improved weather), we believe that sales decelerated at
WH/BM ($15.24)versus last year.
!
Despite this year’s longer Coach Full Price (COH - $31.30) Semi Annual Sale which offered deeper markdowns, we are
not seeing a material improvement in store traffic or sales.
In addition to the continued macro softness in denim, we see little in the late-July deliveries to suggest an improving trend
at The Gap (GPS - $36.05). It still appears that the brand has cut orders, leaving the current floorset with little of interest
for customers.
In addition to decelerating denim sales, we believe that the women’s fashion has somewhat plateued at Old Navy (GPS - $36.05).
We like most of the fashion today, but there is little incremental to last year.
!
!
!
Sales were somewhat choppy at Nordstrom (JWN - $76.34) throughout the quarter. But we believe that this year’s
Anniversary Sale ended Q2 2015 on a positive note, largely driven by the strength of shoes/accessories and new customer
acquisition. Big picture, most of the Anniversary offerings this year were more narrow, but of higher quality fashion than
last year.
!
We believe that the positive start to Q2 2015 (per Company) at Lululemon (LULU - $63.07) continued throughout the quarter
driven by strongly appealing merchandise. Store traffic remained high throughout the quarter (notably higher than most retailers),
consisting of young and older middle-age customers.
!
We believe that Ross Stores (ROST - $52.75) ended Q2 2015 on a high note. Early Back-to-school selling appears to be
off to a strong start, helped by an appealing apparel assortment and an improving home offering. Traffic is surprisingly
high in stores today.
!
We still have some concerns regarding denim and men’s apparel. But relative to last year when the chain was simply
raising price points, Urban Outfitters (URBN - $33.00) has a better handle on key women’s BTS looks this year. Though
not especially differentiated, today’s key items are outperforming last year’s over-priced and too extreme women’s fashions.
Also, discounting is running below last year.
!
Despite modestly improved dress sales (helped by weather and markdowns), we believe that apparel continued to struggle
at Anthropologie (URBN - $33.00) during Q2 2015.
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American Eagle Outfitters (AEO - $17.36) - POSITIVE
07.30.2015 ($17.36)
Merchandise VS LY
Markdowns/Promos VS LY
Inventory Level VS LY
I
W
I
Q2 Mgt Guidance
+HSD Comp
Q2 Comp LY
-8%
Scoring Methodology: The above scoring reflects our view on each parameter relative to last year. I+ = Significantly Improved versus last year, I = Improved versus last year, W = Worse
versus last year, W+ = Significantly Worse versus last year, S = similar versus last year.
We still view the American Eagle offering as “best in class” and significantly improved versus last Back-to-School (BTS). AE store
traffic is typically higher than ANF brands and URBN brands together. But even AE was more promotional during July versus last
year. Despite still weak macro denim trends (similar to LY), we believe that the strength in tops and men’s can continue to drive sales
higher.
!
Helped by a hilarious new ad distributed via FunnyorDie.com and starring Jake Johnson (New Girl TV series), men’s bottoms
appear to be a strong point for Back-to-school. This year’s broader assortment of fleece joggers and jogger shorts are
outperforming today. http://ae.com/web/index.jsp
!
As AE anniversaries the launch of women’s DenimX, the focus this year is on the new men’s FLEX denim line, offering 3 levels
of Lycra stretch. They are cool. It is too early to gauge the success in stores after 1-week on the racks. But we are impressed at
the level of sales associate engagement (similar to the women’s DenimX).
!
While the men’s category was weak during Q3 2014, we are not convinced that new men’s FLEX Denim will effectively
anniversary/outperform the women’s DenimX launch last year.
!
A weak category last year (through Q3 2014), women’s knit tops continue to drive sales, helped by the still incremental Soft &
Sexy offering. The BTS Soft & Sexy assortment includes a broader number of styles versus Spring. Also, the fabrication has been
expanded to dresses and jumpers (largely online). During the current BOGO 50% off t-shirt promotion, AE’s Soft & Sexy tees are
$15 versus $12 - $24 at A&F or $12.95 - $14.95 at Hollister today.
!
Women’s non-denim bottoms appear to be outperforming denim. Similar to last year, leggings are selling best. This year’s
legging assortment consists of trendier photorealistic prints and is priced above last year at $15.95 each versus 2 for $24 LY.
!
Likely a positive to merchandise margins, the accessories offering is notably broader and more appealing today versus last year.
Jewelry and hats are especially trend-on, rivaling appealing offerings at Madewell and Urban Outfitters.
!
Inventory levels are notably improved versus Q1 2015 with denim inventory well stocked. Also knit tops are better inventoried
versus last year.
!
MARKDOWNS during July were slightly deeper at AE versus last year. On July 23rd the chain launched deeper BOGO
50% off Denim versus $10 off Denim last year. Additionally, during July week #2, the chain offered Up to 25% off When
you Purchase 5 Items versus 20% off Purchase last year. Also, AE’s highest rise women’s denim, Sky Rise is now
discounted 50% off, suggesting that the look is too extreme for the brand.
4
Abercrombie & Fitch (ANF - $19.90) – NEUTRAL
07.30.2015 ($19.90)
Merchandise VS LY
Q2 Mgt Guidance
Q2 Comp LY
I
I
S
N/A
-1%
In addition to the expected Q3 2015 “logo abatement,” we are seeing modest improvements in the women’s A&F denim offering.
U.S. sales are not getting worse. But we are not seeing material improvements in traffic or sales to get excited about BTS selling.
!
We see little evidence that A&F is “making faster fashion decisions for quicker speed to market. Aside from a new denim
fabrication (Feather denim) and a few “sport-to-street” items, A&F largely offers many of the same fashions offered last year (i.e.
skater skirts/dresses, maxi-length skirts/dresses, higher-rise denim, kimono sweaters and one-piece rompers).
!
We are seeing some improvements in denim. New women’s stretch Feather denim is performing well out of the gate. In addition
to greater emphasis on new silhouettes such as flare denim and boyfriend styles, denim fabric quality is improved versus last year.
For example, destroyed denim fashions are more authentic/appealing this year.
!
In line with macro trends, A&F is pushing women’s blouses. But only a few off-the-shoulder styles appear to be performing
today.
!
We continue to see less logo in stores. Inviting broader appeal, some women’s denim now excludes the “A&F” pocket stitch
design. U.S. store associates openly admit today that, “nobody buys the large A&F screen prints anymore.” Foreigners “tolerate”
the A&F logo.
!
AUR remains somewhat stabilized in the US, but is likely lower Internationally. Helped by long-sleeve option, we are seeing
increased AUR on Essentials. But, the opening price Essentials offering is still incremental to last year.
!
Helped by less discounting on new merchandise and this year’s improved denim quality and higher price points on new Feather
denim, out-the-door pricing during July was likely above last year.
!
Increased attention to variety of trend, and color appears to be having little impact on sales. For example, new burnt orange color
is underperforming.
!
Most A&F locations remain understaffed. Unlike the highly product educated sales associates at AE, customers are left to
discover newness such as Feather denim on their own at A&F.
!
Incremental “on the body” photographs are likely improving sales of tops and dresses on the website today.
!
Inventory levels remain well controlled/light in stores today. But few customers appear to be taking advantage of the still
incremental Purchase Online From In Store service.
!
We’re not yet seeing any improvement in marketing efforts at A&F. In fact, anti-A&F videos seem to outweigh anything positive
on the Internet today.
!
MARKDOWNS: July markdowns are improved versus last year, helped by higher denim pricing. A&F has offered
fewer $39 Denim days this year, instead offering a $39 - $59 Denim promotion. Also, a July week #3 25% off Purchase
event ran shorter this year (4 days versus 7+ days last year). The chain offered what we believe is an incremental 20% off
Purchase bounce back coupon that is redeemable through August 18th.
5
Hollister (ANF - $19.90) - NEUTRAL
07.30.2015 ($19.90)
Merchandise VS LY
Q2 Mgt Guidance
Q2 Comp LY
I
W
I
N/A
-10%
The Hollister Back-to-school offering is modestly improved versus last year. The current floor set is closest to American Eagle’s
assortment (fashion and price). But we question if Hollister’s fashions is differentiated enough from A&F. Though pricing is lower at
Hollister, most of the largely bohemian fashions are similar.
!
Unlike last year’s rocker offering that left more conservative Hollister customers completely dumbfounded, this year’s BTS
assortment largely skews to bohemian fashions. That said, most of the key looks are similar to last year and simply styled more
conservatively (i.e. no torn fishnet stockings this year).
!
Tops continue to sell best, largely driven by still incremental open price point “Must Have” basic tops. But longer girl’s woven
shirts and many cropped blouses are underperforming.
!
Dresses are performing better today, helped by fewer long maxi styles and more youthful mini dresses this year.
!
Similar to the men’s stretch denim launch at AE, Hollister is incrementally offering Epic Flex men’s denim for BTS. But
Hollister lacks the viral marketing yet that AE is successfully experiencing via FunnyOrDie.com.
!
Stores today are emphasizing women’s flare denim in front rooms. But we believe that the trend is too early to materially drive
sales at the brand. The few spring flare denim styles are deeply discounted at the chain today.
!
Unlike the improvement at A&F, we are not yet seeing more “on the body” photos of Hollister merchandise on the website yet.
!
On a positive note, the chain offers fewer drapey soft pants this year (underperformed last year).
!
Likely a modest positive, Hollister this year emphasizes an assortment of “Dress Code Approved” chinos, polos, and accessories
for BTS.
!
Likely a positive to merchandise margins, Inventory levels in stores this year are notably lower than last year.
!
MARKDOWNS are less broad in stores today, helped by lower inventory levels. But discounting is slightly deeper at Up
to 75% off versus Up to 70% off last year. Also, the chain offered what we believe to be an incremental 25% off Purchase
event during July week #3.
6
New men’s Epic FLEX denim at Hollister
Chico’s (CHS - $15.24) - Neutral
07.30.2015 ($15.24)
Merchandise VS LY
Q2 Mgt Guidance
Q2 Comp LY
S
W
I
“Modestly Pos”
+.09%
At the expense of merchandise margins, we expect that Chico’s squeezed out a positive July comp. We still view the offering as
generally appealing, but we are concerned that macro fashion trends to cleaner, less embellished fashions are negatively impacting
sales at the chain. We are not convinced that Chico’s has been able to pullback on the promotions as hoped (online or in stores).
!
Chico’s continues to offer more consistency and color overlap between flows. But are there enough bright colors? Given that
customers have largely seen a black and white statement fronted for several months, we worry that there is the perception of a
lack of newness. We like the largely neutral colors and soft pastels. But the older Chico’s customer generally prefers brighter
tones that don’t wash her out.
!
So Slimming Girlfriend jeans are performing best in bottoms.
underperforming.
!
Lace embellishment and scroll prints are performing today. But the lack of more ‘bling’ appears to be negatively impacting sales.
Trend on or not, the core Chico’s customer still likes her ‘bling.’
!
Clearance racks during July were littered with underperforming maxi dresses, wide-leg pants, and baggy boyfriend denim (styles
hard to wear for the core Chico’s customer).
!
Following a deeply promoted July week #2, stores were able to clear what we viewed as too high inventory levels (especially
relative to the more constrained inventory levels of the past year). Today, inventory levels appear too light in many locations.
!
MARKDOWNS during July were deeper versus last year. Chico’s ended the quarter on a more promotional note than we
have seen in years. For example, July week #2 offered a deeper 45% off Purchase (for Passport members) versus 40% off
last year and a deeper Extra 25% off Clearance on top of Additional 40% off (and already discounted 50% off on ticket).
But we believe that the bottoms category is generally
7
Deeper discounting than we have seen in years at Chico’s
White House/Black Market (CHS - $15.24) - NEGATIVE
07.30.2015 ($15.24)
Merchandise VS LY
Mgt Comp Guidance
Comp LY
W
W
W
“Modestly Pos”
-1.9%
Despite improving dress sales versus Q1 2015 (largely helped by improved weather), we believe that sales decelerated at
WH/BM versus last year.
!
Though last year’s embellished fashions were getting ‘long in the tooth,’ we are concerned that the newest Fall deliveries may be
skewing too modern and clean (i.e. not enough embellishment).
!
This year’s broader assortment of dressy shorts largely underperformed and was broadly discounted throughout the quarter.
!
This year’s incremental offering of drapey “soft” pants did not appeal to the WH/BM customer.
!
Helped by a broader online Genius dress offering this year (successful expansion into bridesmaid dresses), we believe that the
chain experienced an improvement in dresses during Q2 2015.
!
July’s “pop” color, army green appeared to underperform at the chain, negatively impacting tops sales.
!
Inventory levels appeared to be heavy during Q2 2015, leading to deeper discounting.
!
MARKDOWNS appeared to be slightly broader and deeper this year versus last year at Up to 70% off versus Up to 60%
off last year.
8
Too modern/clean Fall fashion at WH/BM
Coach (COH - $31.30) - NEGATIVE
07.30.2015 ($31.30)
Merchandise VS LY
Mgt Comp Guidance
Comp LY (N. Amer)
S
W
W
“Neg mid 20s”
-17%
Despite this year’s longer Coach Full Price Semi Annual Sale which offered deeper markdowns, we are not seeing a material
improvement in store traffic or sales.
!
Store associates suggested that this year’s sale attracted new customers. But they admit that most customers were only interested
in the lowest price accessories.
!
The ultimate admission of failure for Vevers or smart merchandising? Likely an attempt to capitalize on the petite handbag trend,
Coach Full Price launched smaller versions of its top-selling Edie handbag (pre-Vevers handbag shape). Yes, the smaller shapes
have some appeal to petite women, but we view it as a desperate attempt to drive sales when little else is working.
!
After a disappointing Spring collection, Coach is giving artist Gary Basemen another chance with the latest Wild Beast print
offering. But the drip-leopard print is having little success with U.S. customers. The print is driving some wallet sales, but
leopard print handbags are underperforming.
!
After several years of selling men’s handbags largely to women, Coach is finally marketing many handbags to a unisex
“Everyone” customer. It’s okay to follow your customer, but why did it take so long?
9
New unisex “For Everyone” offering and Wild Beast print at Coach
The Gap (GPS - $36.05) - NEGATIVE
07.30.2015 ($36.05)
Merchandise VS LY
Q2 Mgt Guidance
Q2 Comp LY
W
S
S
N/A
-5%
In addition to the continued macro softness in denim, we see little in the late-July deliveries to suggest an improving trend at
The Gap. It still appears that the brand has cut orders, leaving the current floorset with little of interest for customers.
!
The Gap made a feeble attempt at adding a few 1970’s inspired “bohemian” trends, but these items are only modestly appealing.
!
Aside from a few new skinny flare styles, the core denim assortment offers little newness since the launch of Resolution denim.
!
New Modern Stretch Skinny crop khakis don’t even look appealing featured on the website models (too tight).
!
Similar to spring/summer assortments, women’s joggers remain over assorted in the offering today.
!
Most of the shirts and blouses remain too boxy.
!
The dress offering is one of the worst we have ever seen from The Gap. It appears that modifications have been made to the
Spring/Summer designs to make the fashions less extreme. But most of the dresses are simply dowdy and unfashionable now.
10
!
MARKDOWNS are similarly broad to last year during July. But the chain is extending last year’s deeper PLCC
discounts to all customers today. For example, over the 4th of July weekend, The Gap offered all customers 40% off Entire
Purchase this year. Last year the chain offered 30% off Entire Purchase and 40% off to PLCC holders.
Old Navy (GPS - $36.05) - NEUTRAL
07.30.2015 ($36.05)
Merchandise VS LY
Q2 Mgt Guidance
Q2 Comp LY
S
W
W
N/A
+4%
In addition to decelerating denim sales, we believe that the women’s fashion has somewhat plateued at Old Navy. We like most of the
fashion today, but there is little incremental to last year.
!
!
!
!
!
!
For the first time we can recall, store associates point to Pixie pants as outperforming denim. Given that the chain is so reliant on
denim sales and given that denim is a much bigger category, we view this as a negative.
Similar to last year, the chain is experiencing strength with oversized boyfriend tees and tanks. Therefore, knit tops sales remain
relatively strong.
Dresses, skirts, and shorts appeared to underperform throughout the quarter, likely due to increased competition/markdowns at
competitors.
Activewear sales remain strong. But we are not seeing much incremental newness in the category and inventory levels are light
in stores today.
Inventory levels appear to be on the high side today (men’s and women’s apparel).
MARKDOWNS appeared broader and deeper throughout the quarter this year. In addition to offering a deeper 40% off
Purchase (versus 30% off Purchase last year) for PLCC holder’s promotion during July weeks #2/#3, clearance levels were
higher.
Nordstrom (JWN - $76.34) - NEUTRAL
07.30.2015 ($76.34)
Merchandise VS LY
Q2 Mgt Guidance
Q2 Comp LY
I
S
S
+2% – 4%
+2.7%
Sales were somewhat choppy at Nordstrom throughout the quarter. But we believe that this year’s Anniversary Sale ended Q2
2015 on a positive note, largely driven by the strength of shoes/accessories and new customer acquisition. Big picture, most of
the Anniversary offerings this year were more narrow, but of higher quality fashion than last year. Store traffic remained
generally high during the Pre-Sale weeks and during the official sale. Customers showed interest in both sale and full price
offerings (especially in women’s contemporay apparel departments).
!
Shoe departments “killed it” by eliminating many of last year’s repetitive/boring styles (i.e. basic black boots) to offer more
appealing fashions this year. Hot women’s Hunter and Frye boots were sold out within the first 2-days at many locations.
11
!
Handbag department store associates suggest that the sale was more successful this year, helped by this year’s improved
assortment of colors (more classic versus last year’s color block styles). Priciest designer handbags were largely sold-out within
the first few days of the sale.
Tory Burch, Michael Michael Kors, and Rebecca Minkoff were top-selling brands again this year. Interestingly, Tory Burch is
appealing to twenty, thirty, and forty-something’s today but the Michael Michael Kors customer is skewing younger (i.e.
appealing to teens).
!
In apparel, tops generally outperformed bottoms. Colorful women’s woven tops, knits, and lightweight sweaters performed best.
Newness such as wide-leg trousers generally underperformed. Also, women’s suit separates performance appeared to be weak.
!
Denim sales were somewhat mediocre and largely driven by premium women’s brands such as Rag & Bone. The Anniversary
Sale offered several new silhouettes such as flare leg and boyfriend jeans. But skinny mid-rise jeans still attracted most attention.
!
The Junior BP department experienced modest strength via this year’s emphasis on soft pants, dresses, and duster sweaters.
Interestingly, denim was largely de-emphasized during the sale this year.
!
Women’s activewear continued on a positive trajectory. Incremental men’s activewear helped drive men’s apparel sales.
!
MARKDOWNS were largely in line with last year throughout the quarter.
12
Lululemon (LULU - $63.07) - Positive
07.30.2015 ($63.07)
Merchandise VS LY
Q2 Mgt Guidance
Q2 Comp LY
I+
W
S
N/A
Flat
We believe that the positive start to Q2 2015 (per Company) at Lululemon continued throughout the quarter driven by strongly
appealing merchandise. Store traffic remained high throughout the quarter (notably higher than most retailers), consisting of young
and older middle-age customers.
!
As promised, the women’s tank top wall continued to improve throughout the quarter. We are somewhat surprised to see that the
chain delivered with such a broadly appealing fashion top offering. Unlike many of last year’s too forward To-and-From
fashions, this year’s incremental tank offering is better suited for work outs AND other activities.
!
Store associates point to tops as outperforming bottoms today – typical during summer months but intensified this year by the
broader tops offering. Today, new Cool To Street tanks, split back All Tied Up tanks, and other “street” tanks are performing
best.
!
We expect this year’s broader fashion tank offering to notably outperform last year’s underperforming Fall sweater assortment
(rationalized this year).
!
As LULU anniversaries a somewhat too forward assortment, this year’s offering of more muted fashions and more broadly
appealing prints is experiencing stronger selling. We often see customers (men AND women) today captivated over the newest
deliveries.
!
Prints continue to drive sales. This year’s broader number of prints is more appealing that last year’s loud floral prints.
!
Today, pants continue to appeal to young customers in place of denim. Therefore, we have seen little deceleration in print pant
sales.
!
Inventory levels appear relatively clean in stores, helped by this year’s incremental Warehouse sale (online only) that ran during
July week #3 (pulled forward into Q2 vs. Q3 last year). But pant inventory levels appear to be still growing.
!
MARKDOWNS were generally moderate throughout Q2. But the incremental Warehouse sale likely negatively impacted
merchandise margins.
The improved tank offering at LULU is outperforming today
13
Ross Stores (ROST - $52.75) - POSITIVE
07.30.2015 ($52.75)
Merchandise
Markdowns/Promos
Inventory Level
Mgt Guidance
LY Comp
I+
S
S
+2% to +3%
+2%
Scoring Methodology: The above scoring reflects our view on each parameter relative to last year. I = Improved versus last year, W = worse versus last year, S = similar versus last year.
We believe that Ross Stores ended Q2 2015 on a high note. Early Back-to-school selling appears to be off to a strong start,
helped by an appealing apparel assortment and an improving home offering. Traffic is surprisingly high in stores today.
!
The young men’s apparel offering is most impressive this year with stores offering a significantly improved woven shirt offering,
including some trendier prints. Also, men’s denim is improving with a broader assortment of slim leg styles and brands such as
Levi’s and Michael Kors.
!
The activewear offering continues to grow in size and improve with a broader assortment of trend on fashions. Also, the chain is
beginning to more consistently offer appealing brands such as Adidas and Nike in the women’s active assortment.
!
Many of the key fashions such as soft pants, print leggings, and tube skirts that are offered at full price competitors are available
at ROST today (at a fraction of the price). Greater customer acceptance of soft pants will likely benefit ROST this year.
!
Adult shoe racks are somewhat light today and fall styles such as booties begin to trickle into stores.
!
Inventory levels are similar to last year, but notably improved versus spring. Denim inventory levels appear to be broader this
year.
!
Inventory is largely skewed to fall transitional goods today, with few summer liabilities.
!
In the home department, décor is markedly improved today. Also, many stores offering one of the best value priced pottery
offerings we have seen.
!
MARKDOWNS are largely in line with last year.
14
Denim inventory levels at ROST appear to be broader this year
Urban Outfitters (URBN - $33.00) - POSITIVE
07.30.2015 ($33.00)
Merchandise
Markdowns/Promos
Inventory Level
Mgt Guidance
LY Comp
I
I
I
N/A
-10%
We still have some concerns regarding denim and men’s apparel. But relative to last year when the chain was simply raising
price points, Urban Outfitters has a better handle on key women’s BTS looks this year. Though not especially differentiated,
today’s key items are outperforming last year’s over-priced and too extreme women’s fashions. Also, discounting is running below
last year.
!
Likely a positive, Urban has targeted several women’s key fashions (via testing) that it is exploiting in stores. Today, stores offer
a plethora of t-shirt dresses and rompers in a variety of colors and fabrics. Also, tube skirts and crop tank tops remain important to
the current floor set.
!
But we are seeing few improvements in the men’s assortment. Similar to last year, men’s apparel largely consists of joggers,
jogger shorts, and t-shirts. Most concerning is that Urban continues to push underperforming men’s wide-neck t-shirts for fall (a
key failure of the Spring/Summer offering).
!
Intimates continue to grow in stores, enhancing overall sales. In addition to a broader assortment of bras and underwear, stores
incrementally offer an appealing selection of loungewear today.
!
Relative to last year Without Walls activewear is de-emphasized on the website today. We are seeing little expansion of the line
in stores. Interestingly, we still hear that the activewear is “too pricey” from store associates.
!
Decelerating denim sales is a concern. In addition to rationalizing its denim offering, store associates suggest that recent
customer’s are “growing tired of the high-rise trend.” Urban offers a few lower-rise boyfriend denim styles, but the lions share of
women’s denim is skinny high-rise. Also, we are hearing that the boyfriend denim has a “funky fit.”
!
Urban continues to push lower-volume electronics in stores an online. In addition to the growing record collection, Urban
incrementally offers $400 Aether audio players, $130 drones, and $99 Polaroid Cubes.
!
Similar to Spring floor sets, inventory levels are extremely controlled in stores today.
!
Markdowns levels are running below last year. In addition to fewer markdown units, the chain offered a less deep Additional
30% off Clearance over 4th of July weekend this year versus Additional 50% off last year.
15
Urban’s broader key-item t-shirt dresses are a win for BTS
Anthropologie (URBN - $33.00) - NEGATIVE
07.30.2015 ($33.00)
Merchandise
Markdowns/Promos
Inventory Level
Mgt Guidance
LY Comp
W
W
S
N/A
+6%
Despite modestly improved dress sales (helped by weather and markdowns), we believe that apparel continued to struggle at
Anthropologie during Q2 2015.
!
We were never believers in the “not enough casual dresses” Q1 2015 excuse. Yes, the chain received more casual “day” dresses
during June/July, as the chain does every year. That said, full price dress sell through continued to struggle.
!
In addition to little incremental newness, we believe that apparel sales are struggling to anniversary incremental offerings such as
petites and BHLDN dresses. Also, as “cleaner,” less embellished fashion remains in vogue, Anthropologie’s generally more
embellished looks have less appeal.
!
Similar to apparel, Anthropologie’s more feminine and embellished accessories continue to take a back seat to brands/retailers
such as Madewell offering more modern accessories.
!
The Home category continues to outperform, helped by incremental Gift Registry assortments in higher volume locations. Home
category markdowns were lower during this year’s Tag Sale.
!
MARKDOWNS were slightly broader and deeper during Q2 2015 versus last year. Stores offered Additional 20% off
Clearance several weeks longer this year. Also, the chain offered several category promotions, including 25% off All
Dresses during June and 20% off Full Price Bedding during 2H July.
16
Anthropologie’s “busy” accessories are somewhat out of vogue today
Additional Photos:
New “on-the-body” imagery at Abercrombieandfitch.com
17
New Modern Stretch Skinny Crop Khakis at The Gap are unflattering/too tight
The JWN Juniors offering de-emphasizes denim today in favor of soft pants
18

Field Report

Transcription

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