| Research Notes: Nov 30, 2011 – Black Friday, URBN |
StoreIntel |
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Black Friday Notes
- The media has made it quite clear how robust business was for the first major weekend of the Holiday season. Most, if not all major retailers reduced margins for the sake of driving major sales volume – this has been the major theme as Holiday 2011 kicked off.
- Through our mall walks this week we have noticed that some retailers are still promoting quite heavily. ANN is still running 50% off and today changed their website to reflect 50% off all sweaters, and we can be sure they’re not alone.
- Caution should be taken with respect to the warm weather – it was the warmest November in recent years and the 2nd warmest Thanksgiving weekend in the last 19 years – and the effect on the sale of cold weather product, especially sweaters; this could be a potential liability for all retailers. As the month progresses and every time the weather rises above seasonal averages, take note of the potential markdown liabilities. This could be a major drag on Q4 merchandise margins – remember many missy retailers and manufacturers already saw severe gross margin compression in Q3.
- We will be watching the next two weeks closely which will set the table for how aggressive retailers get with markdowns if business should slow down leading up to the week before Christmas.
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Urban Outfitters (URBN)
- We are feeling very strongly about the potential rebound for the Anthropologie brand as we move into Q1 and Q2 of 2012.
- The brand lost momentum as the cut and sewn knit cycle came to an end for the back half of 2011. It’s a very normal trend to gear up and get behind a category and then the customer grows tired of the trend. This has been a large part of the demise of the business for Anthropologie, as woven tops become the number one category.
- The Urban Outfitters brand looks to be the best in its class for the Holiday season and our channel checks give us a strong feeling that for returns for Black Friday and all of November were beyond expecations. Their product is right and the customer knows it…stay tuned.
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