| Research Notes: Dec 22, 2011 – The Final Countdown |
StoreIntel |
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Department Stores: Macy’s (M), JC Penney (JCP), Kohl’s (KSS)
- Our channel checks as of today indicate a softening of sales and in particular considerable pressure coming from the women’s space across all departments from moderate through contemporary.
- The warm weather has only compounded the pressure in this zone. Our previous notes have indicated the weakness in the outerwear space and we believe this will continue to spread across additional cold weather categories. It will be interesting to see how aggressive discounting gets in this channel becomes after Christmas.
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Specialty Chains
- Express (EXPR) - This is a name we continue to believe in due to the space it has carved out in the 22-30 year old demographic. As of Wednesday, the sweater promotion of 30% off continues to drive traffic. We love their assortment with particular call out to the fine gauge category, which should allow them to still clear product even with the warm weather.
- Urban Outfitters (URBN) - The Urban brand as the company mentioned in mid-December seems to be experiencing strong sales. The product is different and has a great price-value relationship. The look of the Urban customer is quite unique which will allow them to separate themselves from the “three A’s” (Abercrombie, American Eagle & Aerospostale). We are also hearing about Free People performing quite well but are concerned about potential markdown pressure from their department store partners. Anthropologie seems to be clearing a significant amount of product at the expense of margin. The product at Anthropologie is still not mainstream enough to generate a change in momentum but we will reserve an opinion until spring 2012 receipts hit the stores.
- Ascena Retail (ASNA) - The inventory issue which hurt Justice last December seems to have passed and our channel checks indicate a very robust December. The same can be said of Maurices. At core Dress Barn we are concerned about the warm weather affecting the business but it’s important to keep in mind that Dress Barn is typically not a typical gift-giving destination.
- ANN - Large sweater inventory and very promotional, with 50% off the entire store and online this week following 40% off last week. The question is where they are going after Christmas…this is a margin story we will continue to monitor.
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Apparel Manufacturers – Jones Group (JNY)
- The missy space is under pressure in all channels and we anticipate severe markdown allowance requests from the big box chains. It will not be a very happy New Year come January 2012 Market Week…stay tuned!
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