School May Not Rule for Apparel Retailers

From Reuters

Apparel retailers are hoping their back-to-school fashions will make the grade among style-conscious teens and young adults this fall, but it could be a tough sell, with students and parents keeping a tighter hold on their wallets.

Record high oil prices have bitten into American budgets, and a disappointing jobs market may mean consumers will take a more conservative approach to shopping.

The outcome could be especially painful for retailers, because back-to-school is their second-most-important season, behind the winter holidays.

“Consumers are not exactly in the mood to go on buying binges and shopping sprees,” said Kurt Barnard, president of Barnard’s Retail Consulting Group. “They will be very cautious in what they buy.”

Surfer looks, faux fur ponchos, preppy chic, always-popular denim and accessories such as backpacks are among analysts’ picks for fall. But the lack of a single “must-have” item -- like low-rise jeans in years past -- could stall the momentum of back-to-school shopping.


What’s more, many students this year are less focused on fashion and more interested in keeping up with trends in technology, analysts said.

That means that some of the hottest back-to-school items will be electronics. Although students and parents will be willing to splurge on items like notebook computers and digital cameras, there will be less left in the budget to spend on clothing.

Many Americans this fall will buy only items they need, and, when they do shop, they will choose the least expensive options, Barnard said.

Nagging weakness in the labor market has also sparked fears that many Americans will curb their spending habits.

American Eagle Outfitters and Aeropostale Inc., both of which reported strong same-store sales in July, will continue to draw teens with the right mix of fashion and value, analysts said.

Some analysts are optimistic that sluggish sales in July for many retailers do not mean a wash for the fall season.

Gap Inc., which posted disappointing July same-store sales, said its early fall items were selling well.

Some kids wait until school starts to check out what the trendsetters are wearing and then make their purchases, said Jeff Klinefelter, senior analyst at U.S. Bancorp Piper Jaffray.