Spending on Teen Fashion Slides

| About: The Wet (WTSL)

Teens may still be spending lots of time and dollars in the malls, but a cutback in spending by their parents, possibly due to worries about economic conditions, has led to a sharp decline in total fashion spending for the group. According to Piper Jaffray & Co.'s biannual "Taking Stock With Teens" survey, total fashion spending tumbled 24% from its spring 2007 survey, with declines most pronounced for young women, where spending was down 18%, while spending among young men dropped 9%. Last week, Wet Seal Inc. lowered its third-quarter outlook citing weak store transactions and more discounting. The research firm cited "a gradual maturing of the fashion cycle" for the declines. Teens continued to spend a "significant" among of money on fashion, the survey noted, with the most popular store being Hollister for the sixth straight time, followed by West Coast Brands, American Eagle, Abercrombie & Fitch and Forever 21. In the food category, Starbucks was the clear winner followed by Chipotle and McDonald's. "The fashion category still represents 42% of the total teen budget for the fall 2007 season despite moderation in spending habits," said Jeff Klinefelter, senior retail research analyst at Piper. "However, we found that spending expectations remain largely unchanged, as nearly 50% of the students plan to spend the same amount of money on apparel this season. We believe the discrepancy between budget dollars and expectations may be due to a decline in contributions from parents." The study covered some 980 students and field trips to malls in 10 cities across the U.S., while a separate study indicated that parental spending on their teens was down 33% from the spring survey and 19% y/y Parents also said they were spending less on themselves, 23% less from spring and 26% y/y.

Sources: Press release, Reuters
Commentary: Looking for Strength and Weakness in RetailConsumer Spending: A Mixed Bag
Stocks/ETFs to watch: WTSLA, AEO, ANF, MCD, SBUX. ETFs: RTH, XRT, PMR

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