American Eagle, Abercrombie & Fitch, And Express Send Promising Signals: Holiday Countdown - Week 3
Summary
- American Eagle is steady-as-she-goes on their promotional cadence.
- Abercrombie reports a (surprisingly) good 3Q and sets the stage for a good 4Q.
- Recent mall visits show Express to be busier than many of their neighbors.
- Garage continues to offer strong competition in the Teen Sector. Even Gap could take a lesson.
- LL Bean continues its green streak...and it is a busy green streak.
American Eagle (NYSE:NYSE:AEO) is steady-as-she-goes on their promotional cadence. And they are already setting the floor for an efficient Black Friday.
Abercrombie (NYSE:ANF) reports (surprisingly) strong 3Q numbers, setting the stage for a (relatively) good 4Q.
Recent mall visits show Express (NYSE:EXPR) to be busier than most of their neighbors.
Garage continues to offer strong competition in the Teen domain. Even Gap (NYSE:GPS) might want to take a few notes.
LL Bean continues its green streak…and it's a busy green streak.
It's week 3 of the Holiday Countdown and there were no big surprises in the malls' promotional stance. Black Friday creep may be in full swing though. It wasn't shocking to see a 50% off sign at Gap's front door, but the headline did read "Black Friday Starts Now"…on Friday 11/20. Then, over the weekend, almost ever retailer email I received made some mention of Black Friday, including Sears (NASDAQ:SHLD) and Best Buy (NYSE:BBY). Amazon (NASDAQ:AMZN) has their own version of a week long event. I am sure the day after Thanksgiving will still be a huge day for the mall, but 'Black Friday' is certainly diminished as a promotional hot button. I'll have a full report on the actual Black Friday next week.
A review of the Promotional Profile below indicates that the mall overall went to a slightly more promotional stance, but that was to be expected as we approach the end of November. What is amazing is that LL Bean and Dicks Sporting Goods (NYSE:DKS) remain as non-promotional as they do. And even with their regular price posture, LL Bean is amongst the busiest stores I visited. You will see that reflected in the Q/S summary below.
I thought Abercrombie & Fitch was fairly aggressive in its promotional posture during 3Q, but its earnings announcement was better than expected news. I also thought they looked light in inventory all through 3Q. That well controlled inventory didn't require deep or prolonged promoting to digest. Given that, and the fact that they finally have some measure of color on the floor, I'm expecting good things from ANF through 4Q.
Express continues to impress. You will see below that they were one of the busier stores this last week. And their floor remains open and well defined.
PacSun (NASDAQ:PSUN) had been looking downright light in inventory but another floor freshener has them fully stocked and in the game. A slight shift from fashion into key items will hopefully serve them well.
Aeropostale (NYSE:ARO) changed the window signage to reflect a 50% Off event, but that didn't appear to alter most of the specific pricing in Key Items and categories. Deep markdowns on Guys fashion wovens in 3Q do not appear to be plaguing them again…yet.
Every time I write about American Eagle I find myself reaching for words like 'smart 'or 'focused' or 'disciplined'. The visit on 11/20 brought 'disciplined' to mind. They had just marked the floor, literally, for the rope line they will use to control the register queue on Black Friday. Walking the arrows says that the line will accommodate 50+ people. Call me crazy, but I love this attention to detail. It is part of what I view to be their very planful approach to the business. They continue to practice strong Risk Mitigation with well-balanced inventories between Key Items and Fashion. Color is well managed in both Guys and Girls. And they appear to be sticking to their own promotional cadence rather than get whipsawed by their neighbors. The current BOGO 50% off is the equivalent of an over all 25% off. It's a cadence they have maintained for weeks now. Having a plan is a wonderful thing, especially when you can stick to it while many around you are making up a new one each week. Pictured below, American Eagle's floor at the back of the store, ready for the rope line:
The Q/S Profile below was used at BTS to track people in line at the register (NYSE:Q) and additional shoppers in the store. Teen retailers are in blue. Adult retailers are in yellow and Outdoor retailers are in green. Already AEO looks to be the busiest teen store, just like BTS. Old Navy dominates the Adult sector and LL Bean is clearly the most shopped in Outdoor. We'll see what patterns emerge over the coming weeks.
I noted last week that not everybody in the mall is suffering from bloated inventories. Pictured below is the backside of a fixture in Uniqlo. It was Friday 11/20 and they were definitely not busting at the seams.
Windows of the Week…WOW…go to Garage and Uniqlo. Garage shows a very clean but still enticing show of black and white. Uniqlo makes it happen, again, with color and information.
Conclusion: Buckle in. The healthy businesses are exercising promotional restraint and the unhealthy stores can't wait to get even more promotional. Those retailers that can exercise some level of restraint, and enjoy the margin savings even for a couple of days or weeks, are going to emerge the earnings winners this season.
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Articles I write for Seeking Alpha represent my own personal opinion and should not be taken as professional investment advice. I am an experienced apparel merchant, not a registered financial adviser. This article endeavors to give timely and ongoing color to the unfolding retail experience, not financial advice.
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