As the major youth specialty retailers unveil their fourth quarter results one thing remains crystal clear: the value trend isn't ready to leave us just yet.
Comparatively, the notion that the teen and young adult market is fickle in nature is certainly accurate to a point, but as it relates to their general shopping habits as opposed to specific fashion styles and looks, the concept of a value-driven youth consumer, or perhaps more acutely, the value-driven approached demonstrated by their parents continues to benefit a select few, like Aeropostale, while other remain in a wild game of limbo.
Generally speaking, most youth retailers are experiencing improving sales trends, but there remains this sort of dark cloud hanging overhead that ultimately puts a damper on a more immediate return to profitable growth. It's almost as if they expect to encounter a few more bumps in the road before reaching a smoother track. That said, forecasts for many of the major chains remain rather conservative through the first quarter and quite possibly through the first half of the year.
Much like the back to school '09 shopping season, there are two winners that came out of the fourth quarter: Aeropostale and The Buckle. Let's start with The Buckle.
For those of you not familiar with the Youth Trends research product, The Buckle was the top retailer based on the 2009 Youth Trends Back To School Retail & Shopping Report. Take away the impressive financials they posted in the 4th quarter, the one thing The Buckle has going for it is the intangible measure of a superior coolness factor among its target audience. In fact, based on the latest Youth Trends Teen & College Lifestyle Report, The Buckle ranks among the top three coolest or trendiest retailers to shop at right now. That's more than commendable considering its retail footprint is quite a bit smaller than much larger and better known chains. The Buckle's fourth quarter profit increased 23% compared to a year ago as its net beat Wall St. analyst expectations by six cents.
The Buckle has a good thing going for it in that it offers an array of premium brands the audience and their parents are still very much willing to pay for. These brands include Affliction, Big Star and Rebel Spirit, among others. These brands also represent the macro "tough guy" youth fashion trend which continues to increase in popularity among the masses.
The more value oriented Aeropostale also continues to be one of the bright sports in the youth retail sector as they demonstrated once again with their latest financial results. Their fourth quarter net jumped 42% as sales hit more than $800 million. Same stores sales also increased 9%. Financially speaking, things will get more difficult for Aeropostale in the short term as prior year comparisons will come into play in the first and second quarters.
From the audience's perspective though, it seems as if the picture has never been brighter. Store traffic and several perception-based data points all hit record highs based on the Fall '09 Youth Trends Teen & College Lifestyle Report, and for the first time, more members of the audience said Aeropostale was cooler to shop at than Abercrombie & Fitch. The value of that perception should not be underestimated.
The other facet of Aeropostale's business that is flying a bit under the radar is their relatively new kid's concept store P.S. Aeropostale has plans to add up to 30 new P.S. stores this year. With a bit of a void in the children's and kid's sector for forward thinking fashionable designs, P.S. could be in a rather good position to experience to some immediate success, which in turn will bolster Aeropostale's broader results during the first half of this year.
