Abercrombie, Aeropostale, and American Eagle are stuck in a wasteland.
The former rulers of teen retail will announce earnings this week, and analysts expect lackluster results.
“The group continues to reel from increased competition, a core customer group that is uninterested in logo product (or apparel in general) and a generally ‘blah’ fashion season,”
writes Eric Beder, specialty retail analyst at Wunderlich Securities.
Abercrombie and Aeropostale report earnings Wednesday, while American Eagle’s announcement comes Thursday.
All three companies’ shares have been turbulent in recent years because of a shift in teen consumers’ attitudes.
Simply put, these clothing brands simply aren’t cool anymore, the analysts write.
Teenagers used to be some of the most lucrative customers for apparel companies.
Fickle and obsessed with their appearances, many teens had no problem shelling out for trendy items at Abercrombie, American Eagle, and Aeropostale in order to fit in at school.
But the mentality of teenage consumers is changing rapidly, according to Piper Jaffray’s recent Taking Stock With Teens survey.
Researchers found that today’s teens are increasingly spending on technology and food over clothing.
For the first time in history, teens are spending as much on food as they are on clothing, according to the analysts at Piper Jaffray. This is fuelled by trendy coffee drinks at Starbucks, the top food retailer among the demographic.
Many teens are also more concerned with having a new iPhone than a name-brand t-shirt, according to the survey.
When they do buy trendy clothes, teens are value-conscious. They prefer fast-fashion companies like H&M and Forever 21 to the more expensive specialty stores.
Denim is also losing popularity to stretchy yoga pants from retailers like Lululemon and Nike, the analysts at Wunderlich write.
The troubling trends in the teen market have led to Abercrombie marketing to people in their 20s for the first time in decades.
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