Monday, December 31, 2012

StoreIntel Research: Dec 31st Mall Walk

Not all is bad. After an extensive weekend of comp shopping, we feel not all retailers suffered during the holidays. We are confident that there are some clear winners this holiday, though as expected, the lull in between Black Friday and Christmas was challenging for many. Let us walk you through a few names:

  • Gap: At the top of our list, with Old Navy leading the way. We are very impressed with Old Navy this holiday period. As we reported on our mall walk from December 18th, Old Navy was an aggressive player in this space. We observed their inventory levels to be quite low. Multiple locations reported very strong sales from Black Friday through this past Saturday. Comparing the negative comps from December of 2011, The Gap is a clear winner. Any potential markdowns over and above their plans  were offset by top line growth, which in the end will result in positive margin improvement.
  • Abercrombie & Fitch: Another standout. We believe Abercrombie is the leader in the teen space. We see excellent sell-throughs in the cold weather categories, with outerwear leading the way. Hollister is going to give American Eagle a strong run as the top performer in the category. We noticed both American Eagle and Abercrombie holding strong with controlled promotions, and we see possible significant gross margin improvement. The new floor sets we viewed in Florida and the New York area , at both, Hollister and Abercrombie, were outstanding. If these small capsule presentations are any indication of the product to come, we feel both Abercrombie and Hollister are poised for an exceptional start to the spring 2013 season.
  • JC Penney: We are not in the camp that feels JCP made improvements during the holiday season. Recent news has been relatively favorable, but we feel quite differently. The product seems uninspired. We have heard of many merchandising changes at JCP corporate which leads us to assume all is not well. We would not be surprised if their dramatic comp decreases continue in the 20+ range. The product needs to improve with their private label business, particularly in Worthington brand offering in women's.
We will update again on January 2 with our views on TJX, Ross Stores, and Kohl's, as well as providing holiday comps for roughly 40 chains.

Wishing all a very happy, healthy and productive 2013!

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