Gap Store (GPS) - Once again we see the Gap and Old Navy as leaders for the month of September. We had noted earlier last week that the Gap stores seems to be a bit more aggressive in their promotional cadence for the month. Last weekend Gap was promoting at 30% off the entire store. This was a more aggressive promotion compared to the same time last year when they promoted the entire store at 25%. The question is whether this is an offensive or defensive measure. In our opinion we see this as an offensive position. We feel that for the remainder of the year the consumer is going to chase the more promotional opportunities. Now that the back to school period has passed we don't see any significant event driven opportunity until mid November. A more aggressive posture early on will insure less hard markdowns as we move through the season. The continual updates of new product(GQ setup of new merchandise occurred last night) provides fresh product and allows the Gap to always look current. Our channel checks at this time feel comfortable that both the Gap and Old Navy should be beating 2012 numbers for the month of September.
American Eagle (AEO) - Earlier in the month we were quite excited about the flow of new product that occurred after labor day. Well that excitement was short lived. It seems that the flurry of traffic that immediately followed the receipt of new product, although relatively small, provided a significant improvement in both traffic and conversion. Our most recent visit last night was disappointing. Unlike their competitors, last weekend which was a Friends and Family event, did not provide the expected lift. In addition, we noticed some new product on the flow that did not come close to the prior receipts earlier in the month. We are disappointed in the lack of trend right product being delivered to the girls floor. We feel that AEO is more promotional than LY as are their competitors but have concerns that the product as of yesterday will be problematic.
Abercrombie (ANF) -The most surprising change amongst the teen retailers. The product looks quite fresh and much more on trend than at any time throughout the ENTIRE spring season. In particular, our channel checks at multiple locations commented on the surprising improvement in business within the last week. We are starting to believe that the business is starting to make a turn around. Previously ANF was our most disappointing retailer in this space but we are seeing a reason to believe that a change is currently taking place, This is a name we will watch very closely as the stock has been severely beaten down since mid June.