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Denim Tops the Charts for Teen Specialty Chains in First Quarter

Jeans are leading the way for retailers serving the teen and young adult consumers, such as Urban Outfitters, American Eagle and Abercrombie & Fitch.

These young consumers have apparently taken to the new wave of denim fabrics and silhouettes that in many ways don’t resemble their parents’ jeans, but still serve the purpose of being a go-to wardrobe for comfort, appearance and flexibility.

For Urban Outfitters, Frank Conforti, chief financial officer, noted during the company’s conference call that Urban’s wholesale segment delivered 13 percent sales growth versus the prior year, largely due to a 10 percent gain at Free People.

Adding to that, Richard Hayne, CEO of Urban Outfitters, cited a strong product performance in all channels at Free People, including “outsized growth in Free People’s two expansion categories, FP Movement and denim.” He credited the brand’s “robust” marketing efforts and the stores’ visual merchandising.

“The Free People merchant and design teams completely reimagined the denim offer for spring-summer, adding more choices, alternative fits, a variety of new silhouettes, and expanded inseam and size offerings,” Hayne said. “This drove a 200 percent increase in Free People wholesale denim sales in Q1 over the same period last year. Going forward, the brand will continue to focus on expanding both categories.”

Discussing merchandise on a call with analysts, American Eagle CEO Jay Shottenstein noted that in the fourth quarter, American Eagle introduced key strategies to drive long-term growth and value.

“Those growth vehicles include leveraging our leading position in AE jeans and bottoms to grow our market share, accelerate Aerie regrowth, strengthen our customer connection and deliver financial returns,” he said. “I am pleased to say that our execution on those strategies fueled our results during the first quarter.”

Within the AE brand, the company reported its 19th straight quarter of record jeans sales. “We remain highly focused on developing the very best new fabrics, fits and styles to continue to be the leader in jeans,”Shottenstein said.

Chad Kessler, global brand president of the AE Brand, said for back-to-school, jeans are expected to be the driving force, noting, “it is the leading time of the year to sell jeans.”

“We’re going to make sure we have every relevant fit, a fit for everybody,” Kessler said. “We’re going to continue to lead with innovation, quality and value, and we’re going to have a marketing campaign highly focused on selling more jeans for back-to-school.”

He said profit margins for jeans has improved nicely, and “our sourcing department works very hard to make sure that like-for-like, we see decreases in cost.”

 

Fran Horowitz, CEO at A&F, also cited denim as a key driver on her company’s earnings call.

“From an assortment architecture perspective, we’ve said previously we devote our attention to our must-win and must-grow categories,” she said. “This is a strategic focus, as must-win are the core categories that drive our business and that we’re known for, such as graphic tees, outerwear and jeans. And must-grow are those categories adjacent and complementary to must-win, such as swim, underwear, and Gilly Hicks, where we believe we’re able to drive significant growth and take share.”

At Hollister, she said, those categories made up more than two-thirds of the brand’s sales, which she credited to “record” first quarter sales in denim and swim as well as graphic tees and outerwear, which outperformed.

For Abercrombie, key categories included outerwear, fleece, jeans and pants, she noted. Strong growth was seen in women’s bottoms, particularly denim, and in men’s outerwear.

Horowtitz added that, “Overall, customers responded strongly to newness across color, pattern and detail, and we were able to chase at scale for the second quarter.”

 

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