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Outerwear Sales Change With the Wind, So Brands Must Plan Accordingly

Forecasting can be one of the biggest challenges for retailers, especially as the apparel market is increasingly driven by media coverage and tech innovations. In the outerwear sector, there are bigger forces at play: year after year, the only thing that stays the same in outerwear is that sales are influenced by weather patterns. To stay afloat, brands need to plan assortments carefully. To thrive, they need to use forecasting strategically.

Outerwear sales, in general, increased through fiscal 2019. Research from the Doneger Group indicates that 2018 sales in outerwear were up low double digits to previous years, and that brands saw fewer markdowns and less clearance inventory than before.

For several of the big names in outerwear, the gains were substantial. According to the companies’ most recent earnings calls, outerwear sales were flush in Q3 of 2019. At Canada Goose, the company reported it increased revenue by 50.2 percent, and adjusted earnings per share grew by 65.5 percent to 96 cents per diluted share. Adjusted EPS in the quarter was larger than the company’s annual figure for all of 2018. Meanwhile, Deckers Outdoor saw sales of $874 million, with most of that revenue coming from UGG. VF Corp. reported growth from The North Face and Timberland, while Columbia reported growth throughout wholesale and direct-to-consumer channels. And at G-III, outerwear was a high performer in Q3, especially at Calvin Klein, Tommy Hilfiger, DKNY, Karl Lagerfeld Paris and Levi Strauss & Co.

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Outerwear doesn’t follow quite the same rules as other apparel sectors. Chris Curtis, senior product manager at The North Face, pointed out just how much sales are dependent on factors far outside of brands’ control. “In general, the earlier, wetter and colder a winter season is, the better sales are for outerwear,” Curtis told Sourcing Journal. “This year is no exception.”

Sudden frigid temps jump-started Deckers’ success, “creating early demand with strong full price selling and sell-through,” CEO David Powers said in the company’s earnings call. But what the weather gives, it can take. “Last year [a] cold late December, carried through January,” he said. “This year, we had a good colder October and November, but warm December that carried through the beginning of January. And there’s a lot of selling in January.” The result, Powers said, is an anticipated “flattish” performance in Q4.

According to Doneger, early cool weather in October 2018 jumpstarted consumer demand in the fall, and consistently cold weather through November buoyed it further, shifting the demand slightly. That’s something brands had to anticipate, too—and those that did reaped the rewards as heavy weight and longer outerwear exceeded plan later in the season.

But retailers can’t go all in on pieces designed for extreme temperatures because it might not materialize. The best way for retailers to hedge their bets in outerwear, according to Doneger, is to center mid-weight outerwear as a major buy, and build out their stock of heavier pieces and light jackets from there.

“There are plenty of items that are just for extremely cold weather, but there are also an increasing number of styles that focus on versatility in terms of weather, activity and wear occasion,” Curtis said. Because mid-weight outerwear is intended to be worn throughout the year, that gives brands room to innovate, too.

One example is the lightweight down hybrid base jacket Canada Goose released last year, which was one of its top performers in 2018. The jacket is designed for a wider range of cold temperatures than other jackets in the line, and is indicative of the innovations outerwear companies can make when they’re designing for unpredictable weather. “[The jacket’s] DNA is deeply rooted in what has made us the reference parka, and it appeals to consumers looking for more versatility,” said Dani Reiss, president and CEO of Canada Goose, in the company’s latest earnings call. “We made a concerted effort to drive higher awareness coupled with greater year-round distribution, and the results strengthen my conviction that we have an incredible opportunity to continue to lead this category going forward.”

There is a lot of hybridization in garments that helps bridge the gap between seasons,” said Curtis. That tactic has also lead to an increase in outerwear pieces that are meant to be combined or layered, providing consumers coverage that can change with the day, not just with the season.

Retailers also need to be careful when planning their outerwear strategy to focus on more than just sales volume. Profitability is a major part of the outerwear market: brands that drop outerwear collections too soon or too late in the season will have to take those losses when items are marked down in the middle or end of season. Though it seems counterintuitive, snow and ice storms can inhibit brick-and-mortar sales, and brands can miss out if they’re still transitioning from fall offerings into heavier winter ones when the first freeze hits.

Over the last year, brands have been hitting the sweet spot with profitability, according to Doneger, which translated into higher average unit retails and higher velocity of inventory turnover, and fewer markdowns. Carrying the right amount of stock for consumer demand is a delicate balance, Curtis said.

“If retailers go deep, they know they’ll have the goods if the weather hits,” he added. “Smaller, more frequent orders offer less risk of overstock, but greater risk that they may not have the customer’s desired items.” 

Some brands have developed ways of handling inventory discrepancies—in the company’s Q3 earnings call, VF Corp. president and CEO Steven Rendle touched on The North Face’s pilot program of taking back, refurbishing and reselling some products—but there’s no magic formula for negating dead stock or high returns. Retailers may also look to their supply chain for help in navigating the fall and winter seasons, choosing to pair with vendor partners who can deliver reorder merchandise quickly to meet sudden shifts in demand.

Predicting customer behavior is difficult enough, but apparel companies that are grappling with the weather must also find creative workarounds for severe temperatures, regional disparities, and even the simple fact that summer has to come eventually. Deckers is fine-tuning the UGG men’s strategy, leading to increases in total sales in their men’s boot and outerwear collections. They’re also bolstering lines like Hoka One One and Koolaburra, which offer sneakers and business footwear, along with boots. For Canada Goose, spring and summer signal reinvented versions of brand standards, like travel-friendly, all-weather jackets that mimic the silhouettes of classic Canada Goose parkas.

There isn’t much more brands can do to shield themselves from harsh weather and all the changes snow, sleet and wind bring to the market. Apparel brands that can be flexible in their assortment planning, and that are willing to get cozy with materials suppliers to pivot when necessary, can avoid both literal and figurative storms.