A clothing crisis averted as Spring arrives

Apparel and department store retailers with heavy exposure to the clothing and accessories businesses reported abysmal sales results in January. Saks, Gap and American Eagle led the way down with same-store sales declines of more than 20%, while Target’s women’s business also suffered similar decline. JCPenney and Kohl’s recorded declines of 16.4% and 13.4%, respectively. Department stores such as Dillard’s were in negative-double-digit territory, while Macy’s fare better with drop of 4.5% that seemed respectable compared to others. There’s probably more bad news to come, as year-end results are reported in the weeks ahead, and magnitude of markdowns and the impact on profitability is revealed.

If there is a bright spot amid the reports of negative apparel sales it is this: Markdown activity and more prudent buying have brought inventory levels more in line with the reduced pace of demand seen during the past six months. That is good news heading into the spring and summer selling seasons, especially as there is bound to be a degree of pent-up demand from consumers who have money but are reluctant to spend it and have just endured an exceptionally rough winter. Female customers may be a little more price-sensitive than normal, but as always, they are likely to respond to fresh looks and must-have styles.