California Apparel News

The 2011 Back-to-School season starts in mid-July, and the first forecast is good.

The crucial season’s sales will show modest growth—#8232;3 percent—compared with the same season the previous year, according to an early forecast from the International Council of Shopping Centers trade group.

The ICSC’s formal Back-to-School forecast is being released after the Fourth of July weekend. The National Retail Federation will release its Back-to-School forecast on July 19.

The news is good for a fashion industry still slogging through a tough economy, according to Michael #8232;Niemira, chief economist for the ICSC.

“Back-to-School is the second-biggest sales driver of the year,” he said. It makes up 17.7 percent of annual sales. The top sales driver is Christmas, with November and December shopping racking up 21.8 percent of annual sales. Back-to-School typically lasts from mid-July to mid-September.

Back-to-School sales will grow because the economy is gaining strength, according to the ICSC forecast. But the season’s business will not be easy, and retailers still face big hurdles to make sales.

Teen unemployment is still high, and that limited teens’ purchasing power. In May, unemployment was 24.2 percent for 16- to 19-year-olds across the United States, according to the Bureau of Labor Statistics.

Analysts and retailers are still wary of increasing costs for labor and material. The higher product costs are expected to eat away at retailers’ margins, said Marshal Cohen, chief industry analyst of The NPD Group, a market-research company based in Port Washington, N.Y.

Promotions and sales also will squeeze retailers’ margins.

“Don’t expect the consumers to have to feel much of [an] increase. Late shoppers will be rewarded by nervous retailers using promotions to entice consumers,” Cohen said.

Retailers will find protection from higher costs and some bargain-hunting customers by keeping their inventories lean, said Jeff Van Sinderen, an equities analyst for Los Angeles–based financial-services firm B.Riley & Co.

“Fewer units could mean that the customer starts a little more toward a ’buy it when you see it, or it will be gone mentality’ for key, well-executed fashion items,” Van Sinderen said.

Juniors and their parents will be shopping in a busy market, said Lynne Sperling of retail consultants The Sperling & Hileman Group LLC. “The juniors consumer has more energetic choices both in bricks-and-mortar chains and online,” she said.

Some of the savviest retailers vying for the Back-to-School dollar will be fast-fashion giants Forever 21 and Hennes & Mauritz as well as newer fast-fashion retailers Love Culture, Angl and Papaya, said Barbara Fields, owner of the Barbara Fields Buying Office in Los Angeles, which focuses on forecasting juniors trends.

“You’ve got to bring in trends much quicker than ever before,” she said. “You can’t wait. The customer is reacting to new fashion. That’s what they want.”

Juniors retailers growing this season include Wet Seal, which will open up to five stores during the Back-to-School and holiday seasons, according to financial documents released on June 27 by its parent company, The Wet Seal Inc., based in Foothill Ranch, Calif.

Charlotte Russe sharpened its bid for the juniors dollar when the San Diego–headquartered retailer opened an important new store in May at the Irvine Spectrum retail center in Irvine, Calif. The shop is considered the new look for the 500-store company, which was sold to Advent International, a private-equity firm, in 2009 after suffering through a bruising proxy fight. In February, the retailer announced it opened a new “creative hub” in San Francisco, which will help reposition the brand.

Pacific Sunwear, an Anaheim, Calif.–based surf and skate chain for juniors and young men, will enter the Back-to-School season with a mixed outlook. Its same-store sales increased 1 percent for its fiscal first quarter for 2011. It was the first quarterly positive comp the surfwear giant reported since the fourth quarter of 2007.

PacSun’s goal of increasing its sales for young women also was achieved during the first quarter of 2011. Same-store sales increased 4 percent for juniors.

However, its net sales for the first quarter of 2011 were down 2 percent to $186 million this year over last year.

Department stores Macy’s and Kohl’s will continue to try to attract juniors with celebrity. Pop star Madonna’s Material Girl line debuted last year at Macy’s, and Lauren Conrad bowed her LC Lauren Conrad line exclusively at Kohl’s.

Trends continue to dominate in juniors—and it is one of the most fickle of categories, according to Fields. The most recent popular trends are Navajo prints and colored denim, she said.