Clothing stores are gearing up for the back-to-school shopping season amid a bit of malaise in the retail sector.
It’s anybody’s guess how the year’s second-biggest shopping season, which typically runs from August through September, will play out.
“People are nervous right now,” said Elizabeth Pierce, an analyst at Sanders Morris Harris in Los Angeles. “You saw a lot of mixed results (in July). Specialty retailers did better than big box stores.”
That could bode well for local surf shops. Jack’s Surfboards in Huntington Beach and Newport Beach are planning big sidewalk sales.
Becker Surfboards, which has shops in Corona del Mar and Huntington Beach, is giving staff extra hours.
The hot weather nationwide has put a damper on demand for back-to-school clothing at big retailers, such as Gap Inc. and Nordstrom Inc. They recently reported worse-than-expected July sales that missed Wall Street forecasts.
It’s looking better for Orange County chains.
Foothill Ranch-based Wet Seal Inc. and Anaheim-based Pacific Sunwear of California Inc. both went into the back-to-school season with same-store sales up in July.
Becker Surfboards President Dave Hollander said he’s impressed with the fall clothing from OC’s surf brands, such as Irvine-based Billabong USA and Huntington Beach-based Quiksilver Inc.
He said four years ago he used to show them clothes from Abercrombie & Fitch Co. and say, “Why can’t you do it like this?”
Now he said the surf clothes are “almost artsy” with more detail, better hang tags and stitching.
“The product looks good,” he said.
Hollander said he expects a good back-to-school season, on par with last year.
But so far this summer the “buzz” at his stores has been weak compared to last year, he said.
“We’re selling stuff but the weather has been crummy,” Hollander said. “The surf has been crummy. I’m amazed we’re doing as well as we have.”
Hollander said he’s still on track to end the year with a 10% to 20% increase in sales.
But he said the vibe at his stores has been weak mainly because the ocean is filled with jellyfish, which keeps surfers and swimmers away.
“Last summer everybody wanted to learn to surf. All the movies were going,” Hollander said. “It was a frenzy kind of year. This year is certainly one of the slowest years in a while.”
After the season, Hollander said he runs sales reports to figure out what brands and types of clothing were hot so he can make adjustments for the winter holiday season.
“You ascertain the trends right there,” Hollander said.
Summer sales at Jack’s Surfboards have been swift, said buyer Bobby Abdelfattah.
“We are buying very heavily for back to school,” Abdelfattah said. “We have a lot of the stuff in and we’re putting it out.”
The retailer holds big sidewalk sales with discounted clothing at its Huntington Beach and Newport Beach stores during August to entice shoppers, Abdelfattah said.
The stores feature garb from many of OC’s surfwear brands, such as Quiksilver, Billabong and Costa Mesa-based Volcom Inc.
National retail forecasts are mixed.
Deloitte & Touche LLP said in a recent report that general merchandise and apparel sales are expected to rise 4.5% to 5% during the August through Septem-ber period, up from a 3.8% gain last year.
Ernst & Young LLP predicted in an August report that back-to-school spending would rise “moderately.”
“The back-to-school season will be promotional again,” said Jay McIntosh, Ernst & Young’s director of retail and consumer products in the Americas. “But retailers will use sales more judiciously, starting back-to-school promotions earlier and adjusting merchandise based on consumers’ reactions.”
The National Retail Federation has a bit of a gloomier retail take on the season. The federation said back-to-school spending this year is expected to be $13.4 billion, down from $14.8 billion last year.
Families with school-aged children are expected to spend an average of $444 on back-to-school gear, down 8.2% from last year, according to the federation’s July survey.
The good news for most retailers: The drop largely is due to less spending on electronics, according to the survey.
That could play in the favor of clothing retailers, such as Jack’s and Pacific Sunwear, said Pierce at Sanders Morris.
“Electronics were cannibalizing apparel sales for the last couple of years,” she said. “That could be good news for apparel for the back-to-school and holiday (seasons).”
Pierce said she expects to see a “healthy” back-to-school season since “kids like to replenish their wardrobe every year.”
Wet Seal, whose restructuring this year includes a new chief executive, a round of financing and the shuttering of more than 100 unprofitable stores, is heading into the back-to-school season with momentum.
The company’s July sales rose 51% at stores open at least a year.
“We enjoyed another month of strong sales in all geographic regions as we enter the back-to-school season,” said Chief Executive Joel Waller, in a statement.
Pacific Sunwear has made changes, too.
The company tweaked its men’s clothing line at its urban-style d.e.m.o. division.
Pacific Sunwear added more masculine colors like gray, white and navy to the mix instead of pastel colors, which flopped. It also increased its selection of men’s polo shirts.
The chain’s same-store sales rose 4% in July, beating analysts’ expectations of 3.5%, though the results are down from double-digit gains in the past few years.
“It seems like the stock gets picked on quite a bit,” said Pierce of Sanders Morris. “You hear every once in a while that surf and skate is going out of style. Tell that to a couple hundred thousand people at the Huntington Beach pier (for the recent Bank of the West Beach Games). I continue to say it’s a lifestyle and it’s not going out of style.”
Gypsy skirts, shrug sweaters and jeans are expected to be big this back-to-school season, she said.
Pacific Sunwear should do well at its d.e.m.o. and PacSun stores since it stocks jeans with different washes and jewels, glitter, lace and other so-called embellishments, she said.
One longer term warning from Deloitte: The back-to-school season could be losing its oomph.
In an August report, Deloitte said that from a “long-term perspective demographics are making the back-to-school season less of an event to consumers and retailers.”
That’s mainly because the number of children ages 5 to 19 is down, and school districts continue to move to year-round schedules, which spreads spending throughout the year, the report said.
“The environment is shifting and retailers can no longer count on traditional peak spending periods, such as back-to-school,” said Pat Conroy, vice chairman and national managing principal of Deloitte’s consumer business practice unit in Costa Mesa. “As the back-to-school season becomes less of a focus for consumers, retailers should consider new ways to reach out to them.”
Still, Pierce of Sanders Morris said the back-to-school period remains critical for most retailers since it’s “starting to represent a greater percent of their total sales” and can give them clues on what to change for the holiday season.
“The retailer and manufacturer have to be prepared to accommodate how fast consumers’ tastes change,” she said.
