Teen Retailers: Holiday Season Ain’t Over Yet, Survey Says Only Half Done

While it may have been more than a month into the holidays, the most important season for apparel retailers is still not over. According to National Retail Federation’s (NRF) survey, most consumers have more than half of their shopping to complete. The positive outlook has also resulted in NRF increasing its holidays sales forecast to rise by 3.8% compared to its earlier forecast of 2.8% in October. Extrapolating the results to our apparel coverage universe, we believe the increase in holiday shopping near Christmas to benefit retailers such as Gap Inc. (NYSE:GPS), Aeropostale (NYSE:ARO), Abercrombie & Fitch (NYSE:ANF), Urban Outfitters (NASDAQ:URBN) and others.

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So what is  behind the increased outlook?

While the initial figure of 2.8% growth in October was based on macro-economic uncertainty and rising unemployment, retailers have reported better sales numbers during November and early December. Retailers have witness some of the best sales during Black Friday weekend, with specialty retailers reporting betterment in retail comps across the board. As an evidence of strong retail sales in November, NRF has announced that retail industry sales for November rose 4.5 % year-over-year.

Additionally the survey reveals that the average American has completed far less of their holiday shopping till now than in previous years. Which in turn refers that apparel retailers can hope for a brighter Christmas than what they had expected in the beginning of the season.

However the growth still less compared to that of 2010

Though there may be an improved holiday outlook, the overall mood across the apparel market is still cautious. Global issues such as European debt crisis and zooming unemployment rate still hold the potential to derail the holiday growth bandwagon at any time. Additionally the market is excessively promotional, which points that while there may be an increase in retail sales, increasing promotional depth can even things up with negative impact on margins.

We believe the situation will clarify much after the apparel companies come out with their December business updates, however there is no denying the fact that holiday season is anything but over.

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