Net Net: Promoting innovation and managing change
Net Net: Promoting innovation and managing change

Back-to-School Shopping Progress Report (It's Not Over Yet!)

Michael Hitoshi | Digital Vision | Getty Images

Students may be back in the classroom, but the back-to-school shopping season has not wound down yet. It comes as more and more parents do their shopping in piecemeal. The late trips to the mall may be a function of the struggling economy, but not all of it.

"There is the post-school opening period where kids go to school and they buy outfits of the 'cool' kids. So, there's definitely more shopping to do," said Eric Beder, Brean Murray, Carret & Co. Managing Director.

Beder said the name of the game for winning back-to-school is fashion. The right duds have been driving traffic and inventory integrity. In return, it has been helping maintain margin and higher pricing.

"The biggest trend is color continuing even after the summer into fall, with colored denim and louder tops," said Beder. "It’s the perfect cure for a blah economic environment."

He believes Wet Seal and Abercrombie are both best in class this season. Beder said the retailers are doing well on their fashion looks and in the denim department.

Beder said American Eagle and Gap will likely finish near the bottom of the class. He blames weak offerings, too much inventory and weak pricing.

He notes that inflation has caused a "strange shift" in how business was done during this season. Basically, you have to grade back-to-school pricing and discounts on a curve this year.

"Many times the discounts were heavier than last year, but the initial prices were higher, so the net price actually crept up year over year," said Beder.

SW Retail Advisors President Stacey Widlitz has the same school of thought as Beder.

Her top pick is Abercrombie, too. She cites pricing power and its success at grabbing the teen market.

"Numbers in general for back-to-school shopping were off to a good start," said Widlitz. "Irene had us looking for a shortfall, but it was the same story as we have seen in the past months."

While mid to low-end retailers are struggling, Widlitz points out the higher end is seeing improvements this season.

"Consumers seem willing to pay for great product even in this tough environment. We only need to look at Saks (NYSE: SKS) and Nordstrom (NYSE: JWN) to see that full price selling is back. Both retailers continued to seem cautiously optimistic at the Goldman Sachs conference this week," said Widlitz.

If more parents are back to buying their children higher-end fashions, perhaps it is a sign the economy is on the mend. Plus, there is nothing wrong with dressing for success at an early age. The Wall Streeters of tomorrow should look sharp.


Beder: None

Widlitz: None


Stephanie is Squawk Box producer. Follow her on twitter @StephLandsman

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