Spring has sprung at U.S. clothing stores with a budding crop of fresh trends to lure shoppers, but it will take more than fashion to pry wallets open in these troubled times.
"The weak environment, the geopolitical noise, consumers' fears about their jobs and the tone of business, all of that trumps everything else," analyst Todd Slater of Lazard Freres.
Mini skirts, sheer tops, surfer garb and splashes of pale pink are in bloom in stores across the country, even where it's still too cold to wear them. Polo shirts and cargo pants also abound.
This may be enough newness to offset the strength of last year's peasant trend. But will consumers buy it?
"Just because the micro-mini is being promoted, women today are not going to throw out all their other skirts. The consumer has dramatically recognized that fashion is no longer such a priority in their spending," said Marshall Cohen, co-chief of fashion at research firm NPD Group.
Specialty apparel retailers, including sector leaders Gap Inc and Limited Brands Inc., are plagued by unfavorable weather, a weak economy, terror alerts, a potential war in Iraq, and the lowest consumer confidence in more than a decade.
Most retailers, at least, are relieved to be starting a new season. This week, Talbots Inc. management said 2002 was even more complex and difficult than 2001, which is remembered for the Sept. 11 attacks and their ill effects on the industry.
The second half of 2002 was extremely disappointing, as it proved surprisingly difficult to improve on the dismal performance of the prior year. The poor performance culminated in a lackluster holiday season.
Many retailers managed to extract earnings growth in 2002 from margin control, low inventory and cost cutting. Now analysts are eager to see top-line sales growth.
That is where fashion comes in.
"There are all kinds of opportunities to instigate a shopping trip," Slater said.
The new looks should be especially resonant with teens, who are less inhibited by economic and political concerns, he said.
Teen chains Hot Topic Inc. and Pacific Sunwear of California Inc. which have edgy music-related and beachy images, respectively, have consistently performed strongly in the current downturn.
If some of the issues of the day get cleared up, look for pent-up demand from older consumers as well, analysts said. But until then, discretionary spending will be reined in.
To a lesser extent, cold weather has also been wreaking havoc on the early spring. A Presidents Day blizzard took a big bite out of February sales, as East Coast stores were shuttered and shoppers were housebound.
The severe weather initially made it difficult to tell the direction of spring fashion, which could make things difficult ahead for retailers that rely on a test and reorder system of restocking, analysts said.
The calendar shift of Easter to April from March is an additional complication, as it prolongs the uncertainty of sales until the end of the quarter.
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