By: Krystina Gustafson, CNBC
It’s about time consumers caught a break.
After months of bundling up against below-average temperatures, residents of the Midwest and Northeast are finally thawing out—spurring delayed demand for spring merchandise that’s already hit the shelves.
As a result, March is shaping up to be significant month for retailers. Following a sluggish February, in which companies from Gap to L Brands said extreme weather took a bite out of sales, retailers are hoping the five-week long month will drive shoppers off of their couches and into the stores.
But while analysts sounded an overall positive note on the month—which should also benefit from a healthier consumer and an early Easter—trend reports and store checks indicate that certain names are better positioned for the season than others.
“The trends are not as innovative as we would all like,” said Jane Hali, head of Planet Retail’s financial services team, on a call with BMO Capital Markets. “However, we are in a much better position this year than last year.”
Coachella, color and comfort
Many of the season’s biggest trends are continuations from last year. Key themes include a 1970s vibe; festival looks, a la the Coachella music festival; and a sport influence. Popular items include jumpsuits and dresses—which give shoppers an entire outfit with a single price tag—tunics and jogger pants.
One of the biggest changes for the season comes from the color palette, Hali said. Whereas spring 2014 was full of neutrals, this year’s set is already shaping up to be more colorful. Pastel blues, pinks and yellows, and brights including orange, are more prevalent on the selling floor.
“The customer does respond to color,” Hali said.
Another big change is a shift in focus back onto denim, a category that’s lost much of its luster among comfort-driven shoppers who prefer leggings. For spring, Hali said denim is powder- or acid-washed, marking a “major change from all the dark denim that we’ve been wearing.” It’s also coming with a wider leg.
Still, Hali emphasized that athletic influences are not abating. The category is particularly important during the transitional months, when temperatures are warm but not yet hot.
“One of the reasons why… ‘athleisure’ has been so important is because this customer can buy today and wear today,” she said. “That is one of the major problems in apparel. We ship so early that in February we’re seeing shorts and most of us can’t wear them until the summertime.”
Kelly Carroll, client services manager at Planalytics, said transition pieces such as ballet flats, three-quarter-inch sleeve shirts and light jackets also tend to sell well during these seasonal shifts. But because consumers have been cooped up inside for so long, she added, shoppers will likely gravitate to warm-weather items such as flip flops, even if they can’t wear them right away.
“I think anyone, especially in the eastern half of the country, is grasping onto anything they can that shows signs of spring,” she said. “I think we’re going to see a surge just because consumers have been waiting for it.”
Who will win this spring
There are a number of tailwinds that should boost March sales. For one, an earlier Easter should move some sales forward from April. For another, last year’s prolonged cold spell left many retailers with a relatively low bar for the month’s comparable-store sales, Carroll said.
Those two factors are combining with a more sound economic backdrop, which includes a lower unemployment rate and consumer confidence that’s returned to prerecession highs.
Still, there are certain stores where the floorset appears more on-trend than others—boding well for their spring season.
Hali noted Urban Outfitters’ new capri jogger as an innovative take on the item, and said the tunic trend should benefit the company’s more upscale Anthropologie brand. H&M has tapped into the festival trend for a few seasons now, and is launching an official line with the Coachella music festival this month.
Hali added that contemporary brands—which typically cost less than a true luxury label and target a younger shopper—are often overlooked, despite the share they’ve stolen from teen retailers. She expects their strength to continue, naming BCBGeneration as a beneficiary of this trend.
Along those lines, Janney Capital Markets analyst Adrienne Yih-Tennant said that young adult and contemporary retailers are well-positioned, calling attention to Bebe, Express, Francesca’s, PacSun and Urban Outfitters. On the flip side, she expressed concern about product misses at Ann Taylor, Gap and Loft.
“In our opinion, both Ann Taylor and Loft are based in neutrals, black and white, with minimal color and print pops,” she wrote in a note to investors.
Among the ailing teen names, analysts agreed that American Eagle is resonating best with its target demographic, while Abercrombie & Fitch’s efforts to evolve from logo-driven to fashion-forward has yet to gain traction.
Hali also expects accessories to perform well, as emerging trends including the shrunken handbag are bringing newness to the category. As such, Kate Spade, Michael Kors and Coach are well-positioned, she said.
That’s not to say spring will be without challenges. Among them, a backlog at the West Coast ports, which will cause some of the season’s deliveries to hit the floor later than usual. This will likely lead to discounts on merchandise that could have sold at full price.
Gap’s Old Navy, Macy’s and Steve Madden are among the companies that have already said their stores will be hurt by late deliveries.
“It’s really going to take effect later in the season,” Carroll said.