The holiday season is crucial for retailers, so how are the companies doing so far? Intrepid Motley Fool Research analyst Bob Fredeen braves the maddening crowds to get a feel for the holiday season.
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As I did in August, two weeks ago I visited Tyson's Corner mall in McLean, Virginia, to get an idea of what retailers are offering. I also spent a few hours in another local mall, the Fashion Centre at Pentagon City in Arlington, Virginia, to see how things were going there. I returned to Tyson's the day after Thanksgiving to evaluate the holiday-season traffic. Gap attack A quick word on Gap's stores: Gap has been redesigning its stores in order to improve efficiency and make them more inviting to customers. The first redesigned store in this area opened about two months ago at Pentagon City. The biggest differences I noticed were larger signs and easier access to the checkout counter. The registers were moved to the back wall (unlike the island of registers in the middle of most Gap stores), making them accessible to customers on the men's and women's sides of the store. If my visit was any indication, customers like the new design. The store was full of people, and quite a few folks were in line waiting to buy their selections, almost all at full price. Banana Republic's holiday line is very similar to the items it usually sells. Cashmere is the first thing you notice when you walk into the store, along with plenty of wool, leather, suede, and lots of sweaters in winter colors. Traffic at the Banana Republics I visited was pretty strong, though they were in the middle of the pack in terms of shoppers each visit. Also, there was not very much discounting going on at Banana Republic, with the exception of the usual discount racks in the back corners. Gap Kids was pretty quiet the day after Thanksgiving, possibly due to the fact that mostly young people and "hard core" shoppers were out. However, the Gap Kids at Pentagon City was full of people, with quite a few folks buying. One thing I like about Gap Kids is the focus on detail. For instance, the shelves and displays are kid-height, as demonstrated by all the kids running up to their parents with their shirt and sweater selections. Overall, the merchandise was very similar to Gap's, with few markdowns. Limited potential? Another Limited brand, Express, was packed for each visit at both malls. However, the store also had the most markdowns of the stores I visited. Sweaters remain the big thing for this brand, with lots of colors and styles to choose from. The store was also pushing a new credit card. Express remains one of the nicest stores to visit because of its exciting environment and helpful staff. All this seems to be working, because the cash registers were hot. The flagship Limited brand stores were more focused on formal and dressy selections compared to the younger fashions at Express, with fewer colors and fewer sweaters available. Most of the sales associates were helpful, though a couple seemed prone to making snide comments about customers. Traffic looked pretty slow at this store, and there was a moderate level of discounted merchandise. Lane Bryant was the final Limited brand I visited. The styles were very colorful and flashy. One of the managers told me that the brand's chief designer had spent some time in Italy, and that had influenced her recent designs. This seems to have been a positive change. However, the store was not very busy, with just a few shoppers browsing. Very little merchandise was marked down. Abercrombie cleans up -- or not Sweeter sweaters What does all this mean for Christmas? My observations were based on two trips to two different malls in the same region and may not be indicative of every store, mall, and region. However, based on what I saw, it seems that Abercrombie & Fitch, Gap, and American Eagle Outfitters are doing pretty well with their current holiday efforts. As I've mentioned before in my Motley Fool Research coverage of Gap, the company needs a strong Christmas even more than usual this year. Lastly, I noticed some weakness in the Limited Group's stores, which, if indicative of problems common everywhere, could mean bad news for the holiday season. Related Links:
Let's start with Gap's (NYSE: GPS) flagship Gap brand first. Gap's stores were surprisingly busy each time I visited, especially right after Thanksgiving. For a brand that has been ailing for the last year, Gap was full of shoppers and had little discounting. While not everyone was walking out the door with Gap shopping bags, I saw more than a few throughout the mall. At Tyson's, I estimate that Gap bags were third, behind department store Hecht's and Abercrombie & Fitch. Gap's holiday line is very colorful, especially for women. The store is firmly on the sweater bandwagon, though Gap has a new focus on bright winter accessories like hats, gloves, and scarves. Additionally, the store offered the most helpful staff in the mall.
Moving on to the Limited (NYSE: LTD) stores, I visited Structure, the men's brand. It seemed to me that prices were set a bit higher than my last visit. Also, the selections were more colorful, with lots of pastels. Traffic was not high for either visit to the store, possibly due to the higher prices.
Abercrombie & Fitch (NYSE: ANF) sported its usual "well shopped in" look, with some mess and clutter. The only thing that really bothered me during my first visit was that several sales associates walked right over a spilled coffee cup without doing anything about it. While traffic wasn't anything special during that visit, the store was pretty busy after Thanksgiving. As I mentioned before, Abercrombie & Fitch bags seemed to be everywhere. Abercrombie may have had an advantage right after Thanksgiving, since most of the shoppers were high school and college age, the store's prime demographic. There was more discounted merchandise than I expected, with two full racks of paratrooper pants stuck in a corner. However, the discounted merchandise was not very accessible and most customers were busy with the full-price merchandise.
American Eagle Outfitters (Nasdaq: AEOS) won the coveted "Best Sweater" award that I gave out at the end of the day. It featured a lambswool/angora sweater that was the nicest thing I saw during my visit. Store traffic was moderate before the Thanksgiving holiday and a bit better afterward, with very busy cash registers. The styles were similar to what the store has been selling for the past few months, though there were more holiday decorations after Thanksgiving. Some merchandise was marked down, especially the snowboarding collection. I didn't know there was a snowboarding collection, and apparently I wasn't alone.
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