When your whole business depends on selling fashion to the masses, the last thing you can afford to do is be out of touch with what's going to be hot. While winter seems to have dug in its heels, spring really is just around the corner, and that means a new season of trends. Here's a look at three of the biggest consumer trends coming down the pike, and a few companies that are hoping to make the most of them.
Let us cultivate our garden
Almost every runway this season was awash in floral prints -- dresses, skirts, shirts, pants, everything. While almost every brand will have some versions to sell this spring, there are especially interesting offerings from Aeropostale (NYSE:AROPQ) and Fifth and Pacific (NYSE:KATE) brand Kate Spade. Aeropostale is focusing on the lower-end crowd with less-expensive items such as $25 dresses. That's the brand's style, and hopefully it's going to pay off. In its last conference call, the company said the first quarter was off to a slow start. Having trendy offerings should help boost performance, but only if the weather cooperates.
At the higher end, Kate Spade is doing what it does best -- clean lines and fashionable designs. The brand had a stellar 2012, with a 57% increase in revenue in the last quarter. This spring, the brand is rolling out a new line of $400 dresses and $200 skirts that aim at the fashion-forward customer. The company is also going to increase its focus on the Kate Spade Saturday brand this year, so look for new prints from that lower-priced brand soon.
The new trend on the block
If you're not wearing a floral print, you're probably going to be in a bold stripe or color-blocked outfit this spring -- or maybe you're a guy. Leading the solids pack is Michael Kors (NYSE:CPRI), with a selection of dresses and skirts at a wide range of price points. The lines on Kors' clothing are slimmer than those of either Kate Spade or Aeropostale, both of which have color-blocked offerings of their own.
For the past few years, Kors has been on the bleeding edge of mass-produced style. The company had a 41% increase in comparable-store sales last quarter, as customers rushed in to be part of the "in" crowd. This spring should be no different, even though the company has said sales growth is going to slow over the coming quarter. But Kors has a strong relationship with its suppliers and feels confident that any change in style can quickly be reflected on the company's sales floors.
Finally, expect to see a whole bunch of people running around in sheer layers and dresses with cutout sections in them. This trend has already been gaining steam, and the spring is just going to see it expand. As usual, Abercrombie & Fitch (NYSE:ANF) is happy to swoop in when the recipe for success includes baring more skin. A good spring would be great for the company, which is looking to keep up the momentum it gained last quarter, when it hit its highest quarterly sales ever, $1.5 billion. Of all the brands mentioned here, Abercrombie might be the best one to take a second look at.
Last quarter, comparable sales at Abercombie's main brand stores finally leveled out. The quarter before, sales had fallen 4%. By cutting back the bleeding, Abercrombie has shown that it's finally getting back in tune with trends that consumers are looking for.
While all of the companies I've covered here have plans to be fashionable this year, actually doing so might mean the most for Abercrombie. On top of its potential turnaround, Abercrombie is also priced to buy, with a P/E of 16, which is below the industry average. If I were going to take a bet on spring, I'd bet on Abercrombie. Now all we need is some warm weather.