Apparel Retailers: Assessing Stock Price Trends
Abercrombie & Fitch outshines peers
Abercrombie & Fitch’s (ANF), American Eagle Outfitters’ (AEO), and Urban Outfitters’ (URBN) stocks have risen, with the companies’ strategic initiatives gaining traction. Their strategies include focusing on digital sales, revamping merchandise, and improving operational efficiency.
As of April 11, 2018, Abercrombie & Fitch, American Eagle Outfitters, and Urban Outfitters had risen 61.3%, 14.0%, 9.0%, respectively, this year. However, Gap (GPS) had fallen 10.3%, and the SPDR S&P 500 ETF (SPY) had fallen 1.2 %. The SPDR S&P 500 ETF tracks the performance of the S&P 500, which has taken a beating due to US-China trade war fears.
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Despite performing better than expected in 4Q17, Gap has seen its stock price fall in 2018. As reported by Benzinga, Bluefin Research Partners analyst Rebecca Duval believes that Gap’s improving merchandise and expense discipline will continue to boost its financial performance in fiscal 2018. Duval believes Gap stock, which comprises 0.03% of SPDR S&P 500 ETF, is underappreciated by investors.
Why the focus on digital sales?
As online shopping gains momentum and footfall in stores drops, apparel retailers are readdressing growth strategies. Amazon (AMZN) and a host of online retailers have changed the dynamics of the retail sector. To keep up with competitive online pricing, traditional retailers have been compelled to cut prices, pressuring their margins.
Also, stiff competition from fast fashion brands such as Forever 21 and H&M has impacted apparel retailers’ sales. With consumer preferences shifting to online shopping, investments in building sound direct-to-consumer and omnichannel capabilities have become the topmost priority for traditional retailers. In the next article, we’ll look at sales growth trends for apparel retailers.