Favorable weather conditions and a strong comparison to last year will help retailers during the holiday, the report says. Retailers also have two extra selling days this year compared to 2003. These factors should lead to a 3% to 4% increase from last year's sales, according to Lehman.
Women and teens will be buying fitted, shrunken and tailor-fitted apparel, the report says. Pants will have high waists and wide legs; skirt styles are "pencil tight or full and flouncy." Lehman calls the biggest fabric story of the season "modern versions of classic textured tweed." Chains capitalizing on the trend include Ann Taylor, Anthropologie, Banana Republic and Express. The report also highlights cardigans, denim, animal prints, corduroy and ponchos as hot sellers.
Last week Lehman Brothers initiated coverage of Abercrombie & Fitch, American Eagle Outfitters, Children's Place, Gap Inc., Limited Brands, Ross Stores, TJX Cos., and Urban Outfitters.
The firm predicts that American Eagle will post a same-store sales gain of 20% this month and mentions that the retailer plans to introduce a new chain by the end of the year. Meanwhile Hollister, an Abercrombie spin off chain, could grow to between 450 and 500 units in the next three to five years, the report says. That chain now has about 200 stores.
The report expresses concerns about the Children's Place deal to acquire the Disney Store chain and says the impact of the transaction will not be determined until early next year. Lehman had a favorable report of Gap but said the company could stand to close from 300 to 400 of its 1,352 stores in order to maintain "gross profit stability."
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