"Despite less favorable weather in the Mid-Atlantic and a cautious tone emanating from recent conferences, our mid-month store checks revealed a low promotional tone," writes Lehman analyst Jeff Black. "That indicates a healthy environment and we think softline retailers are on track for solid March comps."
The note predicts excellent March comps for American Eagle Outfitters, better in fact than analysts' consensus (up 22% compared to up 16%). Any point within that span would represent fairly typical growth for the popular clothier, which saw comp growth of 28.6% in Q4 2004 and 24.9% in Q3 2004. "The teen space continues to be strong, driven by the preppy and bohemian trends (colorful polos and ethnic-inspired prints and embellishments)," says the note about American Eagle.
The calendar also favors American Eagle and other retailers who focus on the teen market. Easter, which is next Sunday, is early this year, and so are many schools' spring breaks, which is an active period for teen purchases. Easter is also driving March purchases of dress clothes for children, a factor that may help Children's Place in particular, according to the note. That retailer is expected to score a 23% increase in March comps.
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