Urban Outfitters, American Eagle Top 2014 Teen Retailers
It's been a tough year for the 3As — Abercrombie & Fitch, American Eagle, and Aeropostale — due to the massive popularity of fast fashion chains like H&M as well as persistently high unemployment levels among teenagers. But of these three teen retailers, one is predicted to rise, phoenix-like, back into the arms and pocketbooks of the teen sector. The other two will continue their painful clearance bin march into 2014.
Jefferies analyst Randal Konik predicts that the most successful teen retailers of 2014 will be American Eagle and Urban Outfitters, and Konik upgraded their stock from "hold" to "buy," accordingly. Conversely, he expects the stock shares for both Abercrombie & Fitch and Aeropostale to suffer this year, and has changed their status from "buy" to "hold."
As the Jefferies report predicted — or maybe because of it — American Eagle was up 2.2 percent last Tuesday, the first trading day of 2014, and Urban Outfitters rose 2.1 percent; Aeropostale and Abercrombie, as predicted, were down.
Of course, it's hard to mention Abercrombie without reminiscing about their PR disaster of a 2013. CEO Mike Jeffries made sure the world knew that he only wants thin, popular high school kids to shop at Abercrombie; sections of the store's creepy employee handbook kept being leaked; France grew suspicious of Abercrombie's hiring policies; and the retailer angered the hive mind that is Taylor Swift's fan base. Add to that a price point that's simply too steep for un- or underemployed teenagers, and you've got yourself a retail disaster in the making.
Aeropostale is significantly more affordable (you can snag an Aeropostale hoodie right now for $8.99 under their New Year's sale), but there's a sort of unofficial Internet consensus that they're a middle school brand. Their website is brighter and more cheerful than Abercrombie's, and their clothing is distinctly less sexualized. Compare:
Abercrombie & Fitch website.
Urban Outfitters, on the other hand, has the distinct advantage of appealing to broad age range — while their sassy graphic tees and babydoll dresses bring in the high school crowd, they still sell plenty of slinky cut-out dresses and Coachella-fied apartment kitsch to 20- and 30-somethings. On Tuesday, Urban had a trading price of $37.95; Konik set his price target for Urban to $54.
American Eagle might seem too similar to the other As to be a front-runner, but Konik cites a strong management team as part of the reason for his cheerful AE predictions. Additionally, he considers American Eagle to be the "most relevant teen brand" right now, after conducting panels over the past 12 months. A quick glance at American Eagle's website reveals a breezy, hipster-California-lite style with a distinctly Instagrammable vibe — a bit similar, it seems, to their new BFF Urban. On Tuesday, AE had a trading price of $14.77 per share, and Konik has set his price target for $19 per share.
American Eagle website.
The experts have spoken. If you like your fashion in portfolio form, rather than hanging in your closet, you know where to shop.