While most of retail appears to be in recovery mode this spring, one petulant sector -- teen retailers -- is failing to participate.
When figures come out this Thursday, teen retailers -- represented by Aeropostale, Abercrombie & Fitch, Hot Topic, Pacific Sunwear, The Buckle, and Zumiez -- are expected to squeeze out a 0.7 percent increase, compared with a 3.7 percent gain expected for retailers overall, according to Thomson Reuters.
Teen retailers underperformed in the first quarter as well. A Wall Street Journal article suggested that weak teen spending may not be a good sign for the retail recovery.
"Teen retailers are a good proxy of discretionary spending because teens generally don't have many big expenses, so they can more easily spend their money, and, if their parents feel good about the economy, they are more inclined to give their child $100 to buy a pair of jeans," Jharonne Martis, retail analyst at Thomson Reuters, told the Journal.
"Parents don't have the money to support their spending habits," Laura Gurski, partner and leader of the North American consumer and retail practice at A.T. Kearney, told The Associated Press after teen chains delivered subpar results for April. "Teen merchants could face a difficult summer as job opportunities for teens will likely be slim."
Analysts also told the Journal that the teen retail group is suffering from an overabundance of stores that don't carry enough fresh merchandise.
"We aren't seeing the dramatic pickup in spending that everyone was hoping for in regard to teens," said Lisa Walters, principal at Retail Eye Partners, an equity research and consulting firm. "Buying remains constrained and value-oriented for the majority of them, with most still shopping around for the best deals."
According to a recent survey by Piper Jaffray, students indicated they would be spending an average of $932 on the fashion category in 2010. In a survey last fall, they were expecting to spend $1,083. Specialty stores continue to be the top preference of teen consumers, with a 29 percent share, but discount stores and major chains are gaining share as well, the survey showed.
May's sales figures are also expected to be impacted by a shift of the Memorial Day holiday to the last weekend of the month, pushing more sales into June. Cooler weather everywhere but the Northeast, as well as heavier rain in the Northwest, also slowed sales of summer apparel, according to Reuters.
Discussion Question: What do you think is behind the recent weakness in teen spending? Does the softness in the teen retail business have implications for consumer spending overall?