As cotton prices soared earlier in the year, retailers were left scrambling on how they would handle the pricier fiber this fall. For denim in particular, in which cotton makes up about 55% of the total cost, this is an even bigger issue for the all-important back-to-school season.
According to Brean Murray analyst Eric Beder, five retailers he covers raised denim prices to offset higher cotton costs, while four cut prices this back-to-school season. With price at the forefront of shoppers' minds, most retailers are offering compelling promotions to distract from the increase in original prices.
Here's a look at how retailers are handling denim prices and where to find the deepest promotions.
Abercrombie & Fitch
Abercrombie & Fitch is dominating denim discounts for back-to-school season, pressuring rivals like American Eagle Outfitters and Aeropostale.
Abercrombie is offering 50% off all denim (excluding flagship exclusive styles) through Aug. 30. This time last year, the teen retailer offered 40% off its denim selection.
While Abercrombie's denim discounts appear deeper than last year, Needham analyst Christine Chen noted that the company has been charging higher prices. This year jeans range in price from $39 to $44 price range compared to the average $39 last year.
"The re-launched denim has a higher lycra content, which is not only a better fit, but now uses less cotton," Chen noted.
The average price at the company’s Hollister stores is $24.75, 17% less than last year, Beder said.
American Eagle Outfitters
The teen retailer kicked off the back-to-school season with a 40% clearance, deeper than last year's 30% discount.
But for the most part, American Eagle's denimprice points are consistent with last year, with Beder finding the average price at about $37.47 (before this week's discount).
"While the denim assortment is once again the most comprehensive and compelling in the teen space, it does not seem to be generating as much interest as Abercrombie & Fitch's 50% off denim in most locations, given that price points are now similar to Abercrombie and higher than Hollister," Chen noted.
Aeropostale
Aeropostale is featuring a 50%-off denim promotion, with men's original boot cut jeans now $22.25 from $44.50 and girl's jeggings $23.25 from $46.50.
Earlier in the month, Aeropostale was offering $10 off denim, but this promotion actually increased the price of denim, according to Chen. After the promo, denim was between $24 to $28 for men's and $22 to $26 for women's, compared with $20 last year.
"Aeropostale's back-to-school assortment is wear now, and is more edited, with fewer colors and a return to classic preppy styles that are brighter and more appropriate for the younger customer," Chen noted. "Denim does not seem to be emphasized in this initial floorset, which given the heatwave, could be beneficial as the customer is still looking for shorts and wear-now apparel."
Urban Outfitters
Urban Outfitters has the most expensive jeans at $63.33, an average unit retail increase of 3.8% from last year, according to Beder.
"The lack of uniqueness will make it much harder to justify increased price points in the eyes of the money-tight consumer given their various options," Beder noted.
Pacific Sunwear of California
Pacific Sunwear of California is offering buy-one, get-one free denim on select styles as well as a buy-two, get-40%-off promotion on other denim merchandise.
The skate-and-surf-inspired retailer is featuring the BOGO event on select BullheadBlack and men's Bullhead styles. Women's Bullhead black leggings and other styles are buy two, get 40% off each pair.
These discounts are a direct result of PacSun being forced to raise original prices on denim this back-to-school season due to higher cotton costs. Beder noted that PacSun's average unit retail price is $38.36, a 39.5% surge from last year.
Wet Seal
Wet Seal has seen the biggest price increase in denim this year, up a whopping 113.9% from back-to-school 2010, according to Beder.
"We believe they have jumped on the bandwagon with the others who have raised prices and are going to take advantage while they rightfully protect their margins," Beder wrote in a note.
Wet Seal's average unit retail price is $32.08, higher than Aeropostale, Old Navy and Hollister.
But Wet Seal is offering discounts on these higher prices. The fast-fashion player is featuring its "Rock Blues" promotion on its Web site, with five fits and 12 washes on sale for $19.50.
yahoo
According to Brean Murray analyst Eric Beder, five retailers he covers raised denim prices to offset higher cotton costs, while four cut prices this back-to-school season. With price at the forefront of shoppers' minds, most retailers are offering compelling promotions to distract from the increase in original prices.
Here's a look at how retailers are handling denim prices and where to find the deepest promotions.
Abercrombie & Fitch
Abercrombie & Fitch is dominating denim discounts for back-to-school season, pressuring rivals like American Eagle Outfitters and Aeropostale.
Abercrombie is offering 50% off all denim (excluding flagship exclusive styles) through Aug. 30. This time last year, the teen retailer offered 40% off its denim selection.
While Abercrombie's denim discounts appear deeper than last year, Needham analyst Christine Chen noted that the company has been charging higher prices. This year jeans range in price from $39 to $44 price range compared to the average $39 last year.
"The re-launched denim has a higher lycra content, which is not only a better fit, but now uses less cotton," Chen noted.
The average price at the company’s Hollister stores is $24.75, 17% less than last year, Beder said.
American Eagle Outfitters
The teen retailer kicked off the back-to-school season with a 40% clearance, deeper than last year's 30% discount.
But for the most part, American Eagle's denimprice points are consistent with last year, with Beder finding the average price at about $37.47 (before this week's discount).
"While the denim assortment is once again the most comprehensive and compelling in the teen space, it does not seem to be generating as much interest as Abercrombie & Fitch's 50% off denim in most locations, given that price points are now similar to Abercrombie and higher than Hollister," Chen noted.
Aeropostale
Aeropostale is featuring a 50%-off denim promotion, with men's original boot cut jeans now $22.25 from $44.50 and girl's jeggings $23.25 from $46.50.
Earlier in the month, Aeropostale was offering $10 off denim, but this promotion actually increased the price of denim, according to Chen. After the promo, denim was between $24 to $28 for men's and $22 to $26 for women's, compared with $20 last year.
"Aeropostale's back-to-school assortment is wear now, and is more edited, with fewer colors and a return to classic preppy styles that are brighter and more appropriate for the younger customer," Chen noted. "Denim does not seem to be emphasized in this initial floorset, which given the heatwave, could be beneficial as the customer is still looking for shorts and wear-now apparel."
Urban Outfitters
Urban Outfitters has the most expensive jeans at $63.33, an average unit retail increase of 3.8% from last year, according to Beder.
"The lack of uniqueness will make it much harder to justify increased price points in the eyes of the money-tight consumer given their various options," Beder noted.
Pacific Sunwear of California
Pacific Sunwear of California is offering buy-one, get-one free denim on select styles as well as a buy-two, get-40%-off promotion on other denim merchandise.
The skate-and-surf-inspired retailer is featuring the BOGO event on select BullheadBlack and men's Bullhead styles. Women's Bullhead black leggings and other styles are buy two, get 40% off each pair.
These discounts are a direct result of PacSun being forced to raise original prices on denim this back-to-school season due to higher cotton costs. Beder noted that PacSun's average unit retail price is $38.36, a 39.5% surge from last year.
Wet Seal
Wet Seal has seen the biggest price increase in denim this year, up a whopping 113.9% from back-to-school 2010, according to Beder.
"We believe they have jumped on the bandwagon with the others who have raised prices and are going to take advantage while they rightfully protect their margins," Beder wrote in a note.
Wet Seal's average unit retail price is $32.08, higher than Aeropostale, Old Navy and Hollister.
But Wet Seal is offering discounts on these higher prices. The fast-fashion player is featuring its "Rock Blues" promotion on its Web site, with five fits and 12 washes on sale for $19.50.
yahoo