Piper Jaffray Gives A Sneak Peek Into Early Spring Transitional Apparel Flows

• Following their post-Christmas shopping trips, Piper Jaffray analysts Neely J.N. Tamminga and Kayla R. Wesser shared a “Sneak Peek Into Early Spring Transitional Apparel Flows.”
• According to a report issued Monday, early spring fashions are centered around cozy fabrics and color palettes that work for most customers. This provides consumers with “a reason to redeem holiday cash and gift cards.”

After visiting malls around the country, analysts at Piper Jaffray said that fresh product flows are central to helping capture high-margin sales during gift card redemptions -- which the firm estimates represent about 5 to 15 percent of overall December sales.

Since sales associated with gift cards are acknowledged during redemption, the final couple of weeks of December could be seen as important “holiday” sales weeks. Thus, the analysts made their case for “a back-end weighted holiday season.”

Within their specialty apparel retailing coverage universe, the analysts continue to favor Abercrombie & Fitch Co. ANF, American Eagle Outfitters AEO, Ascena Retail Group Inc ASNA and Express, Inc. EXPR. Within department stores, they favor J C Penney Company Inc JCP and Kohl's Corporation KSS.

The research note highlighted three main themes to notice in the industry:

• 1) “Early spring fashions demonstrate cozy fabrics and a color palette that works for nearly everyone thus giving consumers a reason to redeem holiday cash and gift cards.” Above all, the experts saw “newness and innovation whether in the form of fabric, feel, color, or cut,” and noted that this is central to helping motivate the clients to buy.
• 2) The environment was “more promotional” than last year, but in line with expectations and “not maniacal.” Having said this, most promotions and sales excluded new product flows.
• 3) Investors should focus on stories that stretch into 2016, rather than on holiday 2015 trends. Stock-wise, Piper's top pick for 2016 is JC Penney. However, they also like Kohl's, Abercrombie & Fitch, Express, Wayfair Inc W and Ascena Retail Group for the holiday season and into next year.

Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.