Any Reason to Care About Teen Apparel Stocks?

The clear winner from teen apparel to start the holiday selling season was American Eagle Outfitters, strong assortment, the traffic was there, the promotional (40% off) strategies were enticing, and frankly, the store associates were some of the most energetic and helpful from comparable companies. When the company announces earnings this week, I expect positive commentary on the press release regarding quarter to date sales and margin trends. On the contrary, I would say Zumiez, which also reports earnings later in the week (don't think the earnings call will be too hot), was a loser, as it oddly didn't bring to light too many Black Friday promos in the store and online. This may have to do with a few missed quarters and management trying to make back profits, but whatever the reason no compelling promotions no strong traffic (did observe a new deal on the Zumiez website on the weekend, a potential tell the season started slowly on Friday).

Maniacal rundown on the rest of the sector:

Aeropostale: Too much inventory by the end of the weekend for my taste, in spite of very aggressive promotions. In no way does this engender confidence in the quarter.

Hot Topic: Never a top destination for holiday wares, the season looked to start decently amid respectable promotions in t-shirts/shoes. Benefiting from the latest Twilight movie release, however.

Francesca's: Urban Outfitters had the stronger traffic and presentation, think that hampered Francesca's a bit.

Old Navy: I reiterate that the company over-ordered goods to compensate for being out of stock last year due to higher cotton costs (did not buy “deep”). Still, liked what I saw from Gap and Banana Republic, so not inclined to move off my positive stance on the company.

Investment strategy: To get long this sector into year end, the company in question MUST have a shot at beating big for the fourth quarter. Gap and American Eagle Outfitters are my preferred names.