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Back-To-School Sales Wars In Full Swing, But Promo Pricing Looks Rational

Back-To-School Sales Wars In Full Swing, But Promo Pricing Looks Rational

Back-to-school takes on a whole new meaning for retail investors who are concerned with the performances of companies in their portfolio throughout the very busy shopping season.

According to analysts at Jefferies, promotional activity they observed at store visits were higher sequentially this weekend but "remained fairly controlled" on a year-over-year basis. The one exception from the observation was in the intimates space, where American Eagle Outfitters (NYSE: AEO)'s Aerie concept was "upping the ante" with $15 bralettes.

Related Link: Victoria's Secret Looking To Win The Battle Of The Bralettes

In fact, American Eagle has been "driving the best traffic and conversion" within the teen space, especially this weekend when it offered a buy-one-get-one (BOGO) 50 percent off the entire collection.

Gap Inc (NYSE: GPS)'s Old Navy brand also "saw a favorable response" to various promotions, including $12 select jeans, 30 percent off all jeans, 50 percent off tees and 40 percent off dresses along with sx Super Cash issuance.

The analysts also observed that Francesca's Holdings Corp (NASDAQ: FRAN) continued its BOGO 50 percent off most categories, and it also added 20 percent off dresses, shoes, handbags and wallets.

Bottom line, the analysts concluded that while the retail environment remains in a state of heightened competition, more retailers are now "opting to use their 'A game' promotions" ahead of the peak back-to-school shopping weekend, which typically occurs during Labor Day weekend.

"We think the discounting environment is fairly rational for this time of the year, as retailers have become more strategic around their promotional usage and inventories are generally well controlled," the analysts concluded.

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Latest Ratings for AEO

Nov 2019Initiates Coverage OnEqual-Weight
Oct 2019DowngradesBuyNeutral
Sep 2019Initiates Coverage OnBuy

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