The fashion retail sector faced a turbulent 2022, grappling with a trifecta of economic pressures: persistent inflation impacting consumer spending, evolving consumer preferences shifting away from previous trends, and significant inventory management challenges. These factors collectively put considerable strain on clothing companies. Several major fashion retailers, including Abercrombie & Fitch Co. (NYSE: ANF), American Eagle Outfitters (NYSE: AEO), and Urban Outfitters, Inc (NASDAQ: URBN), reported revenue figures that fell short of analysts’ expectations in their second quarter earnings releases.
To gain deeper insights into these challenges and the comparative performance of key players, we analyzed consumer spending patterns across these fashion retailers, alongside competitor Aeropostale Inc. Our analysis focused on sales performance, average monthly customer spending, and the evolving landscape of ecommerce, comparing recent trends to pre-pandemic benchmarks.
Urban Outfitters Inc. (NASDAQ: URBN) Demonstrated Strongest Sales Growth Over Pre-Pandemic Levels in August 2022
A consistent sales pattern emerged across all four companies studied, with notable sales surges observed in August, typically attributed to back-to-school shopping, and during the holiday season. When comparing August 2022 sales to the same month in 2019, Urban Outfitters, Inc., encompassing brands like Free People, Anthropologie, Nuuly, and Urban Outfitters, exhibited the most significant growth at 28 percent. Aeropostale Inc. followed with a modest 1 percent increase. In contrast, Abercrombie & Fitch Co. (which includes Abercrombie & Fitch and Hollister Co.) experienced a 6 percent decrease, and American Eagle Outfitters (including Aerie and American Eagle) saw a 12 percent decline. It’s important to note that our data excludes sales from gift cards, third-party retailers, store-branded credit cards, and specific financing methods, providing a focused view of direct consumer spending.
Year-over-year sales comparisons for August 2022 revealed declines across the board. Urban Outfitters, Inc. experienced a 3 percent decrease, American Eagle Outfitters saw a 13 percent drop, Abercrombie & Fitch Co. faced a 14 percent reduction, and Aeropostale Inc. recorded the steepest decline at 25 percent. Interestingly, August 2021 sales for all four companies were notably elevated compared to the preceding two years, potentially influenced by the resurgence of in-office work and in-person schooling, driving apparel purchases.
While each retailer caters to the teen and young adult demographic, strategic brand expansions and shifts have been evident in recent years. Urban Outfitters ventured into the clothing rental market with Nuuly in 2019 and further expanded into the secondhand market with Nuuly Thrift in 2021. American Eagle Outfitters has reportedly benefited from the robust growth of its Aerie brand, specializing in intimates and lingerie. Abercrombie & Fitch has undergone a brand transformation, targeting older teens and young adults with more inclusive sizing and updated styles. Aeropostale has concentrated on aligning with Gen Z fashion trends, diversifying its product offerings beyond graphic tees to include denim and other contemporary apparel. Notably, Aeropostale’s parent company, Authentic Brands, postponed its planned IPO in early 2022, indicating shifts in market conditions and financial strategies within the retail landscape.
Ecommerce Share Surpasses Half of Total Sales for Abercrombie & Fitch Co. (NYSE: ANF) and Urban Outfitters Inc.
Analyzing sales by purchase channel demonstrates a significant shift towards online retail for these fashion competitors. In August 2022, all companies experienced a higher proportion of sales originating from ecommerce platforms compared to pre-pandemic levels in August 2019. Abercrombie & Fitch Co. saw the most dramatic increase in online sales share, rising by 25 percentage points. Urban Outfitters, Inc. followed with a 12 percentage point increase, American Eagle Outfitters with a 4 percentage point increase, and Aeropostale Inc. with a more modest 1 percentage point increase.
Abercrombie & Fitch Co. leads in ecommerce penetration among these companies. In August 2022, 61 percent of Abercrombie & Fitch Co.’s total sales were attributed to online channels, closely followed by Urban Outfitters, Inc. at 58 percent. American Eagle Outfitters reported 30 percent of sales online, and Aeropostale Inc. had the lowest online sales share at 15 percent. This data underscores the critical role of ecommerce for NYSE ANF and URBN in maintaining and driving sales.
Urban Outfitters Inc. Leads in Average Sales Per Customer
In terms of customer spending, Urban Outfitters Inc. recorded the highest average sales per customer in August 2022 at $216. Abercrombie & Fitch Co. followed at $122, American Eagle Outfitters at $114, and Aeropostale Inc. at $80. Compared to August 2019, all four companies experienced substantial double-digit growth in average sales per customer. Urban Outfitters, Inc. saw the largest increase at 51 percent, Abercrombie & Fitch Co. at 35 percent, Aeropostale Inc. at 30 percent, and American Eagle Outfitters at 16 percent.
Year-over-year, average sales per customer remained relatively stable for American Eagle Outfitters, Abercrombie & Fitch Co., and Aeropostale Inc. in August 2022. However, Urban Outfitters, Inc. experienced a notable 13 percent year-over-year increase in this metric. Analyzing annual spending patterns reveals that January typically represents the lowest month for average sales per customer across these retailers. This trend may be attributed to a shift in consumer spending towards the holiday shopping season in November and December, driven by major sales events like Black Friday and Cyber Monday.
Data for this analysis is provided by Bloomberg Second Measure, utilizing transaction data broadly representative of U.S. consumers.
