Outerwear apparel sales are ramping several weeks earlier than in years past. Weather? Yes, in part. But we think we’re also seeing the inevitable snap-back in the replacement rate for winter coats – which is perhaps the most discretionary apparel item the average person buys.
Athletic apparel sales appear to have remained at a healthy HSD-LDD run rate in Q3. Breaking the late October trend of old, outerwear sales started to ramp as a percent of sales into the fall beginning in late September; 2-3 weeks earlier than in 2009 & 2010. In 2010, outerwear sales did not accelerate as a percent of athletic apparel sales until the 2nd week of October. In 2011, outerwear ramped to 6% in the third week of September, closed out September at 7% and accounted for 11% of apparel sales in the first week of October compared to 4%, 5% & 9% respectively in 2010.
What’s driving the early outdoor apparel sales? Looking at the heat maps below, the past two weeks have had at least one major US region where temperatures were 3 to 9 degrees cooler than typical seasonal temperatures. When comparing this year’s US climate over the past 2 weeks vs. the same period last year, it was 10-20 degrees cooler out in certain western states during the week ending October 8th (last week). The climate during the week ending October 1st (2 weeks ago) when the ramp in outerwear really began to accelerate compared to the same week in 2010 was virtually unchanged.
Another thing to consider is this... There are roughly 300 million jackets/coats sold in the US each year. Yep, that’s about 1 per person. In reality, it’s not one per person, but rather a smaller portion of the general population getting multiples while the other tail of the distribution gets none. Most notably, the purchase of a coat is one of the most discretionary apparel items you can get. It’s not difficult to stretch out the replacement cycle by 1, 2 or even 3 years.
So, are we seeing stronger outerwear sales due to a tightening of the replacement cycle? Yes, we do. But it’s near impossible to quantify that vs. the impact of cooler and wetter weather.
In the end, this probably won’t budge the number of units sold – as that was determined when they were ordered six months ago. But shifting earlier in the season – even by a few weeks – takes up ASP and margin for the retailers and wholesalers alike.
This could make the outerwear category one of the rare standouts in 4Q in both top line and margins. Who does this help? On the margin it benefits VFC/North Face, Columbia and Dick’s.