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Teens Spend More on Apparel This Spring While Parent Spending Remains Flat; Abercrombie & Fitch, Pacific Sunwear and Limited's Express Unit Remain Teens' Top Picks

- U.S. Bancorp Piper Jaffray Conducts Fifth Bi-Annual National Study Of Generation Y Shopping Behavior and Brand Preferences -

MINNEAPOLIS, April 10 /PRNewswire-FirstCall/ -- Over the past six months, the economic downturn has continued, but since last fall teens have increased their spending on apparel, shoes and accessories. While the teens are spending more, their parents continue to spend money on their teens, but are slightly curbing spending on themselves. In addition, teens continue to list the same three top brands as last fall in Abercrombie & Fitch (ANF, Strong Buy, $31.04, #>), Limited's Express Unit (LTD, Outperform, $13.44, #=) and Pacific Sunwear (PSUN, Strong Buy, $21.21, #>). This data -- and much more -- was released today by U.S. Bancorp Piper Jaffray Retail Analyst Jeff Klinefelter, who recently completed his fifth proprietary research survey on teen spending habits and retail brand perception. Klinefelter conducted mall research tours with nearly 600 teens from 12 high schools in 11 states across the country and one province of Canada.

Brand Preferences

Klinefelter surveyed teens on their favorite places to shop as well as their spending habits. Based on their responses, Abercrombie & Fitch was found to be the most frequent overall destination for the fourth survey in a row grabbing 12 percent of the total votes. In second was Limited's Express Unit, followed by Pacific Sunwear. The same survey last fall found that Abercrombie & Fitch was the most frequent overall destination, followed by Pacific Sunwear and then Limited's Express unit (LTD, Outperform, $14.52, #). In spring 2002, the students chose Abercrombie & Fitch as their most frequent destination, followed by Limited's Express unit and American Eagle Outfitters (AEOS, Outperform, $15.01, #>=).

"Abercrombie & Fitch continues to be the top brand in our survey," said Klinefelter. "More importantly, in our view, is that Abercrombie's Hollister concept showed up in the top five brands having been only listed in the 24th spot six months ago. This is especially interesting, we believe, considering Hollister had stores in only two-thirds of the markets we surveyed. Also, we believe Express' move back to the number two spot this spring was due largely to male teens voting for Express Men's/Structure, which made fifth place this survey up from 12th spot in fall 2002."

Several other brands shifted rankings in the past six months according to the students. American Eagle Outfitters remained in the same place as last fall finishing fourth. In fifth was Abercrombie's Hollister concept as mentioned above. Aeropostale (ARO, Strong Buy, $15.25, #@>+) moved up slightly to 14th, from the 15th spot last fall. Aeropostale also had a presence in just two-thirds of the markets that were polled. The Gap (GPS, Outperform, $15.30, #>=) dropped from fifth to ninth, while Old Navy also fell from seventh to 10th in the past six months.

"Owing to what we believe is a combination of more choices of retailers from which to shop for current fashion trends as well as Gap Inc., focusing on more democratic appeal in its concepts, Gap and Old Navy both fell in the ranking and mind share," said Klinefelter.

Gen Y - Teen Spending Increases

Yearly spending among teens was $1,400, up from $1,156 in fall 2002. In spring 2002, yearly spending was $1,542. In spring 2003, girls spent $1,572 compared with $1,342 in fall 2002 and $1,458 in spring 2002. Guys spent $925 in spring 2003 compared with $890 in fall 2002 and $1,661 in spring 2002.

"Total spending on fashion products (apparel, shoes and accessories) increased by 21 percent on a sequential basis," said Klinefelter. "On a year- over-year basis this spending estimate is down 9.2 percent but on a two-year basis, it is up 6.1 percent. Bottom line, we believe this modest sequential improvement is an indication that fashion spending hit an inflection point during the past fall season and should continue to improve with a strong product offering."

Parents' Contribution to Teen Spending Remains Flat

In addition to surveying the students on spending patterns this spring, Klinefelter also surveyed approximately 150 parents, eliciting a 27 percent overall response rate. According to the data, parents are contributing $927 annually to their teens' spending, compared with $935 in fall 2002 or down one percent sequentially. In spring 2002, parents spent $1,115 on their teens. Despite the drop, parents continue to pare their spending with greater magnitude, versus expenditures for their teens. Parent apparel spending slipped six percent sequentially and 23 percent from the prior year to $911. Also, shopping frequency is down overall and the major chains and discount stores were the only channels to gain shopping share.

Brand preferences for the parents reflect the channel shift to favor chain stores with Kohl's (KSS, Market Perform, $55.71, #@) and J.C. Penney (JCP, Not Rated, $18.89) among the top three favorite clothing stores when they shop for themselves. Department stores continue to be an important channel for the parents as it represented 32.5 percent of shopping time. According to the parents, the favorite store to purchase products for their teens is American Eagle Outfitters, followed by Express, and Abercrombie & Fitch and Gap (tied for third place). Kohl's also tied for third place, versus fall 2002 when it did not make the top five list. However, in the markets where Kohl's has a presence, it was the second choice behind American Eagle. This is in contrast to six months ago when it ranked fifth.

Total Spending

A key component of the survey asked the students to identify what percentage of their disposable income they spend on video games/systems, music/movies (DVDs, CDs), electronic gadgets, clothing, accessories/personal care, shoes, food, concerts/movies, car, books/magazines and other. This spring, clothing and accessories remain two of the most frequently shopped and purchased categories, second only to food. On average, teens shop for fashion-related products four times per year, with female consumers shopping five times per year and male consumers shopping slightly less than four times. The video games and hardware category also continues to increase in shopping frequency reaching slightly more than two times per year on average for all students. DVDs and CDs are also a frequently shopped and purchased category.

U.S. Bancorp Piper Jaffray, a subsidiary of Minneapolis-based U.S. Bancorp (NYSE: USB), is a focused securities firm comprised of three divisions: Equity Capital Markets, Fixed Income Capital Markets and Private Advisory Services. The firm provides a full range of investment products and services to individuals, institutions and businesses. The firm has over 120 offices in 24 states across the country. The Equity Capital Markets Division focuses on the needs of growth companies in the health care, technology, financial institutions, consumer and communications growth sectors. The firm has a national reputation for its expertise in fundamental research and equity and debt financing. The Fixed Income Capital Markets business provides bond issuers, individual investors and institutional investors expertise in investment banking, underwriting, trading, sales and research. The firm offers innovative solutions in corporate and government debt financings with particular expertise in corporate, health care/hospitals, real estate, higher education and government debt. The Private Advisory Services division financial advisors provide guidance in retirement planning, education planning, estate planning and wealth accumulation. Investors select from a wide array of products, including fee-based products, stocks, bonds, mutual funds, annuities, insurance and trust services. U.S. Bancorp offers a comprehensive range of financial solutions through U.S. Bank, U.S. Bancorp Asset Management, U.S. Bancorp Investments and U.S. Bancorp Piper Jaffray. For more information on U.S. Bancorp Piper Jaffray, visit www.piperjaffray.com.

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The following disclosures apply to stocks mentioned in this report if and as indicated: (#) U.S. Bancorp Piper Jaffray (USBPJ) was making a market in the Company's securities at the time this research report was published. USBPJ may buy and sell the Company's securities on a principal basis. (^) A USBPJ analyst who follows this Company or a member of the analyst's household has a financial interest (a long equity position) in the Company's securities. (@) Within the past 12 months, USBPJ was a managing underwriter of an offering of, or dealer manager of a tender offer for, the Company's securities or the securities of an affiliate. (>) USBPJ has either received compensation for investment banking services from the Company within the past 12 months or expects to receive or intends to seek compensation within the next three months for investment banking services. (~) A USBPJ analyst who follows this Company, a member of the analyst's household, a USBPJ officer, director, or other USBPJ employee is a director and/or officer of the Company. (+) USBPJ and its affiliates, in aggregate, beneficially own 1% or more of a class of common equity securities of the subject Company. (=) One or more affiliates of U.S. Bancorp, the ultimate parent company of USBPJ, provided commercial banking services (including, without limitation, loans) to the Company at the time this research report was published.

Nondeposit investment products are not insured by the FDIC, are not deposits or other obligations of or guaranteed by U.S. Bank National Association or its affiliates, and involve investment risks, including possible loss of the principal amount invested.

USBPJ research analysts receive compensation that is, in part, based on revenues of USBPJ Equity Capital Markets, which include investment banking revenues. USBPJ research analysts who follow this Company report to the Head of Equity Research who, in turn, reports only to the Head of Equity Capital Markets.

This material is based on data obtained from sources we deem to be reliable; it is not guaranteed as to accuracy and does not purport to be complete. This information is not intended to be used as the primary basis of investment decisions. Because of individual client requirements, it should not be construed as advice designed to meet the particular investment needs of any investor. It is not a representation by us or an offer or the solicitation of an offer to sell or buy any security. Further, a security described in this release may not be eligible for solicitation in the states in which the client resides. U.S. Bancorp and its affiliated companies, and their respective officers or employees, or members of their families, may have a beneficial interest in the Company's securities and may purchase or sell such positions in the open market or otherwise. This report is a communication made in the United Kingdom by U.S. Bancorp Piper Jaffray to market counterparties or intermediate customers and is exclusively directed at such persons; it is not directed at private customers and any investment or services to which the communication may relate will not be available to private customers. In the United Kingdom, no persons other than a market counterparty or an intermediate customer should read or rely on any of the information in this communication. Securities products and services offered through U.S. Bancorp Piper Jaffray, member SIPC and NYSE, Inc., a subsidiary of U.S. Bancorp.

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Additional information is available upon request.

SOURCE U.S. Bancorp Piper Jaffray

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding U.S. Bancorp's business which are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see "Risk Factors" in the Company's Annual Report or Form 10-K for the most recently ended fiscal year.



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