U.S. Bank Home   Customer Service   Contact Us   Locations   Careers   About U.S. Bancorp   
U.S. Bank

Search
 
About



About



Related Links
Careers at U.S. Bancorp
Community Relations
Corporate Governance
Resources
IR Tool Kit
Print PagePrint Page
E-mail PageE-mail Page
RSS FeedsRSS Feeds
IR ContactsIR Contacts


Printer Friendly Version View printer-friendly version
<< Back
U.S. Bancorp Piper Jaffray Completes Sixth Bi-Annual National Study Of Generation Y Shopping Behavior and Brand Preferences

Analyst Upgrades Abercrombie & Fitch, American Eagle Outfitters And Downgrades Aeropostale and Charlotte Russe

MINNEAPOLIS, Oct. 8 /PRNewswire-FirstCall/ -- U.S. Bancorp Piper Jaffray Senior Retail Analyst Jeff Klinefelter today released the results of his sixth proprietary research survey on teen spending habits and retail brand perception. Klinefelter conducted mall research field trips with nearly 700 teens from 14 high schools in 13 states across the country and one province of Canada. As a result of the survey results and a shift in brand preference, Klinefelter is changing his investment rating on four companies. He is upgrading Abercrombie & Fitch (ANF, $30.22 #>+=) from Outperform to Strong Buy and American Eagle Outfitters (AEOS, $16.50, #>=) from Market Perform to Outperform. In addition, he is downgrading Aeropostale (ARO, $30.90, #@>) from Strong Buy to Outperform and Charlotte Russe (CHIC, $10.15, #>) from Market Perform to Underperform.

"Despite lackluster same-store sales, we are raising our rating on Abercrombie & Fitch and American Eagle Outfitters based on the results of this survey as well as the companies' trading valuations," said Klinefelter. "Additionally, while we continue to believe in Aeropostale's longer-term growth prospects and second-half earnings potential, we believe an Outperform rating is appropriate at current valuations. Our survey also shows that Charlotte Russe fell to 11th place from eighth in the spring 2003 survey. This shift in the ranking along with competition and the disruption of the design process following the recent departure of the company's chief merchandising officer, has caused us to take down our rating a notch to Underperform."

Brand Preferences Survey Results:

Klinefelter surveyed teens on their favorite places to shop as well as their spending habits. Based on their responses, Abercrombie & Fitch remains the most frequent overall destination for the fifth survey in a row grabbing 15 percent of the total votes, which is an increase from 12 percent in the spring 2003 survey. There was a tie for second between Pacific Sunwear of California (PSUN, Strong Buy, $23.38, #>) and American Eagle Outfitters, both with eight percent of the votes. Last spring, the teens chose Limited's Express unit (LTD, Market Perform, $16.35, #=) as their second favorite place to shop, followed by Pacific Sunwear. This fall, Limited's Express unit finished fourth, with seven percent of the votes.

Several other brands shifted rankings in the past six months according to the students. Abercrombie's Hollister concept remained in fifth place, but moved from sixth to third in the ranking for females. Also Gap (GPS, Outperform, $18.38, #>=) moved from ninth in the spring survey to sixth this season in the overall ranking for both males and females. Gap's Old Navy unit also moved up from the spring survey, going from 10th to seventh. In addition, Target (TGT, Strong Buy, $39.69, #>=) made the top 10 list for males, finishing in a tie for seventh in the ranking.

Gen Y -- Teen Spending Increases

Total spending on fashion products (apparel, shoes and accessories) increased by 24 percent to $1,742 annually on a sequential basis, versus spring 2003. In addition, on a year-over-year basis total spending increased by a significant 50 percent. Spending trends for females mirrored those of the total teen survey and were strongest for apparel and accessories. Total fashion spending for females increased 25 percent, versus the spring 2003 season and 46 percent, versus the fall 2002 season. Spending trends for males continue to be challenging with the exception of the accessories category. Total spending for males on the fashion category declined 10 percent on a sequential basis and six percent on a year-over-year basis.

Yearly spending among teens in this season's survey was $1,742, up from $1,400 in spring 2003. In fall 2002, yearly spending was $1,156. In fall 2003, females spent $1,964 compared with $1,572 in spring 2003 and $1,342 in fall 2002. Males spent $834 in fall 2003, compared with $925 in spring 2003 and $890 in fall 2002.

"We are encouraged to see the fashion spending increases on both a year- over-year and sequential basis and believe it is further evidence that the apparel industry has hit an 'inflection point' and is gradually beginning to expand," said Klinefelter.

Parents' Contribution to Teen Spending Remains Flat

In addition to surveying the students on their spending patterns this spring, Klinefelter also surveyed 186 parents, eliciting a 27 percent overall response rate. According to the data, parents have increased their apparel spending on their teens by 47 percent from last fall and by 57 percent from spring 2003. In addition, parents have increased spending on apparel for themselves by 47 percent from last fall and by 58 percent from spring 2003.

"We believe that part of this increase in spending can be tied to the strong performance of the stock market over the past year and six months, as the majority of these families have a vested interest in the market," said Klinefelter.

Parents' favorite place to shop remained Nordstrom (JWN, not rated, $27) with 14.9 percent of parents rating it number one. Kohl's (KSS, Market Perform, $55.50, #>@=) and Macy's (FD, not rated, $44.64) tied for second (each with six percent of the vote). J.C. Penney (JCP, Market Perform, $22, #>), which ranked third in our spring 2003 survey, fell to seventh place, as some higher-end retailers such as Chico's (CHS, Outperform, $33.26, #>) and Christopher Banks (CBK, not rated, $28.21) moved up in the ranks. In addition, parents continue to favor specialty retailers when purchasing clothes for their teenage children. Abercrombie & Fitch and Old Navy ranked first and second, respectively, as specialty apparel companies held five of the top seven spots in our latest parent survey.

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 fall, clothing remains the most frequently shopped and purchased category, followed by food and accessories/personal care. On average, teens shop for fashion- related products four times per year, with female and male students both maintaining an average of four times. The video games and hardware category continues to register a shopping frequency of approximately two times per month although the frequency dropped for male students and increased for female students. Music and movies (DVDs/CDs) are also frequently shopped and purchased products by teen customers; despite the fact that many students also indicated that they download music on the Internet.

About U.S. Bancorp Piper Jaffray

U.S. Bancorp Piper Jaffray, a subsidiary of the consolidated group of U.S. Bancorp (NYSE: USB), is a focused securities firm comprised of two revenue- generating segments -- Capital Markets and Private Client Services. Clients of both segments are supported by Investment Research, an independent group reporting to the CEO. The firm provides a full range of investment products and services to individuals, institutions and businesses. The firm has over 124 offices in 25 states across the country. 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 .

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 percent 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. (*) A registration statement relating to these securities has been filed with the Securities and Exchange Commission but has not yet become effective. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This communication shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state. ** These companies have conducted initial public offerings of their securities and are currently in the "Quiet Period." As a result, there is no research available on these companies. This communication shall not constitute an offer to sell or the solicitation of an offer to buy any securities of these companies. Additional information is available upon request.

Investment Opinion: Investment opinions are based on each stock's return potential relative to the overall market*, not on an absolute return.

Strong Buy: Expected to outperform the relevant broader market index over the next 6 to 12 months. An identifiable catalyst is present to drive appreciation.

Outperform: Expected to outperform the relevant broader market index over the next 12 to 18 months.

Market Perform: Expected to perform in line with the relevant broader market index over the next 6 to 12 months.

Underperform: Expected to underperform the relevant broader market index over the next 6 to 12 months.

* Broader market indices = Russell 2000 and S&P 500

Volatility Rating: Our focus on growth companies implies that the stocks we recommend are typically more volatile than the overall stock market. We are not recommending the "suitability" of a particular stock for an individual investor. Rather, it identifies the volatility of a particular stock.

Low: The stock price has moved up or down by more than 10 percent in a month in fewer than 8 of the past 24 months.

Medium: The stock price has moved up or down by more than 20 percent in a month in fewer than 8 of the past 24 months.

High: The stock price has moved up or down by more than 20 percent in a month in at least 8 of the past 24 months. All IPO stocks automatically get this volatility rating for the first 12 months of trading.

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 overall investment banking revenues. USBPJ research analysts who follow this Company report to the Head of Investment Research who, in turn, reports directly to the Chief Executive Officer of U.S. Bancorp Piper Jaffray.

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. Affiliates of U.S. Bancorp Piper Jaffray, including U.S. Bancorp 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.

Notice to customers in the United Kingdom: 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. 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.



The information that is on or available through this site is for informational purposes only and speaks only as of the particular date or dates of that information. We do not guarantee the accuracy or completeness of information on or available through this site, and we are not responsible for inaccuracies or omissions in that information or for actions taken in reliance on that information. U.S. Bancorp does not undertake an obligation, and disclaims any duty, to update any of the information on or available through this site.

This site is supported through the use of Microsoft Internet Explorer Browser, version 6.x or higher. Use of older or other browsers may cause pages to improperly display. We regret any inconvenience that this may cause.





Privacy Pledge   |   © 2010 U.S. Bancorp Site Map   |   Careers