Fashion Retailers Are Ramping Up Store Traffic

Specialty and outlet retailers have seen their shares rise sharply in recent years, with both sides enjoying periods of growth. L Brands (NYSE: LB) announced last month that it would sell its La Senza and Henri Bendel businesses to Versace, which plans to take the companies out of its portfolio. The department store will then focus on its core brands.

Mall and off-price stores, meanwhile, have been facing problems due to a softening of the retail sector. Fashion companies and other retailers like Macy’s Inc. (NYSE: M), Neiman Marcus Group Inc. (NYSE: NMM), and Gap Inc. (NYSE: GPS) have cut back on their off-price offerings to limit losses. Meanwhile, more stores in shopping malls have been closing in recent years.

Retailers are falling back on their traditional products and trends to gain back some traction. Fashion and retail trends for this year point to a brighter outlook for apparel. The latest figures indicate that apparel retail spending should grow in the first quarter of 2017, compared to last year, according to the NRF’s Quarterly Retail Sales Report.

As a result, the retail industry has seen its share price jump on the growth potential.

In January, retail shares jumped, driven by strong consumer spending during the holiday season. According to the latest report from retail-research firm Retail Metrics, overall retail spending increased 0.9 percent in the month of January, with spending at department stores increasing 1.2 percent. The increase in sales at off-price retailers and fashion outlets fueled the overall increase. Clothing sales increased 2.5 percent.

December’s retail and apparel sales figures showed similar trends to the first quarter, with overall retail sales rising 1.9 percent. These figures were the best since 2014, with sales at fashion outlets and off-price retailers showing strong growth, driven by discount promotions. However, retail and apparel stocks traded in December had slumped over the past year, with many experiencing sharp declines over the past 12 months.

Specialty and outlet stores had been heavily hit due to the oversupply of apparel products, which has hurt retailers. Nevertheless, some retailers have continued to reap the benefits of an improving retail industry. Nordstrom, Inc. (NYSE: JWN) posted a 3.3 percent increase in sales, driven by an increase in transactions, and an increase in sales for off-price retailers, specialty retailers, and the new Nordstrom Rack locations.

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