Teens aren’t shopping like they used to. Experts said these retailers are going to face a tough road in 2015.
1. Wet Seal
With new styles and trends coming and going so quickly, retailers need to be able to get runway looks into their stores quickly and cheaply.
If retailers can’t keep up with this fast fashion trend, they’re going to be left behind. And retail experts said Wet Seal is lagging behind the competition.
“They are on shaky ground for sure,’ said James Dion, president of retail consulting firm Dionco. “Their prices aren’t down as far as H&M and Forever 21, they are a price point or two above.”
The teen retailer reported a net loss of $36 million in the third quarter as store sales dropped 14.5%.
The company has disclosed it has worked with outside advisers to explore possible strategic and financial alternatives, including bankruptcy court proceedings.
2. Aeropostale
It wasn’t too long ago that Aeropostale was a favorite shopping hole to teenagers, but times are a changing. The retailer recently reported an 11% drop in sales at stores open at least a year.
“You have to constantly come up with new tricks and innovate and they just aren’t doing that enough to appeal to teen shoppers,” said retail analyst Kristin Bentz.
In the third quarter of 2014, Aeropostale reported a 12% drop in net sales.
Last month, the company disclosed plans to close 75 stores from November through January. The retailer also plans to close an additional 50 to 75 stores in 2015.
3. American Apparel
While the saga inside the boardroom and the firing of founder and CEO Dov Charney made headlines last year, sales remain a drag for American Apparel.
Sales dropped 5% in the third quarter, and the company reported a net loss of $19.2 million.
Price point is the problem, according to Dion.
“They are going to struggle,” he said. “Most Americans, the whole ‘shop American’ thing really doesn’t resonate with them unless the price is the same or less.”
The New York Post recently reported that the company had been delaying some payments to suppliers.
Experts said the retailer is ripe for a possible buyout, and sources told CNNMoney last month the company has sought advice from an investment bank on a range of “strategic options.”
4. Abercrombie & Fitch
Teens aren’t that into logos any more, and that’s bad news for Abercrombie & Fitch.
“It was the perfect storm for them: logos fell out of style, technology has changed the game of retail, and fashion trends are happening much faster,” said Will McKitterick, a retail analyst at IBIS World. “Retailers have to constantly be on their toes to respond to the latest trends.”
Despite a change in the corner office last month with CEO Mike Jeffries retiring, retail experts said the brand lacks appeal to its target shoppers.
“They are trying to de-sexy themselves; it’s almost worse now, now they are looking like everyone else,” said Bentz.
The company reported a drop in sales in the third quarter along with slow store traffic and recently cut its annual profit outlook.
But of all the retailers on the endangered list, experts identified Abercrombie as the strongest brand, and the most likely to be able to pull off a turnaround thanks to its still-strong international demand.
5. American Eagle Outfitters
American Eagle Outfitters faces an uphill battle in 2015 thanks to young shoppers disinterest in logos.
What’s more, Dion said the retailer isn’t giving teenagers a compelling reason to go into their stores.
The Pittsburgh-based company has been experiencing a slowdown in sales and foot traffic as teen shoppers seek out other alternatives.
“When the logo trend fell out of style, it didn’t matter that their clothes were more affordable,” said McKitterick. “In the end, their style seemed a bit dated and they haven’t been able to catch up and adapt quickly enough.”
