After two years of declining apparel prices, the latest batch of government reports shows consumers are finally spending more on T-shirts and sweaters.
According to the Consumer Price Index released Wednesday, the apparel index in February posted its largest increase in seven years, rising 1.6 percent. It was the second straight month of higher apparel prices, after they ticked up 0.6 percent in January.
Prior to January, apparel prices had fallen for four straight months.
This inflection signals that retailers’ efforts to trim their inventories — and as a result, drive more full-price selling — are starting to take hold. But it’s still too early to call victory.
“I think it’s probably more of an indication of a comparison issue,” Perkins said. “We had a lot of clearance merchandise obviously in January, and coming into February you finally see some more full-price selling.”
Discounts were particularly prevalent during December and January, as unseasonably warm weather left retailers with a glut of coats and jackets.
But over the past few months, retailers from Express to Jos. A. Bank have taken steps to reduce shoppers’ reliance on steep discounts. They’ve done so with varying success.
While a more thoughtful promotional strategy and better management of its merchandise helped Express beat Wall Street’s comparable sales and earnings estimates, Jos. A Bank’s comparable sales plunged 32 percent during the fourth quarter. Revenues at the retailer, which was acquired by Men’s Wearhouse in 2014, have taken a beating since it did away with its famous Buy One Get Three Free promotions.
Jack Kleinhenz, chief economist for the National Retail Federation, said he is hopeful that February’s results are a sign that retailers are starting to see some “stickiness” on prices. But he also expressed concern that they received a boost from favorable weather, or that the number could receive a downward revision next month.
“I’m pleased to see [the data] to a certain extent, but I’ve also go to look at it with squinted eyes,” he said. “We need to see some notable changes on more than just one month.”
Though Perkins was skeptical that apparel prices would continue their recent ascent, he said the steep declines the category experienced last year are unlikely to continue. Instead, he predicts clothing prices will stay stable, particularly if consumers respond favorably to the new spring product.
Paired with Tuesday’s retail sales data, which showed that revenues at clothing stores were up 3.2 percent during the first two months of the year, Perkins said there are “burgeoning signs” that that apparel could be bouncing back.
Still, he cautioned that retailers are facing numerous headwinds, including the growth of fast-fashion and off-price retailers, wage pressures and necessary investments into digital shopping.
“Apparel has a chance to rebound here,” he said. “It really has been neglected over the past several years.”