Clothing may be low on consumers' holiday wish lists this year, according to two Roth Capital Partners analysts.
That could spell bad news for clothing retailers, who are already coping with a downturn in spending by shoppers. The holiday shopping period is a critical time for retailers. The last two months of the year can account for 20 to 40 percent of their annual sales.
With limited disposable income, consumers have been opting to focus their spending on homes and cars, rather than shoes and sweaters.
Analysts Dave King and Isela Soto said in a research note Tuesday that consumers remain selective in their spending and they expect holiday shopping will be concentrated on popular new electronics like the latest iPhones, gaming consoles or children's tablets, instead of apparel. They noted that there is pent up demand for new gaming consoles, which represent a major expense that will leave little cash left over for other items. This puts added pressure on teen retailers, particularly those that do a lot of men's business.
They noted that Zumiez and PacSun among the retailers facing a bigger threat from gaming consoles. But they expect that some companies may benefit by this shift toward electronics, including headset maker Skullcandy and electronic learning tablet maker LeapFrog.
One exception to the apparel forecast is for snow-related retailers, like Zumiez, Quiksilver and Black Diamond, which could get a boost if there is snowy weather this season that would have skiers and snowboarders back on the slopes after two poor ski seasons.
Zumiez Inc. shares rose 7 cents to $27.43 in afternoon trading amid a broader market dip. Pacific Sunwear of California Inc.'s shares fell 3 cents to $3. Skullcandy Inc.'s shares fell 22 cents to $5.83. And Leapfrog Enterprises Inc. shares slipped 14 cents to $9.33.
Quiksilver Inc.'s shares fell 23 cents to $6.60, a more than 3 percent drop that outpaced the market. Black Diamond Inc.'s shares added 20 cents to reach $14.19.
- Consumer Discretionary
- gaming consoles