Sector Snap: Retail and surf, skater trends

Analyst: brands offering sense of exclusivity key to retailers catering to skate, surf trends

Associated Press

NEW YORK (AP) -- Brands that offer a sense of exclusivity are a key component for capturing shoppers, a retail analyst said Wednesday.

Wedbush's Gabriella Santaniello said in a note to clients that current skate fashion is "driven by niche brands where exclusivity of product conveys authenticity of lifestyle."

The analyst said that when Pacific Sunwear of California Inc. acquired distribution of Diamond Supply last year, it ruffled some feathers. Diamond Supply is considered one of the more popular skate brands and up until that point had only been carried at one other retail chain, Zumiez Inc. Santaniello said that when PacSun acquired Diamond Supply distribution, Zumiez's core customers accused it of "stealing" the designs.

The acquisition gave PacSun some industry credibility, Santaniello said, but weighed on Zumiez.

"While we believe that Zumiez has led the market in niche brands, the retailer cannot risk another major loss of exclusive distribution," she said.

Zumiez's stock slipped 12 cents to $28.89 in light midday trading.

A shift by girls away from preppy clothes to more of the "California lifestyle" linked to the surf market is also helping some retailers. Santaniello said that PacSun is hitting on the trend with its exclusive Brandy Melville line — which is selling out at many stores — and the private-label Kendall & Kylie brand.

Shares of Pacific Sunwear of California rose 9 cents, or 2.9 percent, to $3.24. The stock has traded in a 52-week range of $1.36 to $3.62.

The analyst said that Tilly's Inc. has a branded merchandising strategy, but that it is also offering competitively priced private label gear — like $14.99 high-waist cutoff shorts — so that consumers can tap into both areas.

"This assortment mix resonates with the budget-conscious cross shopper," Santaniello said.

Tilly's stock shed 9 cents to $15.74.

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