Teens Skip $50 Jeans

In all the excitement this week I skimped on some fundamental/economic stories to focus more on the market and transactions. So we have some catching up to do.

I said long ago as the economy weakens the last things to go would be teenagers and their Abercrombie (ANF) $100 jeans, and video games/gadgets. Well it appears all we have left now are the video games/gadgets. You know Americans are "pooring" when they won’t even splurge on their kids. (Note to Bloomberg reporters – $50 jeans?  What Abercrombie store did you not visit to file your report?) (Note to Wall Street pundits – what will it take for you to admit we are in recession?)

• The financial pressures of adults are finally catching up with American teenagers. Since summer jobs dried up, gasoline prices topped $4 a gallon and parents ran out of spare cash, teens have had to cool it on spending for clothes.
• “I’ve had to cut down on a bunch of stuff because I don’t like spending my own money,” said 14-year-old Haley McClelland from Waldwick, New Jersey, who was shopping at the nearby Paramus Park mall. She said her parents are “more careful” about what they give her. 
• Teens like Haley are among the last American consumers to cut back. Even as adults trimmed purchases, the kids managed to prop up revenue for Abercrombie & Fitch Co. and American Eagle Outfitters Inc. because of handouts from parents and part-time jobs, said Adrienne Tennant, an analyst at Friedman, Billings, Ramsey & Co. in Arlington, Virginia.
• Retailers dependent on that group are feeling the pinch. First-quarter net income at American Eagle plunged 44 percent because of discounting, and the retailer may post its first annual profit drop in five years. Same-store sales have fallen for the past two quarters. At Gap Inc.‘s Old Navy chain, sales in May were off 25 percent from a year earlier. Abercrombie’s same- store sales dropped in five of the past six quarters.
• Looking forward, U.S. teen spring fashion budgets may be reaching the lowest level in seven years, based on results of a survey of 5,000 youngsters by Piper Jaffray Cos. in Minneapolis. Teenagers said in April they would spend $1,183 on fashion this year, 19 percent less than last year and down 23 percent from 2006
• “Gas is the main thing right now,” said Pete McCullough, a 19-year-old from Oradell, New Jersey, who can’t afford the designer clothing he favors. “Just coming to the mall costs $4.” McCullough said he earns what he spends, juggling school with construction work.
• Add to that the biggest jump in joblessness among youths in at least 60 years, according to the U.S. Labor Department. Unemployment among those between the ages of 16 and 19 soared to 18.7 percent in May from 15.4 percent in April, the government said. It was the biggest one-month increase since Labor began collecting statistics in 1948. (this is because their parents are forced to "downsize" into the jobs the teens normally would be taking, as their own adult jobs are eliminated)
• Hurt by sliding home values and rising food and energy costs, parents said they would spend 28 percent less on their teens this year, Piper Jaffray’s survey showed. Klinefelter estimates that heads of middle-income households provide as much as half of teen spending money.
• With prices 20 percent to 30 percent cheaper than American Eagle’s, Aeropostale has improved the quality and fashion of its clothes, said Christine Chen, a retail analyst at Needham & Co. in San Francisco. (Aeropostale (ARO) has actually been doing very well considering their sector and niche within the sector)