Experts Believe Men’s Post-Pandemic Apparel Spending Could Change for Good
MARCH 27, 2020
Withretaildoors temporarily shuttered and nearly 3.3 million Americans filing for first-time unemployment benefits, the near-term prognosis for the apparel and retail sector, particularly in men’s fashion, obviously leaves much to be desired.
But what about down the road, when the current public health crisis subsides and businesses work towards the path of recovery? Will consumers shop as they did in the past for their apparel fix?
That’s the great unknown.
Currently the COVID-19 outbreak has forced most publicly listed apparel and retail companies to withdraw forward-looking outlooks. And still others aren’t providing any earnings guidance at all.
“Due to lack of visibility of how the COVID-19 pandemic will be handled in the U.S., [Tailored Brands] did not provide first quarter 2020 or fiscal year 2020 [guidance],” Susan Anderson, equity analyst at B. Riley FBR, said when the company reported fourth-quarter results last week.
Oxford Industries, parent to the Tommy Bahama brand, reported fourth-quarter results on Thursday. “We concede that fourth-quarter results are not going to matter at all, given coronavirus-related current store closings across the retail space specifically and grinding consumer retrenchment more generally. Indeed, we expect that, similar to most other consumer goods companies over the past week, no specific financial guidance will be provided for the current fiscal year,” Steven L. Marotta, managing director of research and senior analyst at CL King, said.
“I believe all discretionary [buying] in men’s is on hold in Europe and the U.S.,” Jane Hali, CEO of research firm Jane Hali & Associates. “Asia is starting to come to life. We have been seeing photos of queues outside luxury stores in China already.”
The epicenter of the initial coronavirus outbreak was in Wuhan, China, setting off a lockdown in parts of the country for about eight weeks as the government sought to contain the spread of the virus. Those measures have slowly eased, and vendor sources said factories are restarting work projects.
The U.S. is at the start of its COVID-19 crisis, with a trajectory that could easily rival or eclipse that of China and the Lombardy region of Italy, the epicenter of Europe’s outbreak. As multiple business sectors abruptly shutdown to slow down the spread of COVID-19 in the U.S., many workers began working from home as they sheltered in place.
Hali sees the work-at-home mandate as an current opportunity for some apparel brands. “Men will be looking for sweats, lounge and comfy clothes, and slippers, as are women. Most are not prepared, dress wise, to work and stay at home,” Hali said. But she sees hope down the road. “After this is all over, there will again be a need for regular apparel.” Americans are only too happy to buy something new, she added.
But if employees and companies get used to the work-from-home trend, that will likely dampen the need for regular apparel. Some brands instead might find an opportunity in men’s casual and athleisure apparel.
That’ll likely depend on how many will be able to get back to work among those who were abruptly put out of work due to the coronavirus.
On Thursday, the U.S. Labor Department said first-time claims for unemployment benefits were nearly 3.3 million last week, versus the estimated 1.5 million from economists.
“We are likely to see an even larger number of workers lose their jobs in only a matter of weeks, if not already,” Tim Quinlan, senior economist at Wells Fargo, said. The layoffs were the expected result of state and local mandates for widespread closures to protect public health and safety. For that reason, he believes the current spike will ease once the public health crisis passes and businesses reopen, particularly as government provides fiscal aid to spur on the economic recovery.
Former retail analyst Walter Loeb, who’s now consultant, isn’t so sure, at least not in the near- or even mid-term. He expects that some businesses may never reopen, and believes that workers who do find work after going through an extended period of unemployment may take a longer period of time before they feel confident enough to want to spend on apparel again.
“I think men will be cutting back on their spend. Men’s wear will be the last thing they will spend because they’ll be focused on trying to meet the family’s budget constraints,” Loeb said.
While women’s apparel and accessories could see some spend, Loeb expects infants and kids will be the resilient apparel category because parents will continue to make purchases because “growing kids need new clothes.”