‘Boring’ fashion on offer blamed for our poor retail show

FMarcs leopard print wool coat, $279
FMarcs leopard print wool coat, $279

Part of the blame for the frail state of Australia’s retail sector can be pinned on fashion designers, with “boring” clothes on offer holding the industry back, according to investment bank Citi.

While broking analysts are often more comfortable with the models on an Excel spreadsheet than those on a catwalk, Citi’s retail team led by Craig Woolford says a lack of variety is keeping shoppers away.

“In our view, winter sales are weak because fashion trends are hardly different to last year and lack enticing colours. It’s all about black, khaki, pale pink and leopard print (yet again),” Mr Woolford said, seeking to bridge the gap between stockbroking and fashion critic.

“These are simple fashion observations, but have a significant impact on the number of new items a shopper needs to buy to remain on trend,” he said. “When styles are consistent from year to year, sales momentum slows.”

The claim follows remarks by NAB chief economist Alan Oster this week that the retail sector was in a “terrible” state and that it was already in recession. Several big-name retailers have collapsed while others have issued profit warnings and have seen hefty share price falls.

Yesterday there was a rare reprieve, with better-than-expected retail sales that rose by 1 per cent in April from a month earlier, the Australian Bureau of Statistics said. That was well above the 0.3 per cent rise expected by economists.

Even so, growth in clothing sales ground to a halt in the March quarter after a 7 per cent growth rate last year. This coincides with a broader slowdown of discretionary spending from 4.1 per cent in 2016 to 3 per cent in the March quarter.

Mr Woolford noted Womens­wear sales trends had been weak around the world, while beauty (cosmetics), accessories and footwear had been better.

“In winter 2017 the colour and key fashion designs are very similar to 2016. Moreover, the colours are not as bright,” he said.

Indeed, while colours such as navy, marshmallow blue, pink and yellow, black and white stripes were big during winter last year, this year’s winter range is dominated by pale pink, khaki, burgundy, floral print and leopard print.

While last year it was all about puffer jackets, jersey dresses and jumpsuits, this year it’s biker jackets, puffer jackets and choker tops on offer, Mr Woolford noted.

Still, Mr Woolford believes a buying opportunity exists on the market, “particularly given the transitory nature of the slowdown in fashion”, and upgraded the share recommendation to buy on Millers Retail owner Specialty Fashion and Solomon Lew’s Premier Investments, which owns brands such as Just Jeans, Portmans.

Despite those “simple observations”, the analysts said both Premier Investments and Specialty Fashion have been punished amid broad retail concerns and should now be considered oversold. “We see value in both stocks, but acknowledge a likely downgrade cycle over the next few months given weak sales trends.”

Citi’s upgrade on Premier Investments brings it in line with other analysts. Bloomberg research shows nine buy ratings from brokers, three holds and only one sell.

Specialty Fashion is much smaller, with a market cap just below $76 million. Its shares yesterday touched an eight-year low