3 Lingerie Stocks to Leave in the Closet
April 15, 2016 by admin
Filed under Latest Lingerie News
Sex sells … except for, apparently, in the financial markets. That’s the message behind popular lingerie stocks, which have failed to spice up investment portfolios.
Declining sales, a competitive landscape and poor performance overall in the apparel industry have especially challenged specialty or premium retailers. While the products themselves get plenty of media coverage and exposure in popular culture, lingerie stocks as an investment vehicle have recently fallen flat.
Generally speaking, it’s a tough road for everyone. The benchmark SP 500 is going nowhere fast. Wage growth remains a problem. To top it all off, the markets are widely anticipating one of the worst earnings seasons in years.
According to research conducted by FactSet, earnings of companies listed on the SP 500 are forecasted to drop 9.1%. Never mind the fact that unrelated sectors like energy and materials are bearing the brunt of the pain. Such bearishness is ultimately a reflection of the whole, and that certainly doesn’t do favors for specialty items like lingerie.
The immediate problem for lingerie companies is demographics. I think it’s safe to assume that most buyers of lingerie are women. That cuts out roughly half of the consumer base. Another safe assumption is that lingerie products are targeted towards younger Millennial women. Yet it is this very subsector of the broad populace that is seeing a lesser benefit from the present jobs recovery.
According to the Bureau of Labor Statistics, the average unemployment rate this year for women aged 20 to 24 years is 7.6%, significantly higher than the unemployment rate for all women aged 16 and over (4.9%). The unemployment rate for “prime” female Millennials aged 25 to 34 years is 5.2% — though worryingly, this rate increased from 5% in December 2015 to 5.4% last month.
Coincidentally, the rally in the Dow Jones U.S. Apparel Retailers Index began to stall at the end of March, and has effectively reversed course in April.
This isn’t to suggest that a move up in female unemployment figures is solely responsible for bearishness in lingerie stocks. However, it’s an important piece of a larger puzzle that has perplexed the broad markets.
With all companies scrambling for better sales performances, specialized retailers are at higher risk. Here are three lingerie stocks that are unlikely to spice things up.
