Big teen retailers changing tactics, fashions as sales slump

Being a teen can be tough, but catering to one is even more difficult.

Teen retailers are learning that lesson the hard way this holiday season.

The longtime CEO of Abercrombie & Fitch last week abruptly retired just a week after the retailer posted an 11.5 percent quarterly sales drop and slashed its annual profit forecast.

And American Eagle and Aeropostale gave dismal forecasts for the quarter that includes the holiday shopping season after each posted weak sales for the fall.

Teen retailers are facing ho-hum results at a time when overall U.S. retail sales are up 5.1 percent over the past 12 months, the Commerce Department said Thursday.

A shift toward technology

It's a major shift. Teen retailers became popular in the last decade for their logo tees and trendy jeans, which became a high school uniform of sorts. But since the recession these stores have been losing favor with their core demographic.

One reason is technology. Teens are more interested in playing on smartphones than hanging out at the mall. They're also more likely to spend their money on iPhones and other tech gadgets than on clothes.

And when they do buy clothes, they do so differently than past generations who found comfort in dressing like their peers. Today's teens shun the idea of wearing the same outfit as the girl or guy sitting next to them in chemistry class.

Case in point: Olivia Nash, a 16-year-old junior from Washington, D.C. Nash used to shop at American Eagle and Abercrombie, but now she pulls together pieces at a variety of other retailers.

"When I was younger, everyone wanted what everyone else had," she says. But now, Nash says "everyone is putting their own individual spin" on their look.

This change in teen shopping patterns isn't lost on retailers that spent years building their brands around a sort of "insta-look" that shoppers could buy right off the rack.

Logos are out

The three big teen retailers are getting rid of shirts and other items that have their logos and adding trendy fashions and athletic styles. They're letting shoppers buy online and pick up in stores. And they're getting fashions into stores faster in an effort to compete with so-called fast-fashion retailers like H & M.

American Eagle, the midpriced brand of the three chains, says it's adding jeans with different washes this holiday season. Meanwhile, Aeropostale, which is at the low-price range with jeans at about $40, is adding everything from cropped metallic tank tops to floral lace leggings. That's a switch for the retailer, which used to focus on basics like jeans and sweatshirts.

Julian Geiger, Aeropostale's CEO, acknowledged the shift in the way teens shop during a talk with investors last week. But he said the chain has added too many looks in its zeal to chase after fast-fashion chains.

"I still believe that while they strive for individuality in many ways, at 14- to 17-years-old, they still want to be accepted by their friends and peers and that there is still a uniform that they wear that makes them cool," said Geiger, the chain's former CEO who was rehired in August.

For its part, Abercrombie, whose other brands Hollister Co. and Gilly Hicks, has made the biggest changes.

The chain has added neoprene party dresses and faux fur vests this holiday season. Additionally, it introduced black items -- something it had never done before.

Lower prices are in

But perhaps the biggest change customers will see is at the cash register. The retailer, which could easily sell $90 jeans before the recession, is permanently cutting prices across the board by 15 percent.

Les Berglass, CEO of an executive recruiting firm that works with retailers, described the challenge facing teen retailers this way: "They have to make a product that is more exciting than the iPhone6."