- A major shift in fashion is under way, and analysts say Urban Outfitters is best positioned to benefit.
- High-waisted trousers and crop tops are increasingly replacing skinny jeans and loose-fitting tops after a 10-year hold on the fashion market.
- Urban Outfitters could benefit from this new trend for the next 10 years, analysts say.
Urban Outfitters is at the forefront of a new trend in fashion, and analysts say the retailer could benefit for the next 10 years.
For over a decade, skinny jeans and loose-fitting tops have been the dominant fashion trend. Now these items are increasingly being replaced by high-waisted jeans and crop tops.
According to Morgan Stanley analysts, Urban Outfitters is likely to be the biggest winner of this shift. Urban Outfitters stocks many options for combining high-waisted pants and crop tops.
“[Its] broad but shallow merchandise assortment appears particularly well suited to this new fashion cycle, unlike the narrow and deep assortments of its denim-focused peers, which should extend Urban Outfitter’s relative outperformance for multiple quarters and perhaps years,” the analysts wrote in a recent note to investors.
Urban Outfitters CEO Richard Hayne outlined the new trend in a call with investors in March.
“Fashion, well, it’s fashionable again,” he said, explaining that strong growth was driven by demand for new styles in its “bottoms” business.
In May, Hayne directed investors once more to this major shift in fashion.
“The macro fashion, the silhouette and the proportion changes infrequently. My experience would suggest this probably changes about once a decade,” he said.
He added: “It usually goes from early adopter to a mid adopter to a full adoption to an over adoption and then a replacement. That usually takes 10 years. I think we’re at the early stages. I think in the early stages you continue to see better and better adoption of the change. And so I would suggest that we have a reasonably long period of time to enjoy this change.”
Hayne said that the so-called “fashion rut” defined by skinny jeans and yoga pants is over.
“Demand for new fashion has surged,” he said in March.
Urban Outfitters has seen a surge in business in its most recent quarters. Same-store sales were up from flat numbers in 2017 to double-digit growth in 2018.