After a winter of blah colored neutral clothing, the color explosion throughout the mall and online is catching the attention of consumers by surprise (which is good news for the stores, as it sparks impulse buys). More importantly, from an investment standpoint, consumers are voting for color by opening their wallets and paying full price, which is music to the ears of retailers. The key to making money off this spring's color mania is to know what to be looking for and who is doing the best job.
Under Armour vs. Nike
These two sports brands are battling it out for consumer love at Dick's Sporting Goods (DKS) this spring. Each brand has come packing color in tops, bottoms, hats and associated accessories. Under Armour (UA) even has pink water bottles for females, sporting rubber grips on the side for that aspiring bike off-roader or devoted gym step climber. I commend Nike (NKE) for its significantly improved athletic assortment for both men and women in terms of fit and range of colors offered. Dick's has taken notice, and has given Nike a little more floor space, I think.
However, the king of the ring this spring is undoubtedly Under Armour. The colors truly stand out for both men and women, product presentation is on the money, and in certain categories Under Armour has managed to undercut Nike on price for arguably a stronger product. Also, unlike Nike, I haven't seen too much discounting on Under Armour's spring line, which has products in many sizes and styles out.
Dick's Sporting Goods
Hey, why not profit fully from two mega sports apparel brands trying to one up each other? I continue to believe the retailer is benefiting in other parts of its store (such as hunting and golf) from the early arrival of spring weather. The company seems nicely positioned to surprise the market with its first-quarter sales and earnings.
A Retailer Getting it Wrong
Express (EXPR) has truly become the leader in "% off" coupons from the lot of specialty apparel stores in the mall. However, those "% off" signs are on top of ticket prices that are just too high from the start, especially if the product is not stellar (which I think is the case). This is problem No. 1. Problem No. 2 is the lack of color in the window displays this spring and upon entering the store. If the consumer has shown an appetite to buy colorful merchandise, so why own stock in a company that continues to dress its male and female mannequins in neutral colors? It makes little sense to me, so I would avoid this stock or consider shorting it.