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Where are teens shopping now?

| Saturday, Sept. 28, 2002

NEW YORK— Know what's hot in teen fashion• Retailers wish they did.

Gap Inc. is still struggling and Tommy Hilfiger and Polo Ralph Lauren are losing luster among the young. It seems there is no one brand or chain that's dictating style for youth these days.

The lack of focus became more apparent for the back-to-school season, which was grim, as a sluggish economy has forced companies to rein in their creativity, analysts said.

"There isn't that excitement or sense of got-to-have it in fashion this year," said Wendy Liebmann, president of marketing consultant WSL Strategic Retail in New York. "There's no one creating the fizz and bubble."

Gap announced Thursday that it had turned to a Walt Disney Co. executive — Paul Pressler — as its new CEO to help restore magic to the chain. But some industry observers believe the days are over for seeing any one brand hold sway over the masses.

The big brand is being replaced by "a whole laundry list of niche brands," according to Michael Wood, vice president of Teenage Research Unlimited, a market research firm in Northbrook, Ill.

Kurt Barnard, president of Barnard's Retail Trend Report, said: "We're entering an age of individualism. Teens don't want to be dictated to."

That's not good news for the industry.

When chains like Gap and Abercrombie & Fitch Inc. were true leaders, they energized the fashion business, driving consumers to the malls and generating a slew of knockoffs from rivals who hoped to cash in on the look of the moment.

After making pants and khakis chic in the 1990s, Gap lost its pulse, producing fashion faux pas and struggling with 28 consecutive months of declining sales. It is pinning its turnaround on a return of the trendy basics that made it famous.

Abercrombie & Fitch's pricier versions of khakis and other casual basics, backed by edgy — and often controversial — advertising, created a buzz in the late '90s. But recently the clothes appear to have lost some excitement, analysts said.

Labels like Tommy Hilfiger, known for its preppy classics, and Polo Ralph Lauren, whose trademark is country club chic, have lost their cachet as their brands became overly distributed and have lacked design innovation.

"The monotony is what's killing so many specialty stores," Barnard said. "Now the only way to tell one store from another is by the name on the door."

Even chains with specific niches like Hot Topic Inc., whose clothes are inspired by the latest musicians, and Pacific Sunwear of California Inc., which appeals to fans of hip hop and surfing, have had volatile businesses, Barnard said.

There are some rising stars among department store brands.

Urban labels like Sean John, Phat Farm and Roc-a-Wear, all of which are appealing to a multicultural audience, have enjoyed strong sales in the young men's area. Department stores such as Federated Department Store Inc. and Saks Inc. are quickly stocking up on the clothing.

Meanwhile, brands such as XOXO and Rampage have been hot among teen girls, according to Toni Browning, president and chief executive of Profitt's, a division of Saks.

Styles like different washes in jeans, belted low-rise jeans and peasant tops have also been popular.

But it wasn't enough to save the fall retailing season.

"Back-to-school was dismal," said Michael Niemira, vice president of Bank of Tokyo-Mitsubishi Ltd. He expects sales at stores opened at least a year, known as same-store sales, to be up only 3 percent in September. He had originally forecast a 6 percent gain, given the disastrous year-ago period.

Despite the poor back-to-school season, retailers aren't giving up on the teen business, and said the difficult climate is forcing them to work even harder.

"What we've lost is some energy, but we are looking to get it back," said Browning, noting that Profitt's buyers have been traveling more throughout the United States to find new suppliers.

Barnard believes that Gap's choice of someone in the entertainment industry as its new CEO may mean that it's looking to add pizzazz in its stores. Pressler had been the head of Walt Disney's theme park and resort business since 1994.

"Gap can't depend on the same product to reach the same customers," said Barnard, noting that there's an abundance of T-shirts and stretch black pants in the marketplace. "It needs to create more excitement in its stores."

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