Sweater Losing Its Christmas Allure

NEW YORK -- It was the original "one size fits all" gift solution: a bulky, loose-fitting sweater, ideal for the grandparent, distant cousin or spouse who did not know -- or was afraid to ask for -- a recipient's clothing size.

But hard times have befallen the dependable sweater, with sales down sharply this year, and some are beginning to ask if it has become the new holiday fruitcake.

A respected Wall Street analyst sent a shudder through the nation's retail stock rooms recently when she theorized that consumers were rejecting them in favor of that other fail-safe option, the gift card.

"I don't think anyone wants to give or receive it," said Gabrielle Kivitz of Deutsche Bank Securities, the analyst, who says she believes that several big-name chains -- Express, Aeropostale, Banana Republic and American Eagle Outfitters -- have invested too heavily in sweaters this holiday and could be stuck with costly inventory after Christmas.

Her provocative theory might be easily dismissed but for the little-noted fact that sweater sales have slumped.

So far this year, purchases are down 4.4 percent, or $407 million, from 2004, according to the NPD Group, a research firm.

Several theories, beyond defections to the gift card, have surfaced to explain the downturn. A growing fashion trend, mixing blazers with T-shirts (for men) or camisoles (for women), leaves little room, or need, for a heavy sweater.

"When you wear one," said Sandra Sachdev, an 18-year-old student shopping in Manhattan, "nobody can see the cute shirt underneath."

In a survey of 800 shoppers, conducted earlier this month, America's Research Group found that 36 percent planned to give sweaters this holiday, down from the 63 percent who gave them previously.

But before retailers scrap their sweater collections, it is worth noting what happened when another Wall Street analyst boldly predicted a clothing bubble was about to burst.

That was back in May, when Stacy Pak, a retail analyst at Prudential Securities, predicted that retailers had overestimated the American appetite for $50 pairs of distressed-denim jeans.

As it turned out, denim remains the hottest apparel category of the year. In the last year, denim sales increased 7 percent, to $14.7 billion, according to NPD.

Kivitz notes that she is not downgrading any stocks, or even using the word glut, but her warning holds significant implications for retailers.

Deutsche Bank has already spotted deep discounts, a sign that retailers are struggling to sell sweaters. Among its findings: A five-day sweater sale at Ann Taylor has been extended indefinitely (select sweaters are $49.99), and Aeropostale has marked nearly all sweaters down 50 percent.

Retailers played down talk of a sweater slowdown. Gap says it carries few heavy sweaters anymore, favoring thin merino and cashmere.

An American Eagle spokeswoman said Kivitz's warning was "way off," but in a conference call describing November sales, the retailer said both men's and women's sweaters "underperformed."

The big unknown is just how many dollars gift cards will siphon away from traditional gifts like sweaters.

In the past, a person who liked Gap clothing, for example, could expect a sweater with a receipt tucked in the package in case it did not fit. Now that person can bank on a gift card, which requires less time to pick out anyway.

Indeed, America's Research Group found that in the last five years, sweaters have dropped from its top 10-most desirable gifts to the top 30. Still, it remains notches above the brandy-soaked fruitcake. "The sweater," said the group's chairman, Britt Beemer, "has not fallen to that level."