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O.C. BUSINESS PLUS | HEARD ON THE BEAT / RETAIL

O.C.'s Youth Apparel Makers Have Less to Fear in Economy

March 06, 2001|LESLIE EARNEST

A slowing economy . . . gloomy consumers . . . retailers have plenty to be grumpy about these days.

But analysts say the future could be cheerier for businesses that cater to teens, partly because these increasingly well-heeled young shoppers are more nonchalant than their parents about the economy's ups and downs.

That could be good news for a trio of local companies: Anaheim-based Pacific Sunwear of California Inc., Huntington Beach-based Quiksilver Inc. and Wet Seal Inc. in Foothill Ranch.

"We feel strongly that, as the overall economy begins to slow, the teen market represents an increasingly attractive sector," Jennifer Black, an analyst with Wells Fargo Van Kasper, said in a recent report.

In making its case, the report says there are more than 31 million teens in the U.S. today and that their numbers are expected to grow 20% faster than the overall population. These young people spend an average of $82 a week on entertainment, clothes, food and technology. And 70% of the money they spend is their own, earned from allowances, gifts and part-time jobs.

The report also says more than nine in 10 teens are involved in some sort of financial transaction each week, 26% have savings accounts and 21% have checking accounts. Among 18- and 19-year-olds, almost a third have their own credit cards, the report says.

As an example of how young shoppers can boost business even in uncertain times, the Quiksilver brand has been "blowing out the doors" at Pac Sun stores, Black said. It was also one of the few labels that sold well in department stores in January without the dramatic clearance price cuts.

Stock prices for Quiksilver, Pacific Sunwear and Wet Seal are up for the year, although the shares retreated Monday. Wet Seal took the hardest hit, falling $3.19 to $25.81. Pacific Sunwear's shares closed at $26.13, down $2.69, while Quiksilver's stock was off 35 cents, closing at $24.92.

Black has a strong buy rating on Quiksilver and a buy rating on Pacific Sunwear. She does not cover Wet Seal.

Leslie Earnest covers retail businesses for The Times. She can be reached at (714) 966-7832 and at leslie.earnest@latimes.com.

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