MINNEAPOLIS, Oct 06, 2011 (BUSINESS WIRE) --

Piper Jaffray (NYSE: PJC) has completed its 22^nd semi-annual "Taking Stock With Teens" survey, which indicates improving spending at the upper-income level and continued weakness for average-income teens. Also, the survey results reflect a preference by teens for value-priced merchandise at all levels of household income, but not necessarily the lowest cost, as teens report a willingness to spend on higher-priced, differentiated merchandise.

"Our Fall 2011 survey provides further evidence of a bifurcated recovery: upper-income teens are feeling more confident and willing to spend on fashion, while average-income teens continue to rationalize budgets," said Jeff Klinefelter, director of research and senior research analyst at Piper Jaffray. "With macroeconomic uncertainty likely to continue to weigh on consumer spending, we believe fashion and overall product 'newness' can drive sales growth for select retailers and brands."

Key findings from the survey in fashion, beauty and personal care, restaurants, digital media and video game categories include the following:

• Fashion spending reflects improving trends at the upper-income level and continuing weakness for average-income teens. Among upper-income teens, the fashion category accounted for 38 percent of budgets, up from 37 percent in the spring of 2011. Of upper-income females, 40 percent plan to spend more on apparel this year than last year, down modestly from 41 percent in the spring of 2011. Thirty-one percent of upper-income males plan to spend more on apparel compared to 33 percent in the spring. Of average-income teens, 34 percent expect to spend more compared to 35 percent in the prior two teen surveys. Fashion "newness" and the potential emergence of a new fashion cycle point to continued spending on fashion. Upper-income teens continue to be drawn further online for spending, with 13 percent of purchases coming from this channel, which is two percentage points higher than for average-income teens. Friends remain the dominate influence on both upper-income and average-income teen groups, but the Internet displaced television as the No. 2 influence.
• Beauty spending among upper-income teens increased six percent year-over-year, but down two percent sequentially from the spring of 2011. Skin care and cosmetics represented a bigger share of overall beauty spending. MAC is the No. 1 cosmetics brand for upper-income teens, but the brand fell to No. 3 among average-income teens (compared to No. 2 in the spring and the same as the fall of 2010). Victoria's Secret remains the preferred fragrance, consistent with the past seven surveys. The combined share of the top ten cosmetics brands continues to decline, favoring multi-brand specialty retailers such as Ulta and Sephora.
• Teen spending on food and restaurants is reported to be near the highest level since early-2000. Upper-income survey respondents increased weekly restaurant spending by approximately two percent compared to the spring of this year. Average-income teens decreased weekly spending by approximately two percent-- although declines appear to be slowing. For selecting food and restaurants, taste continues to be the strongest influence among teens and nutrition ranked lowest. Value is less of an influence among upper-income teens but remains a more important consideration among average-income teens.
• Portable device spending continues to accelerate with 83 percent of teens reporting that they are likely to purchase a smartphone for their next device, up from 75 percent last fall and 81 percent in the spring. iOS gained market share on Android and it is the most desired operating system, with 36 percent of teens reporting that they are likely to buy an iOS device. Thirty-eight percent of teens plan on buying an iPhone in the next six months, up from 33 percent one year ago. In the last year, iPhone market share among teens has risen from 14 percent to 23 percent. Twenty nine percent of respondents own a tablet or have one in their household, and 22 percent expect to buy an iPad in next six months, which should benefit Apple given iPad's dominant market position.
• Teens represent approximately 35 percent of video game players, with games representing six percent of teen spending. Teens tend to play games online, on mobile phones, and on Facebook. Twenty-one percent paid to play games online, reporting an annual spend of $75. Buying intentions remain low for the purchase of new game systems and software during this fall. Despite declining interest in consoles and handhelds, teens remain receptive to new game experiences.

The "Taking Stock With Teens" survey is a research project comprised of gathering input from approximately 5,700 students with an average age of 16.2 years. Teen spending patterns, fashion trends, and brand and media preferences were assessed through visits to geographically diverse high schools in 11 states, and through an online survey of a wider group of teens from 32 states. The survey is conducted in partnership with DECA (an international association of high school students).

About Piper Jaffray
Piper Jaffray is a leading middle-market investment bank and asset management firm serving clients in the U.S. and internationally. Proven advisory teams combine deep product and sector expertise with ready access to global capital. Founded in 1895, the firm is headquartered in Minneapolis and has offices across the United States and in Hong Kong, London and Zurich. www.piperjaffray.com

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SOURCE: Piper Jaffray

Piper Jaffray
Terry Sandven
AnalystMediaRelations@pjc.com