Skechers, Steve Madden, VF, Crocs, Deckers and more – Footwear News
Over the next two weeks, Skechers, Steve Madden, VF Corporation, Deckers, Under Armour, Crocs and Adidas will release their final quarter results.
Analysts said the macro effects of the current economic environment such as inflation, lack of stimulus funds and fears of recession will likely weigh on results. Additionally, with back-to-school and holiday shopping season ahead, visibility is still murky at the moment, analysts noted.
“While there are reasons to be involved in a number of actions going into the earnings ahead, there is little or no reason to save the truck for at least a month, when consumer demand becomes evident during the back-to-school season,” Williams wrote. Trade analyst Sam Poser in a note to investors, advising them to “remain patient” when it comes to making an important stock decision.
Poser named Boot Barn, Steve Madden, Deckers and Skechers as his top picks for the upcoming season.
One of the big issues facing retailers this season is higher than usual inventory. Executives at Walmart, Target, Foot Locker, Macy’s and others said last quarter that they expected to see increased discounts as they sought to correct their large inventory levels.
“We expect inventory dollars on balance sheets to rise further from the prior quarter,” Cowen analysts wrote in a recent note to investors. Analysts pointed to Deckers, Ralph Lauren, VF and Puma as the most likely to “indicate strong trends and reiterate guidance.”
As prices continue to rise, low-cost brands could see benefits as consumers”trade down” to buy more affordable options.
Skechers is an example of a label that could benefit from this trend, analysts at Jane Hali & Associates (JHA) LLC pointed out.
“Skechers is aimed at a low-end consumer and its distribution includes Walmart, Target, DSW, Kohl’s, Macy’s and off-price,” JHA analysts wrote in a note to clients. “These consumers are being impacted by inflation and the threat of recession, which has forced them to prioritize groceries and fuel over clothing and shoes. However, on the other hand, Skechers could benefit from a lower trade scenario.”
When it comes to footwear and apparel in general, Morgan Stanley analysts have found that consumers could potentially”trade to cheaper stores such as TJ Maxx, Ross Stores and Burlington if high prices continue to rise. However, analysts added that discretionary categories like footwear and apparel have so far “proven resilient”, throughout the current economic environment, although this may change.
“As inflation continues to weigh on lower-income households, our economics team expects there may be further shifts in consumer spending habits,” wrote Morgan Economist Sarah Wolfe. Stanley, in a recent report.