Most Recent Articles In Business
Latest Business Articles
- Puma Banking on Marketing Push as Q2 Earnings Slide
- Market Watch: Puma, Steve Madden to Deliver Quarterly Results
- Marc Fisher's Mark
More Articles By
Going into the third quarter, footwear companies are better positioned than apparel firms even as consumers continue searching for bargains, said industry experts.
As news broke that retailers posted weaker-than-expected June sales results Thursday, analysts told Footwear News that strong demand for boots in the upcoming back-to-school season will help shoe companies weather what has been a volatile sales year.
“The boot business last year was very good and some people think we can’t possibly have another good boot year. But I think we will, because there’s nothing to replace it, and it’s a trend that has legs,” said Jeff Van Sinderen, analyst at B. Riley & Co. “Boots have mind share with the customer.”
“My suspicion is that the footwear space looks a lot like the apparel space with a fair amount of discounting going on, but footwear may be slightly better just because that seems to be the trend,” said Morningstar analyst RJ Hottovy.
Van Sinderen agreed. “Although footwear companies post quarterly, not monthly comps, across the board I’m hard-pressed to find publicly listed footwear companies whose businesses are not getting better,” he said.
Retailers reported mixed results for June, with department stores appearing to have fared slightly better than their specialty store counterparts. Macy’s Inc. registered a 6.5 percent comparable-store sales increase for the month, while Dillard’s Inc. and The Bon-Ton Stores Inc. posted gains of 2 percent and 1.4 percent, respectively.
Nordstrom Inc. led among upscale retailers with a 14.1 percent advance and cited women’s shoes as its third best performing category after dresses and jewelry, while Saks Inc. posted a 2.5 increase for the month. Neiman Marcus Inc. was up 3 percent.
But Gap Inc.’s comps were flat for the month — with Gap down 3 percent in the U.S., Old Navy flat and Banana Republic up 6 percent. Among teen retailers, American Eagle Outfitters Inc. was down 1 percent and The Buckle Inc., long one of the top performers in the sector, experienced a 7.3 percent decline.
“We have to be careful looking at June because it really is a clearance month,” said Van Sinderen. “My theory is that the consumer right now is very event-driven. They need a reason to shop — either because they absolutely must have a product that they love, or everything is on sale and they perceive great value, or because they have to buy a gift.”
Analysts expect a positive, low single-digit rise in July as comparisons continue from low bases last year. But they are split on what happens after that.
While Hottovy said he thinks growth with start slowing in August and September, Van Sinderen thinks those two months will see peak back-to-school traffic.
“After that you’ll see a lull, then it’s holiday. It’s going to be peaky,” said Van Sinderen.