On, Arc'teryx, Skechers see robust demand as consumers splurge on quality sporting goods
Consumers today are picky, but they'll still splurge on quality running shoes and outdoor wear — if the companies give them a reason to.
Brooke Roach, a vice president at Goldman Sachs, told Yahoo Finance that retail brands are not necessarily "competing on the lowest possible price point" but on value perception and innovation.
The trend is boding well for companies like outdoor apparel player Amer Sports (AS), which owns Arc'teryx, Roach said.
"Across all the regions in North America in particular ... we're continuing to see a very strong, robust demand signal, probably more specific to Arc'teryx," CEO Stuart Haselden told Yahoo Finance. Its fans remain resilient and willing to buy products "priced at the top of the market in the outdoor space."
In its latest quarter, Amer Sports, which also owns Peak Performance and Wilson, saw revenue grow 16% from a year ago to $994 million, boosted by growth in footwear, women's, and jackets.
Running shoe brand On's (ONON) co-CEO Martin Hoffmann told Yahoo Finance that "our consumer is in a very good position" with "very strong demand all around the globe." Net Sales in the Americas grew 24.8% last quarter to $436.18 million dollars.
Consumers are still seeking out lower-cost options in the premium space though. In 2022, the company also launched Onward, a pre-owned option on its site, which offers shoes ranging from $80 to $100-plus.
Co-CEO Marc Maurer said the offering is "working well" and is "really being adopted by the American consumer" right now.
Meanwhile, value player Skechers (SKX) saw a record $2.19 billion in net sales in Q2.
The "consumer spend remains strong, and within our portfolio we're actually seeing consumers trade up into some of our higher-end comfort technology," Skechers CFO John Vandemore told Yahoo Finance.
An example is its Slip-ins sneakers, which retail for $85-plus, per the Skechers site.
Back-to-school sales "began a bit slower than expected," Vandemore said, but "it finished strong and hopefully serves as a positive indication of the holiday selling season ahead."
Read more: 5 smart ways to save money on back-to-school supplies
Skechers' team has been conscious of value as consumers are "annoyed or tapped out" by price increases post-COVID.
"More innovation, more comfort technologies in our shoes, and that is actually resonating with consumers so that they're consciously choosing to pay more for that product. That's not pricing, in our view; that's value. We're delivering more and consumers are willing to pay for it. I think that's going to be the recipe going forward," he said.
Not everyone is able to crack the code, though. Specialty retailer Lululemon (LULU) is trailing behind these players and beyond.
In Q2, the company missed on revenue for the first time in two years. Roach said the team is managing through "some execution issues."
"They have strong market share, but some of the innovations that they've offered to the consumer recently just haven't been quite as strong relative to the offers that they had previously," such as its mega-successful belt bag, she told Yahoo Finance.
She added that the company is also managing through inventory issues around certain sizes and colors, which is leading consumers to go elsewhere.
Correction: A previous version of this article misspelled Martin Hoffmann's last name. We regret the error.
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Brooke DiPalma is a senior reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma or email her at bdipalma@yahoofinance.com.