Chicago, IL – January 3, 2025 – Today, Zacks Equity Research Adidas AG ADDYY, Skechers SKX, Steven Madden SHOO, Carter's CRI and Wolverine World Wide WWW.
Link: https://www.zacks.com/commentary/2390584/shoes-retail-apparel-industry-reflects-momentum-5-stocks-to-benefit
The Zacks Shoes and Retail Apparel industry shows promise, driven by rising consumer interest in healthy lifestyles, and increasing demand for activewear and athletic footwear. Innovation in design has been a key growth driver. Companies prioritizing product innovation, store expansion, digital transformation and omnichannel strategies are well-positioned for success. Investments in product development and e-commerce are advantageous for players like Adidas AG, Skechers, Steven Madden,Carter's and Wolverine World Wide.
However, the industry faces ongoing challenges, including rising costs, reduced consumer spending on discretionary items and higher marketing expenses, all of which have pressured profits. Unfavorable currency fluctuations present risks for globally operating companies.
The Zacks Shoes and Retail Apparel industry comprises companies that design, source and market clothing, footwear and accessories for men, women and children under various brand names. Product offerings of the companies mostly include athletic and casual footwear, fashion apparel and activewear, sports equipment, bags, balls, and other sports and fashion accessories.
The companies showcase their products through their branded outlets and websites. Some companies distribute products via other retail stores, such as national chains, online retailers, sporting goods stores, department stores, mass merchandisers, independent retailers and catalogs.
The growing focus on fashion is driving the demand for innovative clothing and footwear in the United States. Companies in the sector are concentrating on product innovation, active marketing, store expansion and enhancing e-commerce capabilities to capture market share. Favorable health and wellness trends are also encouraging footwear manufacturers to broaden their product lines.
Brands continue innovating with new styles, materials, colors and functional designs to gain a larger share of the fast-growing market. Multi-functional shoes, suitable for both casual and formal wear, have been particularly popular.
E-Commerce Investments: E-commerce has been a key growth driver in the athleisure market. Companies in this segment are building their customer base through websites, social media and other digital platforms. As consumers continue to shop from home, the demand for athletic-inspired apparel and digital sales is expected to be strong.
Brands that expand their athletic apparel lines and strengthen e-commerce capabilities are likely to see long-term growth. Investments in faster delivery through improved supply chains and fulfillment processes will give industry players a competitive edge. Additionally, companies are enhancing stores with renovations, better checkout experiences and mobile point-of-sale options to increase their appeal. These efforts to improve the shopping experience across multiple channels are expected to boost store and online traffic, and drive sales.
Cost Headwinds: Companies in the industry have been facing higher costs due to factors like commodity price inflation and reinvestments. Supply-chain disruptions and increased logistics costs have also been significant challenges. Many companies anticipate rising logistics expenses to impact margins in the short term.
Higher marketing spending, operating overhead, and investments in stores and digital operations have increased SG&A costs. Industry players are also incurring increased expenses to support brand campaigns and digital initiatives. For some, exiting the Russia market due to the Ukraine-Russia conflict is a key concern. A competitive labor market adds a layer of difficulty, threatening profit margins across the industry.
The Zacks Shoes and Retail Apparel Industry is an 11-stock group within the broader Zacks Consumer Discretionary sector. The industry currently carries a Zacks Industry Rank #67, which places it in the top 27% of more than 250 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates bright prospects for the near term. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
The industry’s positioning in the top 50% of the Zacks-ranked industries is the result of a positive earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are gaining confidence in this group’s earnings growth potential.
Before we present a few stocks that you may want to consider for your portfolio, let us look at the industry’s recent stock market performance and valuation picture.
The Zacks Shoes and Retail Apparel industry has underperformed the sector and the S&P 500 in the past year.
Stocks in the industry have collectively declined 21.7% in the past year. Meanwhile, the Zacks Consumer Discretionary sector and the Zacks S&P 500 composite have risen 14.4% and 26.2%, respectively.
On the basis of forward 12-month price-to-earnings (P/E), commonly used for valuing Consumer Discretionary stocks, the industry is currently trading at 24.55X compared with the S&P 500’s 25.08X and the sector’s 24.8X.
Over the last five years, the industry traded as high as 37.75X and as low as 20.15X, with a median of 26.39X.
Wolverine: The company is engaged in designing, manufacturing and distributing a wide variety of casual and active apparel and footwear. It also manufactures children’s footwear and specially designed boots and accessories for industrial purposes. Wolverine’s focus on brand structure, increasing efficiency by removing costs, strategic review of its portfolio, improving working capital and lowering leverage bode well. The company continues to focus on strengthening its DTC business. Speed-to-market initiatives, deployment of digital product development tools, expansion of e-commerce platforms and frequent product introductions are steadily contributing to Wolverine’s performance.
The Zacks Consensus Estimate for WWW’s 2025 sales and earnings suggests growth of 5.9% and 51.2%, respectively, from the year-ago quarter’s reported figures. The consensus estimate for WWW’s 2025 EPS has been unchanged in the past 30 days. The company has a trailing four-quarter negative earnings surprise of 17%, on average. Shares of this Zacks Rank #1 (Strong Buy) company have rallied 181.9% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
Skechers: This Manhattan Beach, CA-based company designs, develops, markets, and distributes footwear for men, women and children in the United States and overseas under the SKECHERS name, as well as several unique brand names. Skechers is actively leveraging a multi-brand approach to diversify its portfolio, particularly through comfort-driven footwear, targeting a broad consumer base. Strategic investments are strengthening its infrastructure, including e-commerce and retail, aligning with its omnichannel expansion and DTC growth.
Skechers' international business operations have been a pivotal driver of its overall growth trajectory. SKX has a trailing four-quarter earnings surprise of 8.8%, on average. The Zacks Consensus Estimate for the company’s 2025 sales and earnings indicates growth of 9.4% and 13.7%, respectively, from the year-ago quarter’s reported figures. The consensus estimate for SKX’s 2025 EPS has declined 0.4% in the past 30 days. Shares of this Zacks Rank #2 (Buy) company have rallied 10.4% in the past year.
Steven Madden: The company designs, sources, markets, and sells fashion-forward footwear for women, men and children, as well as private-label handbags and accessories globally. It focuses on growing its direct-to-consumer business through digital innovation, expanding non-footwear categories like handbags and apparel, increasing its international market presence, and strengthening its core U.S. wholesale footwear business. Key priorities include curating trend-driven products, deepening customer relationships through marketing, advancing its digital commerce strategy and managing expenses efficiently.
Steven Madden’s strong performance across wholesale, direct-to-consumer and licensing segments highlights the success of its strategies and positions the company for continued growth, particularly in international markets, which it sees as a major long-term growth opportunity. The Zacks Consensus Estimate for SHOO’s 2025 sales and earnings indicates growth of 5.1% and 11.8%, respectively, from the year-ago quarter’s reported figures. The consensus estimate for SHOO’s 2025 EPS has been unchanged in the past 30 days. The company has a trailing four-quarter earnings surprise of 9.8%, on average. Shares of this Zacks Rank #2 company have risen 4% in the past year.
Adidas: This leading manufacturer and seller of athletic and sports lifestyle products in Europe, the Middle East, Africa, North America, Greater China, the Asia Pacific and Latin America is poised to gain from strong demand, compelling products and the robust performance of its online business. Adidas has been benefiting from improved sell-through of all Adidas products in the market. The company has been witnessing improved margins, driven by the recently implemented price increases and an improved channel mix.
The Zacks Consensus Estimate for ADDYY’s 2025 sales and earnings indicates growth of 10.6% and 88%, respectively, from the year-ago quarter’s reported figures. The consensus estimate for ADDYY’s 2025 EPS has moved up 1% in the past 30 days. Adidas delivered a negative earnings surprise of 14.2%, on average, in the trailing four quarters. This Zacks Rank #3 (Hold) stock has rallied 24.6% in the past year.
Carter’s: This is the leading marketer of branded apparel and products for babies and young children in North America. The company has taken significant steps in pricing to adapt to market conditions and boost profitability. Its emphasis on essential core products and strong value offerings, particularly in inflationary markets, appeals to budget-conscious shoppers. Carter’s has also seen a notable increase in margin rates due to reduced inbound freight costs, which is a key factor in margin growth. This reflects the company's focus on efficient cost management and operational improvements.
The Zacks Consensus Estimate for CRI’s 2025 sales indicates growth of 0.4% from the year-ago quarter’s reported figure, while the same for its EPS suggests a 7.4% year-over-year decline. The consensus estimate for CRI’s 2025 EPS has been unchanged in the past 30 days. The company has a trailing four-quarter earnings surprise of 38.3%, on average. Shares of this Zacks Rank #3 company have declined 25.2% in the past year.
Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.
Today you can access their live picks without cost or obligation.
See Stocks Free >>
Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
support@zacks.com
https://www.zacks.com
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Skechers U.S.A., Inc. (SKX) : Free Stock Analysis Report
Wolverine World Wide, Inc. (WWW) : Free Stock Analysis Report
Adidas AG (ADDYY) : Free Stock Analysis Report
Carter's, Inc. (CRI) : Free Stock Analysis Report
Steven Madden, Ltd. (SHOO) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
