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Footwear is seen as a bright spot in retail despite a significant selloff in the sector as of late, according to Baird analyst Jonathan Komp.
“While most management teams acknowledge the rising pressures on consumers, the footwear category appears to be holding up well especially relative to selected other down trending consumer categories,” he wrote. “Most brands are closely monitoring the health of sell-throughs and inventory levels across key partners while touting operating agility in the case spending were to soften.”
Komp commented that slowly improving supply chains are likely to better the dynamics for the industry while positive trends in fitness chains also add interest for many footwear providers. However, he added there is likely to be bifurcation in performance coming among the names populating the sector.
“In our view, those best positioned include brands with exposure to higher-income consumers,
categories that are trending well especially functional/performance, comfort/casual, as well as dress and western,” Komp said.
He indicated that he is “incrementally positive” on Deckers Outdoor Corp. (NYSE:DECK -0.2%) and On Holding (ON -0.0%). Meanwhile, Crocs (NASDAQ:CROX +0.9%) is expected to benefit from more casualwear trends and Boot Barn Holdings (NYSE:BOOT -1.0%) should benefit from work and event demand as well as budding fashion trends in western wear.
Read more on his specific forecasts for Boot Barn.
