Will Skechers’ domestic wholesale business continue to be a drag or will new products revive the brand in 2017?
Report Available: February 1, 2017
Blueshift’s initial research found SKX scuffling in the U.S. due to a challenging retail environment that included a glut of discounted, name-brand footwear in the second half of 2016. However, there has been some positive buzz about SKX’s next product cycle, with updated shoes expected to hit the market in Q2. The footwear industry continues to be marked by intense competition, with ADDYY and UA among those gaining share.
- SKX missed profit and sales estimates in Q3, its second straight disappointing quarter, and offered lower-than-expected guidance for Q4. Executives touted the company’s strong international performance but said the U.S. environment remains challenging. The closing of major sporting goods stores flooded the market with discounted inventory from major brands, and retailers are increasingly reluctant to commit to large buys ahead of season. SKX’s number of pairs shipped in Q3 was up slightly from a year earlier, but average selling prices fell 4%.
- Prior to its recent struggles, SKX had a strong four-year run fueled by its ability to offer stylish, casual shoes at a good price. The company is trying to get back on track by rebuilding its pipeline of new products. SKX’s new lines got favorable reviews at the recent Fashion Footwear of New York trade show. The company showed off updated men’s and women’s footwear with new materials, better styling, and kid-friendly features like “energy lights,” which have battery-powered, light-up soles. The new lines are expected to hit retail shelves in Q2.
- The U.S. sneaker market is shifting toward a blend of performance and fashion. ADDYY has been among the manufacturers capitalizing on these trends, as it has re-taken the No. 2 spot in athletic footwear from SKX and posted a 20% revenue gain in Q3. NKE remains the leader with about 62% share of the global footwear market, but is under increasing pressure from ADDYY and UA. Classic styles are in vogue, with “retro” footwear representing six of the top-selling models during the most recent back-to-school period.
- Blueshift’s July 19, 2016 report found warning signs that SKX’s momentum was waning. Sales of SKX shoes were down 6% during the second quarter at one of its major retail partners, leading the retailer to consider canceling some third quarter orders, according to a source at the retail chain. The national retailer had to significantly discount some SKX inventory to move it out, the source said, adding that SKX appeared to be losing share to NKE and other performance brands. Other sources were far more positive about SKX’s recent performance. Blueshift’s 24, 2015 report said SKX would sustain its strong recent growth throughout 2015 and into 2016.
What are current trends with retail sales of SKX shoes? How are wholesalers looking at SKX inventory for 2017? How are selling prices? What are the expectations for SKX’s new products? Which footwear competitors are gaining or losing share? To answer these and other questions, Blueshift will issue a market research report by gathering data from independent sources in the following areas: Retail footwear executives, Non-Skechers retail store personnel, Skechers store personnel, and Industry specialists.
Companies: Skechers (SKX), Nike (NKE), Under Armour (UA), Adidas (ADDYY)
Research Begins: Jan. 16, 2017