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4 Steady Shoes & Retail Apparel Stocks in a Troubled Industry

The Zacks Shoes and Retail Apparel industry continues to deal with hardships from elevated costs, reduced spending trends on discretionary items and increased marketing investments. These headwinds have been the key burdens on the participating companies' profits. Additionally, adverse currency movements threaten industry players due to their worldwide presence. However, the industry looks lucrative owing to rising consumer awareness about leading a healthy lifestyle, which has resulted in positive demand trends for activewear and athletic shoes. New and innovative designs have been the key drivers for the industry participants. Players focused on product innovation, store expansion, digital investments and omnichannel growth are expected to gain. Investments in products and e-commerce portals bode well for players like Adidas AG (OTC: ADDYY), Skechers (NYSE: SKX), Caleres Inc. (NYSE: CRI) and Wolverine World Wide (NYSE: WWW). About the Industry 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. A Look at What's Shaping the Shoes and Retail Apparel Industry's Future Cost Headwinds: Companies in the industry are witnessing elevated costs due to factors like commodity cost inflation and reinvestments. Supply-chain constraints and elevated logistic costs have been acting as deterrents. Many companies expect increased logistic costs to hurt margins in the near term. Elevated marketing expenses, higher operating overhead and demand-creating expenses and increased investments to enhance store and digital operations have been raising SG&A costs. Also, industry participants are witnessing rising costs to support brand campaigns and digital investments. The exit from the Russia business due to the Ukraine-Russia conflict is likely to be the key concern for some players. A tough and competitive labor market is another headwind. These factors pose a threat to the industry players' margins. Consumer Demand Trends: Players in the industry have been benefiting from strong consumer demand for activewear/athleisure products and footwear. The trend is expected to continue in 2024. Athletic goods and apparel companies offer products from footwear, sweatshirts, leggings, pants, jackets and tops to yoga wear and running clothes for men and women. The increasing focus on fashion is boosting the demand for innovative clothes and footwear in the United States. Industry participants have been focused on product innovations, active promotions, store expansion and enhancing e-commerce capabilities to gain market share. Favorable health and wellness trends have been the key to inspiring footwear manufacturers to expand their product portfolios. The companies continue to innovate styles, materials and colors and incorporate functional designs to grab a large share of the fast-growing market. Multi-functional shoes, which cater to casual and formal looks, have been gaining popularity. E-Commerce ...