Industry Spotlight
Some shoes still fit
Don’t slash prices on products in high demand. Shoe makers Deckers Outdoor Co. and Steve Madden are holding to that tenet, as their designs continue to sell well despite the bleak consumer environment.
Wedbush Morgan analyst Jeff Mintz notes Deckers’ Uggs brand remained the top seller for a second consecutive year among the companies he covers, with nearly no markdowns during the holidays. He expects Uggs boot styles to continue selling at full price into the first quarter, a period many analysts expect to be tough on retailers after the post-holiday rush settles down. Mintz rates Deckers a “buy,” with a $123 price target. Steve Madden, meanwhile, is gaining market share and raised its profit guidance for its full fiscal year. Mintz says holiday discounts from the trendy shoe seller were “reasonable” and calls the company’s spring line-up attractive, which should bring continued strength this year.
For other footwear firms, the fourth-quarter isn’t shaping up to be nearly as rosy. Analysts believe overall spending on shoes fell from a year ago. Crocs, in particular, has seen demand plunge. Morningstar analyst R. J. Hottovy writes that its growth and profitability potential is highly uncertain and Crocs is unlikely to see improvement “anytime soon.”
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