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Forget Nike, Buy These 3 Footwear Stocks Instead

Stock Markets Nov 19, 2021 10:31AM ET
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© Reuters. Forget Nike, Buy These 3 Footwear Stocks Instead

Despite weathering several constraints related to the COVID-19 pandemic, indeed perhaps because of them, the footwear industry is in a reshaping mode, thanks to expanded digital platforms, rising consumer spending, and pent-up demand. However, to us the sneaker giant Nike (NYSE:NKE) doesn’t look fit enough financially to capitalize on the industry tailwinds. So, we think it could be worth betting instead on footwear stocks Foot Locker (NYSE:FL), Shoe Carnival (NASDAQ:SCVL), and Caleres (NYSE:CAL), which possess strong fundamentals. So, let’s discuss these names. The footwear industry suffered declining sales and profits last year due to the COVID-19 pandemic. However, efforts to strengthen digital platforms, launch smart concepts of connected fabrics, customized material innovations, rising consumer spending and pent-up demand for multifunctional convertible shoes have been driving the footwear market’s growth of late. The sector is projected to witness a significant boost in both e-commerce and brick-and-mortar store sales. The global footwear market is expected to reach $281.2 billion by 2026, registering a 3% CAGR.

Although the leading athletic footwear company NIKE, Inc. (NKE) is preparing for the metaverse, its business has most recently been impacted by global supply chain issues. In its last earnings report, the company lowered its fiscal 2022 outlook to account for longer transit times, labor shortages, and extended production shutdowns in Vietnam. Also, NKE expects its full-year sales to increase by mid-single digits, compared with a prior outlook of low double-digit growth. Furthermore, analysts expect NKE’s EPS to decrease 19.2% in the current quarter and 17.8% in the next quarter.

Therefore, we think fundamentally sound footwear stocks Foot Locker, Inc. (FL), Shoe Carnival (NYSE:CUK), Inc. (SCVL), and Caleres, Inc. (CAL) could be ideal bets instead to capitalize on the industry’s solid growth prospects.

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Forget Nike, Buy These 3 Footwear Stocks Instead
 

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