Wunderlich Goes 'Sole Searching' In Footwear
Analysts at Wunderlich recently released a report updating their take on footwear stocks ahead of Q1 earnings season. Overall, analysts remain bullish on the group, despite recent bumps in the road.
The West Coast port conflict ended in mid-February, but analysts point out that the post-strike port congestion will still take a while to clear up before deliveries will be back to normal. Early predictions for normalization called for a late-April to early-May timetable.
However, continuing transportation delays indicate that the aftermath of the port disruption is still negatively impacting deliveries.
U.S. Dollar Strength
The Euro has fallen about 8 percent versus the U.S. dollar since then end of 2014, and analysts predict that dollar strength will continue to weigh on international footwear sales numbers in the foreseeable future.
U.S. footwear names with the highest international exposure will continue to be pressured most by forex headwinds, including Crocs Inc (NASDAQ: CROX) (58 percent exposure), Deckers Outdoor Corp (NYSE: DECK) (35 percent exposure), Sketchers USA Inc (NYSE: SKX) (35 percent exposure) and Wolverine World Wide Inc (NYSE: WWW) (28 percent exposure).
Wolverine recently stated that every 5 percent increase in dollar strength reduces annual earnings by $0.04 per share.
According to the report, this year’s spring trends are toward casual and comfortable.
“While the sneaker and comfort trend remains very strong,” analysts write, “there is a shift in demand from core heritage styles to more fashion-oriented sneakers including thicker platform bottoms, different materials/fabrics, and embellishments.”
Wunderlich has a Buy rating on the stocks of Brown Shoe Company Inc (NYSE: BWS), Crocs, Deckers, Sketchers, and Steven Madden Ltd (NASDAQ: SHOO). They have Hold ratings on DSW Inc (NYSE: DSW) and Wolverine.
Latest Ratings for CROX
|Nov 2016||Monness Crespi Hardt||Downgrades||Buy||Neutral|
|Aug 2016||Susquehanna||Initiates Coverage on||Neutral|
|May 2016||Sterne Agee CRT||Upgrades||Neutral||Buy|
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