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Footwear sales caught our eye this week with trends decelerating across all durations – sequentially, on a trailing 3-week basis, as well as on the underlying 2-year trailing 3-week basis. While it’s clear these trends suggest the trajectory of positive footwear sales since August may now be in question in the face of more challenging comparisons looking forward – the opportunity for retailers to outperform based on portfolio mix is now greater than it has ever been over the past 2-years.

A closer look at the composition of sales reveals a critically important divergence in product categories emerging beneath the surface of aggregate athletic footwear sales trends. Take a look at the chart below. The bifurcation between performance and non-performance footwear has widened since late summer with the current 40-point spread at its widest margin in 2-years. So what does this mean exactly? 

  1. The lack of innovative/technical product in the wake of industry re-orgs during 2008 coupled with the consumer’s focus on “value” is clearly evident by non-performance consistently outperforming over a 6+month period in late 2009/early 2010.
  2. One of our key themes since Q1 has called for a reinvigorated athletic footwear product cycle beginning in the 2H of 2010. This development is clearly underway.
  3. Footwear retailers (i.e. FL & FINL) should be viewed in isolation when taking into account aggregate trends slowing on the margin. Keep in mind, our weekly sample data from NPD includes sporting goods/outdoor retailers (e.g. Modell’s, REI, TSA, etc.) as well, which tend to carry a greater percent of non-performance footwear, therefore, understating the sales performance at retail concepts more geared towards performance.  We want to be long names with high exposure to technical running, basketball, and training with a still meaningful product tailwind carrying through 2011.

The bottom-line here is that with a favorable comp outlook for athletic footwear through November getting progressively more challenging through year-end – portfolio mix between performance and non-performance footwear will be critically important in driving near-term sales performance at retailers. Our view is that footwear retailers more heavily exposed to the performance category are at a significant competitive advantage to sporting goods/outdoor retailers as well as more fashion oriented, family footwear outlets. Good for FL & FINL – Not as favorable for DKS & HIBB.

Casey Flavin



Weekly Footwear Sales – Performance Bifurcation - FW App Ind 1Yr 11 12 10


Weekly Footwear Sales – Performance Bifurcation - FW Perf v NonP 11 11 10


Weekly Footwear Sales – Performance Bifurcation - FW App Ind 2Yr 11 12 10


Weekly Footwear Sales – Performance Bifurcation - FW Table 11 12 10