For those tracking the Asian environment, the chart below should be particularly relevant. With 85% of US footwear consumption being sourced in China, it's interesting to see each company's relative exposure. A couple of takeaways...
1) Nike very low at 35% and trending lower.
2) Adidas not too far behind at 46%
3) Payless and K-Swiss painfully high at 96% and 98%, respectively.
On one hand, Nike and Adi are materially underweight China, and could keep relative exposure low by increasingly dominating factories in Vietnam, Thailand and the Philippines.
But what does that mean for everybody else? In a zero-capacity-growth environment, it tells us that they'd better have incredibly relevant product and subsequent pricing power. Otherwise, margins could be at risk.
1) Nike very low at 35% and trending lower.
2) Adidas not too far behind at 46%
3) Payless and K-Swiss painfully high at 96% and 98%, respectively.
On one hand, Nike and Adi are materially underweight China, and could keep relative exposure low by increasingly dominating factories in Vietnam, Thailand and the Philippines.
But what does that mean for everybody else? In a zero-capacity-growth environment, it tells us that they'd better have incredibly relevant product and subsequent pricing power. Otherwise, margins could be at risk.
