Footwear retail stocks, such as Foot Locker and Finish Line, have come under pressure recently due to ongoing concerns of a slowdown in athletic footwear and basketball shoes sales. In a report published Friday, Paul Trussell of Deutsche Bank argued that concerns over a slowdown are overblown. The analyst acknowledged that while an increased emphasis on DTC (direct to consumer) by vendor partners, heightened inventories and poor results from Skechers USA Inc (NYSE: SKX) are all valid concerns and "warranted," they are "not new." Trussell continued that athletic footwear sales have been "robust," given their overall mid-single digit growth over the past few years. In fact, total athletic footwear sales are higher by 5.7 percent year-over-year for the last 13 weeks and up 6.9 percent year-to-date – an improvement from the 2.8 percent growth the segment saw in 2014.
Deutsche Bank Sees 'Solid' Overall Athletic Footwear Sales - Yahoo Finance
That increased emphasis on DTC is interesting, for instance at Nike:
Nike (NKE) comes ahead of direct-to-channel sales projections
Nike (NKE) plans to grow its direct-to-consumer, or DTC, sales almost 2.5x in the next five years, from $6.6 billion in fiscal 2015, to $16 billion by fiscal 2020. The company beat its own target of $5 billion in DTC sales by fiscal 2015, announced at its last investor day in 2013, by over $1.5 billion.
DTC sales include sales made through the company’s own stores, both factory and in-line, and through nike.com. These channels key drivers of sales for the brand overall. Nike’s company-owned stores, particularly brand statements like the NikeTowns in New York and London, it addition to Nike’s websites, enable Nike to market the brand effectively, thus driving sales across channels, geographies, and categories.
Web sales guidance
Nike.com is expected to be a key driver for DTC sales, with $7 billion in e-commerce sales expected by fiscal 2020.
Online sales came in at ~$1.2 billion in fiscal 2015. That would take the e-commerce contribution to 14% of sales in fiscal 2020, up from ~3.9% in fiscal 2015.
Global rival Adidas (ADDYY) is targeting over 2 billion euros from web sales by 2020, as detailed in its latest five-year plan unveiled in March 2015. Under Armour (UA) hopes to grow its web sales five-fold by 2018, though it didn’t provide a sales figure at its 2015 Investor Day.
