Holiday Kickoff: Larger Retailers Faring Better

Though not consistent across all categories and channels, footwear sales on Black Friday and throughout the post-Thanksgiving weekend were strong for many retailers.

Analysts, who were out conducting channel checks at malls over the holiday weekend, observed shopping traffic was up this year over last, and footwear stores emerging victorious in the battle for consumer dollars.

“This year, the malls were very busy beginning around 7 a.m. and gained momentum throughout the day,” said Sam Poser, analyst at Sterne Agee. “Based on the store traffic we witnessed, and the number of store bags we saw, the winners over the weekend [were] Steve Madden, Foot Locker, Under Armour and Macy’s.”

Camilo Lyon, analyst at Canaccord Genuity, agreed that Foot Locker and Steve Madden fared well, and he also noted DSW was busy, with customers split between the women’s boot section and the clearance area.

Department stores and big-box retailers likely had a good weekend, according to analysts, with Macy’s and Nordstrom poised to benefit from solid upticks in mall traffic and leaner year-over-year inventory levels. And  Deborah Weinswig, analyst at Citi Investment Research, added, “Walmart, Target and JCPenney stole the show on Black Friday with great customer service and innovation.”

Smaller retailers and independents had more mixed results.

Los Angeles-based American Rag reported sales — including footwear — were up significantly up from last year, even though the stores did not offer any discounts, according to shoe buyer Lindsey Allen. She added that boots and sneakers were the most sought-after items in the shoe category.

And Ron Sadon, owner of Santa Monica, Calif.-base Bertini Shoes said the post-holiday weekend was one of the best four-day sales streaks in years. “We were slammed,” he said.

Others on the West Coast were not as upbeat. At Brooks Shoes for Kids in Los Angeles, owner Roger Brooks noted that consumers seemed reluctant to spend. “This is a very tough period right now,” he said. “Most of the consumers [in Los Angeles] are a little bit scared right now.”

In Palo Alto, Crimson Mim owner Christine Campbell said that while business was up, she saw more customers self-gifting at her two stores, as opposed to buying presents. “The weekend was maybe slightly better than a year ago,” Campbell noted. “It met our expectations, but our expectations are different than big-box stores with all the crazy sales.”
On the opposite coast, Brooklyn, N.Y.-based DNA Footwear aimed to compete with department stores by applying a larger-than-usual discount (30 percent off all shoes except Ugg, Sorel and Toms) and an extended sale period that lasted from Thursday through Monday at its five doors. The strategy seemed to work, said owner Daniel Kahalani, noting that brick-and-mortar sales were up 25 percent from last year, boosted by boots. “[Foot traffic] was phenomenal,” he added. “It was actually somewhat overwhelming [because shoppers] were going crazy. I wasn’t sure we could keep up with demand [regarding inventory].”

Miami-based World Class Footwear was quieter over the weekend, as sales remained even with 2011 levels at all its eight mall-based locations. VP Gina Hanna noted her stores opened at midnight on Black Friday alongside other mall retailers, but that did not seem to help sales. “The traffic just wasn’t there and that just killed the staff,” she said of the late-night schedule. She added that World Class Footwear discounted only select styles. “A lot of people were looking for massive, big sales. We sell high-end [shoes], so we don’t usually do that.” But items that were on sale did move. “People’s first question when they walked in was, ‘What’s on sale?'” Among the top sellers were casual styles and brands, including Sperry Top-Sider, Clarks and Lacoste.

As for brands emerging as overall Black Friday winners, Steve Madden, Nike and Frye were clear favorites, but both analysts and retailers were divided on Ugg.

Shoes for Kids’ Brooks said a steep decline in demand for Ugg boots greatly impacted his Thanksgiving weekend sales. “Ugg sales are off and it’s hard to replace when it’s a $125-$150 boot,” he said. “It’s off 30 percent [over last year]. That’s significant.”

DNA Footwear’s Kahalani also said Frye beat out Ugg, but he added that Ugg was excluded from discounts at his stores and customers were still asking for styles from the label.

Scott Krasik, analyst at BB&T Capital Markets, said he felt encouraged that the label remains the dominant cold weather footwear brand. “[Product was sold almost exclusively] at full-price as the brand was excluded from most promotional activity, which drove the majority of holiday purchases this weekend,” he said, albeit cautioning that a single weekend will not determine whether or not Deckers Outdoor Corp., Ugg’s parent company, will achieve its fourth quarter guidance.

However, Sterne Agee’s Sam Poser disagreed. “We saw a good amount of Uggs being sold over the weekend,” he said, “but at a far slower rate than in years past.”
“Long gone are the days in which consumers are buying multiple pairs of Uggs as the brand has turned from fashion to utilitarian,” said Lyon.

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