Overheard On Wall Street: Athletic Shoe Sales, Under Armour And Crocs

Sneaker Releases From Nike, Under Armour
Under Armour's Curry One Low.
Courtesy of Under Armour

Crocs Inc. has had yet another executive shakeup, athletic-shoe sales continue to gain and Under Armour Inc. has investors buzzing ahead of its analyst day next week.

Read on for the breakdown of this week’s Wall Street shoe chatter.

Athletic Shoe Sales

The first week of September saw increased momentum in athletic footwear, with total U.S. point of sales up 4.2 percent year-on-year, according to a report by Citi Research analyst Kate McShane, who referenced data from Sport Scan Info.

McShane noted double-digit sales growth in casual athletic, consisting of brands such as Nike, Skechers and Converse, up nearly 16 percent. Sales in the basketball category gained 6.5 percent year-over-year, which was significantly below last year’s increase of 20.5 percent. A similar trend occurred in running, with sales up 4.8 percent year-over-year but not as much of a gain as last year’s same-period growth of 7 percent.

The top five brands in sales in the space for the week ending Sept. 5, 2015, were the usual players: Nike, Jordan, Adidas, Skechers and Under Armour.

Under Armour Inc.

Baltimore-based athletic-footwear-and-apparel company Under Armour has been quite the Wall Street favorite in recent weeks. In its second quarter, the firm pulled off a solid earnings beat, with a 40 percent year-over-year jump in footwear, driven by the success of Stephen Curry’s signature shoe.

Now, ahead of its Sept. 16 analyst day, the firm has investors and analysts eager for a sneak peek at its winning playbook.

McShane reiterated her buy rating on the firm’s stock, writing in a Sept. 7 note that the upcoming investor day could be a positive catalyst for shares, “providing anticipated details on the newly acquired digital businesses, international and new categories.”

Among her predictions, McShane said she expects the company to offer an update on long-term growth targets, supply chain, the Connected Fitness platform, and UA’s direct-to-consumer plans.

Susquehanna Financial Group LLLP analyst Christopher Svezia was less bullish, saying the ramped-up expectations for Under Armour have prompted him to give the stock a “neutral” rating ahead of analyst day.

Svezia also said he expects three-year targets at the high end of the company’s long-term goals, “with faster operating income growth off an investment year. … Overall, we will sharpen our thesis following the analyst day, but remain neutral due to valuation,” Svezia wrote.

Crocs Inc.

The seemingly amicable departure of Crocs SVP and CFO Jeff Lasher, announced this week, didn’t cause much of a stir on Wall Street, since the company has already had several executive changes in recent years.

“Given the multiple senior-management changes following Blackstone’s initial stake and board representation in late December 2013, we are not completely surprised by the announcement,” wrote CL King & Associates analyst Steve Marotta in a Sept. 9 note. “We do not believe the management change at this time represents a dislocation with the timing of the turnaround or is representative of near-term trends below expectations.”

Crocs also announced that its SVP for finance, Mike Smith, will serve as interim CFO, effective Oct. 1, and that Lasher will stay on through a transition period that ends in November.

In a Sept. 9 note, Sterne Agee CRT analyst Samuel Poser maintained a buy rating on Crocs’ stock, noting that Lasher’s willingness to stay throughout the transition period was evidence that “there was [not] any antagonism.”

Lasher will join boating-and-marine-supplies company West Marine Inc. in November.