After years of athletic shoe market dominance by Nike Inc., the industry is finally seeing a handful of brands legitimately challenge the company’s supremacy.
While experts agree that we’re likely several years away from seeing another athletic brand touch or surpass Nike’s market cap, Adidas, Under Armour and Puma are making an unprecedented and hard-to-ignore play for the No. 1 spot.
This robust sneaker-industry competition and an overall expansion in consumer preference across brands and styles is likely giving a solid business boost to Foot Locker Inc., according to Cowen and Co. analyst John Kernan.
In a note distributed on Sept. 7, Kernan told investors that he was raising his price target for the athletic specialty retailer’s stock, to $70 from $68, and cited a growing range of brand preferences by consumers as one catalyst for stronger sales at the firm.
Kernan writes, “Foot Locker has its best brand diversity in years … The prevalence of casual and lifestyle footwear, boosted by emerging retro and streetwear fashion trends, is fueling powerful product cycles at Adidas particularly around the NMD and Boost franchises and Puma with the Fierce shoe and the brands collaboration with Rihanna.”
Meanwhile, Kernan added, Under Armour continues to experience success with the Curry 2.0 and 2.5 lines.
“Product cycles at non-Nike vendors should support traffic, ASP and unit growth, and lower markdowns,” Kernan noted. (ASP = average selling price.)