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From Port Congestion to Bricks + Clicks: How Top Shoe Players Are Faring Right Now

Coming off of a year marked by pandemic upheaval and rapid consumer shifts, shoe players likely entered 2021 with the same sentiment that was top of mind for many consumers: It can only go up from here.

Indeed, decent digital trends across the board, fiscal stimulus and a promising vaccine rollout have all served to boost brands and retailers across the industry. At the same time, athletic, athleisure and comfort categories remain robust, and some brands, Steve Madden is one example, indicate they’re seeing signs that dress and fashion categories are rebounding.

Still, a supply chain crisis at the nation’s busiest ports is threatening to impede progress for many companies across retail. In fact, Steve Madden CEO Ed Rosenfeld told investors that just as consumers are showing interest in dress and fashion footwear for Easter, a back log at the West Coast ports could stop those products from getting to shoppers.

Here, a look at the big trends impacting footwear right now.

A Situation at the Ports

Caleres Inc., Wolverine World Wide Inc., Nordstrom and The Gap Inc. are among the other boldface names that have bemoaned the bottleneck situation happening mainly at the ports of Los Angeles and Long Beach in California — which account for nearly half of total United States imports from Asia. The supply chain predicament is the culmination of heightened shipment volumes due to increased consumer demand as well as a shortage of workers.

So far, companies have pegged the costs of delayed shipments at well into the millions, with Caleres CEO Diane Sullivan telling analysts during a call to discuss the company’s Q4 results this month that the company is currently facing between $60 million and $70 million of delayed inventory receipts. Sullivan, who is also chairman of the board, said roughly $50 million of that inventory belong to Famous Footwear and about $10 million to $20 million are for the Brand Portfolio, which includes Sam Edelman, Vionic and Allen Edmonds.

The backlog at the ports are especially frustrating for companies like Caleres and Steve Madden — the latter pegged its Q1 impact from the ports saga at $30 million — which market watchers had cast as fairly well-positioned ahead of COVID-19. Even during the crisis such firms had been able to safeguard much of their liquidity and remain relatively agile. Now, as more stimulus makes its way to the bank accounts of millions of Americans and the COVID-19 vaccine rollout shows promising signs, brands and retailers on the cusp of rebound risk deceleration. At the same time — as had been the case during past port delays — off-price retailers like Ross, TJ Maxx, Burlington and Marshalls may be able to take advantage of opportunistic buys stemming from out-of-season merchandise and inventory overages at big brands.

Brick and Mortar — With a Click

It’s no secret that the digital component of retail has gotten a huge boost due to coronavirus: In fact, Jane Hali & Associates analyst Jessica Ramirez told FN last month addressing Michael Kors and Jimmy Choo parent Capri Holdings’ Q3 results that “If you’re not doing well in e-commerce right now, then something is definitely wrong.” According to a report this month by Adobe, from March 2020 to February 2021, COVID-19 gave e-commerce an extra boost of $183 billion, which amount to nearly the size of the last holiday shopping season, where $188.2 billion were spent online between November and December 2020. All told, within the 12-month period from March to February 2021, $844 billion was spent online. (For reference, in calendar year 2020, $813 billion was spent online, representing growth of 42% over 2019.)

But that doesn’t mean brands and retailers are ready to ditch stores — instead, many firms are realizing the value of a strategy that effectively marries all channels (i.e. omnichannel), in some cases making stores more important than ever. (According to a recent study by Coresight Research, U.S. retailers have announced a collective 3,344 store openings for 2021, or about 39.5% more openings than announced at the same point in 2020.)

For instance, retailers like Nordstrom and DSW are doubling down on their investments in omnichannel services such as buy online pickup in store and buy online ship to store. Others, Dick’s Sporting Goods and off-price seller Burlington are getting increasingly aggressive about store expansion. In an announcement accompanying its Q4 financial results this month, Burlington revealed that it would expand its physical store count to 2,000, compared with the previous goal of growing to 1,000 locations, which was established in connection with the chain’s initial public offering back in 2013. What’s more, at the end of the fourth quarter, the retailer operated 761 units across 45 states and in Puerto Rico.

In February, Dick’s Sporting Goods announced its plans to open five new outposts in the month alone. Following those openings, Dick’s now has 728 locations across 47 states.

The Product Paradox

Retail earnings reports have largely reinforced the strength of categories such as comfort and athletic, which were booming prior to the global health crisis but further boosted as shut-in performance athletes and novices alike increasingly turned to outdoor activities like running and hiking.

Hoka One One, for example, proved to be a big driver in for Deckers Brands in Q3, with sales climbing 52.1% to $141.6 million. And Under Armour, which has struggled to find its footing in the North America market in recent years as it leaned deeper into performance categories, saw gains thanks to the uptick in outdoor activity.

“Everything indicates that we’re going to be much more focused on a healthy lifestyle, and that means you need performance products as opposed to athleisure products,” Matt Powell, senior sports industry adviser with The NPD Group Inc told FN of UA’s recent turnaround successes. “A year ago, I was critical of Under Armour because we were in a major athleisure cycle and they had stuck to performance. It looks like after the pandemic, the market’s going to swing back to them.”

Meanwhile, categories like dress and fashion footwear — which consumers deprioritized last year amid lockdowns and work-from-home — are also starting to see some resurgence.

Steve Madden CEO Ed Rosenfeld told analysts last month that the company was “doing really well” in the sandal category and that customers were responding to dress styles and “anything with big jewels on it [and] oversized embellishment [as well as] wovens.”

Roger Rawlins, CEO of DSW parent Designer Brands, also told analysts this month that the company planned to put an emphasis on three key brands within its Camuto portfolio, all of which are fashion and dress focused: Vince Camuto, Lucky and Jessica Simpson.

The company’s line with Jennifer Lopez — which debuted last February — is also set for relaunch, with its core focus in the fashion footwear space.

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