Analysts at Wunderlich recently released a report updating their take on footwear stocks ahead of Q1 earnings season. Overall, analysts remain bullish on the group, despite recent bumps in the road.
Port Disruptions
The West Coast port conflict ended in mid-February, but analysts point out that the post-strike port congestion will still take a while to clear up before deliveries will be back to normal. Early predictions for normalization called for a late-April to early-May timetable.
However, continuing transportation delays indicate that the aftermath of the port disruption is still negatively impacting deliveries.
U.S. Dollar Strength
The Euro has fallen about 8 percent versus the U.S. dollar since then end of 2014, and analysts predict that dollar strength will continue to weigh on international footwear sales numbers in the foreseeable future.
U.S. footwear names with the highest international exposure will continue to be pressured most by forex headwinds, including Crocs Inc CROX 3.29% (58 percent exposure), Deckers Outdoor Corp DECK 1.12% (35 percent exposure), Sketchers USA Inc SKX 0.34% (35 percent exposure) and Wolverine World Wide Inc WWW 1.26% (28 percent exposure).
Wolverine recently stated that every 5 percent increase in dollar strength reduces annual earnings by $0.04 per share.
Spring Trends
According to the report, this year’s spring trends are toward casual and comfortable.
“While the sneaker and comfort trend remains very strong,” analysts write, “there is a shift in demand from core heritage styles to more fashion-oriented sneakers including thicker platform bottoms, different materials/fabrics, and embellishments.”
Stock Picks
Wunderlich has a Buy rating on the stocks of Brown Shoe Company Inc BWS 0.87%, Crocs, Deckers, Sketchers, and Steven Madden Ltd SHOO 0.99%. They have Hold ratings on DSW Inc DSW 0.58% and Wolverine.
Read this article and all my other articles for free on Benzinga by clicking here
Want to learn more about the stock market? Or maybe you just want to be able to look sophisticated in front of your coworkers when they ask you what you are reading on your Kindle, and you’d prefer to tell them “Oh, I’m just reading a book about stock market analysis,” rather than the usual “Oh, I’m just looking at pics of my ex-girlfriend on Facebook.” For these reasons and more, check out my book, Beating Wall Street with Common Sense. I don’t have a degree in finance; I have a degree in neuroscience. You don’t have to predict what stocks will do if you can predict what traders will do and be one step ahead of them. I made a 400% return in the stock market over five years using only basic principles of psychology and common sense. Beating Wall Street with Common Sense is now available on Amazon, and tradingcommonsense.com is always available on your local internet!
