Some Shining Players of the Retail Industry
Himanshu is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Retail is quite an interesting industry to watch. However, it has become highly difficult to strive in the prevailing economic conditions where people are not willing to spend freely. Innovation and marketing have been instrumental in the growth and success of any retailer, and the footwear industry is no exception. Even though there are various kinds of footwear retailers offering a wide variety of products, customers want more of it all.
Recent quarterly results for the industry players were mixed. Though holiday season wasn’t up to the mark, leading to results which were below expectations, there were some exemplary performers who managed to buck the trend. Let us take a look.
A Look at the Numbers…
Through endless efforts, companies such as Nike (NYSE: NKE) and Wolverine World Wide (NYSE: WWW) have largely outperformed players such as Deckers Outdoor Corp (NASDAQ: DECK) and Crocs (NASDAQ: CROX), which is evident by the stock price appreciation. The stock price performance of the players over the last 5 years is shown in chart below:
Clearly, Wolverine has been the star performer with almost 91% returns to its investors. Even Nike has been delighting its investors with a 74% increase in its stock price. Both the companies followed the strategy of innovation to the T.
Nike has been the most active on this front, and has been bringing in new technological products with every quarter, which lures customers galore. Its introduction of Flyknit technology and products such as Nike+ won the hearts of millions customers. In fact, it also sold off two of its brands so as to concentrate more on its core brands. Its recent quarter was quite good owing to its operational efficiencies as well as higher product prices.
However, Wolverine’s latest quarter was not up to the mark. One key setback was the lackluster performance of the European segment. Europe has been a matter of concern for almost all retailers, and Wolverine is no exception. Though Wolverine’s recent quarter was not a great one it has been making the right moves. Its recent acquisition of Collective Brands’ Performance and Lifestyle business has been looked forward to. Investors expect the acquisition to help Wolverine have a better market standing with 4 additional brands.
For the existing brands, Wolverine has been offering new products with great color variations. Moreover, its M-Connect collection is grabbing the attention of customers as it is expected to be launched early this year. These products, coupled with new promotional efforts, can help Wolverine instigate demand, especially in Europe.
Looking at the weak performers, in terms of stock price movement, Deckers Outdoor has been quite dull. It has been facing low demand for its products in most of markets, especially Europe. One of the primary reasons has been price hikes for Outdoor’s products, which is keeping customers away from its offerings. Moreover, the company is quite inactive when it comes to marketing its products as well as bringing in new varieties. It latest results were also disheartening, along with a dull outlook that makes this retailer not worth investing in.
Nonetheless, Crocs has been an exceptional performer even though its stock price has been punished by investors. Its wide variety of colors offered to investors as well as product quality, in terms of comfort, has made it a consumer favorite. In fact, volumes in the previous quarter remained unaffected in spite of an increase in prices. It has also been expanding its store presence with almost 100 new stores in the last year. With great marketing and expansion efforts, the company seems to be turning things around. However, it would be better to wait for the right time to bet on its future prospects.
Though the footwear retail space has been a mixed bag, there are some opportunities for investors. With the stronger companies such as Nike and Wolverine able to fight increasing input costs and attract customers through its strategic initiatives, the future looks bright. Additionally, both Nike and Wolverine have expansion plans on the cards, which can help them grow more in future.
Nike has been eying its direct-to-consumer segment and is getting exposure to more markets. Even Wolverine looks attractive with its acquired brands and new product launches. Having one of these shining performers might improve your portfolio.
justhimanshu has no position in any stocks mentioned. The Motley Fool recommends Nike. The Motley Fool owns shares of Crocs and Nike. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!