Checking in on the Sneaker Upstarts
Newish sneaker brands continue to nibble away at Nike’s and Adidas’ market share, a trend that will be on full display this week with Amer Sports (owner of Salomon) and Deckers (Hoka’s parent company) reporting results. Remarkably, as much as these brands have seemed to dominate the sneaker discourse in recent years, there are still plenty of people who have never heard of them, let alone run a mile in their shoes. That’s a big reason why these brands can grow sales year after year; in some markets, they’ve barely scratched the surface of potential demand. Often first contact comes through wholesale retailers, but customers who like what they see will shop on the brands’ own websites for their next pair.
Wholesale is one way to build awareness, but the Paris Olympics are certain to be a big moment for these performance-minded brands (On, for one, is preparing to go all out, sponsoring athletes and opening a store on the Champs-Élysées.) Something to watch for this week is how these brands plan to branch out beyond their signature sneakers. Earlier this year Hoka released the Cielo X1, a high-performance shoe intended for marathoners, which costs $100 more than its bestselling sneakers. It’s only barely scratched the surface on apparel.
It’s safe to say all of these brands have avoided becoming the next Allbirds. The question is whether any of them can become the next Nike.
Corporate Intrigue at Macy’s and VF
The battle for Macy’s has gone quiet since mid April, when the department store chain appointed two candidates nominated by the activist hedge fund Arkhouse to its board. That was a temporary truce at best; Arkhouse and a second fund are still pushing to take Macy’s private, now from the inside. Meanwhile, chief executive Tony Spring is pressing ahead with his turnaround plan, which centres on closing underperforming Macy’s and opening more upscale Bloomingdale’s and Bluemercury beauty stores. This week’s results are important but probably not decisive; a bad miss would strengthen the activists’ case, while middling to good sales buys Spring some time.
VF Corp. is more of a wild card. Last quarter, sales at all four of its biggest brands, Vans, Timberland, The North Face and Dickies, fell by double digit percentages compared with a year ago. The company intends to sell some smaller brands, and use the cash to pay down debt and invest in its core assets. Initially VF was thought to be shopping around its backpack brands (Eastpak and Jansport) but recent reports indicate Supreme, which it acquired in 2020, is on the table as well.
Brands on a Roll
E.l.f. Beauty and Ralph Lauren are experts at the expectations game. Quarter after quarter, they beat sales forecasts, thanks to strategies that have existed more or less in their current form for years. For E.l.f., the secret sauce is mastering the art of duping high-end cosmetics while building a strong brand identity of its own. Last week’s “So Many Dicks” ad, highlighting a lack of diversity on corporate boards, was a prime example. Ralph Lauren is all about elevation — fewer discounted polos, more fashionable clothes and accessories that it can sell at higher prices (also there’s still plenty of polos, preferably sold at full price).
Much like with the sneaker brands, while it’s true that nothing lasts forever, there’s little indication this will be the quarter the music stops for either company.
What Else to Watch for This Week
Tuesday
Global Fashion Summit in Copenhagen – three days of talks and events centred around sustainability
Amer Sports, Macy’s report results
Wednesday
E.l.f., VF, TJ Maxx report results
Thursday
Deckers, Ross, Ralph Lauren report results
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