Friday, October 27, 2006

The Shoe Business

If you read this blog, you know that I mostly write about footwear trends from a fashion perspective, but a lot of the work I do is writing about how brands are performing from a business perspective.

It's funny, but I have found in speaking to retailers of various sizes that while the major chains shop in and know a lot about what's going on in the sneaker boutiques, the boutique owners are not only clueless about the trends occurring at major retailers like, say, Foot Locker or Finish Line,but they're often proud that they never visit those stores.

That sort of makes sense because it's the boutique owners who are setting the fashion trends, but you'd think just out of curiousity they'd be interested in seeing how a large company does business. Whatever the size, every retailer is full of lessons, even if it's realizing what you don't want your business to be.

As well, visiting the large retailers is a good way to find out if your vendors are telling you the truth about their distribution policies. Like they may tell you that you're the only one getting a style, but lo and behold, you walk in a Foot Locker and there's that same style featuring a slightly different colorway and wow, it's priced $15 cheaper than yours!

Anyway, all that blah, blah, blah aside, I'm going to start commenting on how the major brands are performing from a overall business perspective, not only because it's interesting to me, but also because it often tells a much different story than the one being told about sneakers on your average sneaker fan site.

The first brand I'm going to comment on is K-Swiss because it reported its third-quarter numbers yesterday. K-Swiss's business in the United States is down. White classic footwear sales have been heading downward for a while now and K-Swiss has been hurt badly by the trend. In Europe, on the other hand, K-Swiss has seen a big growth in sales because it's a pretty new brand and it's expanding to new countries, where it gets points with customers who are looking for something new and different from the brands like Nike and Adidas that are on everyone else's feet.

Even with the positive international numbers, K-Swiss's overall sales were down and its total order (aka backlogs) were down about 10 percent, but, and here's the tricky part about Wall Street, the price of the stock went WAY up yesterday because the company's total profit (basically what was left over after all the bills were paid) during the quarter was much better than analysts expected.

Interesting right? You'd probably guess that if a company's sales and orders were down, it's stock would drop, but with the stock market, a lot of times it's about reality versus expectations.


jefe said...

ill be really interested to read about this info. i work for one of those major chains, not one that was mentioned tho.

Vic said...

Skechers reported huge growth this past quarter. No doubt their eating into the kswiss market share a bit don't you think?

Lois said...

Skechers had an AMAZING 3Q, didn't they? They beat analyst expectations on both total sales and earnings.

It's interesting, I don't know that Skechers necessarily took K-Swiss's share as much as it offered up some great fusion product that filled the hole created when the consumer fell out of love with white classics.

Which means Skechers followed the typical formula for success--a well-desiged product combined with good timing and a little bit of luck.