As the Q1 earnings season comes to a close, it’s time to take stock of this quarter’s best and worst performers in the footwear retailer industry, including Foot Locker (NYSE:FL) and its peers.
Footwear sales–like their apparel counterparts–are driven by seasons, trends, and innovation more so than absolute need and similarly face the bigger-picture secular trend of e-commerce penetration. Footwear plays a part in societal belonging, personal expression, and occasion, and retailers selling shoes recognize this. Therefore, they aim to balance selection, competitive prices, and the latest trends to attract consumers. Unlike their apparel counterparts, footwear retailers most sell popular third-party brands (as opposed to their own exclusive brands), which could mean less exclusivity of product but more nimbleness to pivot to what’s hot.
The 4 footwear retailer stocks we track reported a slower Q1. As a group, revenues missed analysts’ consensus estimates by 2.8% while next quarter’s revenue guidance was 1% below.
In light of this news, share prices of the companies have held steady. On average, they are relatively unchanged since the latest earnings results.
Foot Locker (NYSE:FL)
Known for store associates whose uniforms resemble those of referees, Foot Locker (NYSE:FL) is a specialty retailer that sells athletic footwear, clothing, and accessories.
Foot Locker reported revenues of $1.79 billion, down 4.5% year on year. This print fell short of analysts’ expectations by 2.3%. Overall, it was a slower quarter for the company with a significant miss of analysts’ EPS estimates.
Mary Dillon, Chief Executive Officer said, "We are continuing to execute our Lace Up Plan strategies as we look forward to the successful completion of our transaction with DICK'S Sporting Goods. As we noted at the time we reported preliminary first quarter results, we experienced softer traffic trends globally that impacted our performance. During the quarter, we remained focused on the rollout of our Reimagined and Refresh programs to elevate our in-store experience, enhancing our digital offerings, deepening customer engagement through our FLX program and leveraging our strong brand partnerships to generate excitement for our customers. As we have executed these and other initiatives to further advance our strategy, our teams have also remained nimble to navigate the uncertain macroeconomic environment, including managing our promotional levels, inventories, and expenses and remaining disciplined with our cash flows."
The market was likely pricing in the results, and the stock is flat since reporting. It currently trades at $24.08.
Read our full report on Foot Locker here, it’s free.
Best Q1: Shoe Carnival (NASDAQ:SCVL)
Known for its playful atmosphere that features carnival elements, Shoe Carnival (NASDAQ:SCVL) is a retailer that sells footwear from mainstream brands for the entire family.
Shoe Carnival reported revenues of $277.7 million, down 7.5% year on year, falling short of analysts’ expectations by 1.7%. However, the business still had a very strong quarter with a solid beat of analysts’ EPS estimates and an impressive beat of analysts’ EBITDA estimates.
Shoe Carnival scored the highest full-year guidance raise among its peers. The market seems happy with the results as the stock is up 8.5% since reporting. It currently trades at $20.04.
Is now the time to buy Shoe Carnival? Access our full analysis of the earnings results here, it’s free.
Weakest Q1: Designer Brands (NYSE:DBI)
Founded in 1969 as a shoe importer and distributor, Designer Brands (NYSE:DBI) is an American discount retailer focused on footwear and accessories.
Designer Brands reported revenues of $686.9 million, down 8% year on year, falling short of analysts’ expectations by 6.3%. It was a disappointing quarter as it posted a significant miss of analysts’ EBITDA and EPS estimates.
Designer Brands delivered the weakest performance against analyst estimates and slowest revenue growth in the group. As expected, the stock is down 30.2% since the results and currently trades at $2.59.
Read our full analysis of Designer Brands’s results here.
Boot Barn (NYSE:BOOT)
With a strong store presence in Texas, California, Florida, and Oklahoma, Boot Barn (NYSE:BOOT) is a western-inspired apparel and footwear retailer.
Boot Barn reported revenues of $453.7 million, up 16.8% year on year. This result missed analysts’ expectations by 0.9%. Taking a step back, it was a mixed quarter as it also produced a solid beat of analysts’ EBITDA estimates but full-year EPS guidance missing analysts’ expectations.
Boot Barn achieved the biggest analyst estimates beat and fastest revenue growth, but had the weakest full-year guidance update among its peers. The stock is up 21% since reporting and currently trades at $161.01.
Read our full, actionable report on Boot Barn here, it’s free.
Market Update
As a result of the Fed’s rate hikes in 2022 and 2023, inflation has come down from frothy levels post-pandemic. The general rise in the price of goods and services is trending towards the Fed’s 2% goal as of late, which is good news. The higher rates that fought inflation also didn't slow economic activity enough to catalyze a recession. So far, soft landing. This, combined with recent rate cuts (half a percent in September 2024 and a quarter percent in November 2024) have led to strong stock market performance in 2024. The icing on the cake for 2024 returns was Donald Trump’s victory in the U.S. Presidential Election in early November, sending major indices to all-time highs in the week following the election. Still, debates around the health of the economy and the impact of potential tariffs and corporate tax cuts remain, leaving much uncertainty around 2025.
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