Well functioning financial markets are providers of information and signals. We are analyzing last year’s performance of footwear companies, but also of luxury goods and e-commerce companies with a strong footwear component, to see how markets perceived some of the key players of our industry.
It has been a mixed year for apparel and footwear companies on the world’s stock markets. While Covid headwinds led the stock price of many footwear companies to plunge during the first half of the year, some recovered as some firms successfully transitioned to online sales models. Yet others have struggled to bounce back: Overall, stock price for the footwear companies listed in our chart fell by 16.3 percent on average compared with the end of 2019.
Luxury retail, on the other hand, has boomed, with those companies listed here up 15 percent, following a rebound in sales in the second half fuelled mainly by young Chinese consumers. E-commerce has experienced rampant growth as revenues have soared due to consumers shifting online during the lockdowns. The e-commerce platforms included in this chart grew on average by a whopping 123 percent.
Stock price for European companies has plummeted a sizable 28.2 percent, due to the multiple lockdowns brought in across the continent. Asian companies are down by 22.36 percent, and American companies by 13.07 percent. Individual companies which performed best have credited strong e-commerce sales. American companies performed especially well, with five of the top six best performers listed in the U.S.
Crocs and Deckers, the two top performers, benefitted from growing demand for comfortable footwear as consumers have been forced to work from home:
Deckers’ stock was up 65 percent following an increase in demand for its brands: In the fiscal second quarter, sales for Hoka One One rocketed by 83.2 percent to $143.1 million, while Ugg, the company’s biggest brand, advanced by 2.5 percent to $415.1 million. Overall, group sales advanced by 15.0 percent from the same period last year to reach a new quarterly record of $623.5 million.
Stocks for Crocs rose 50.3 percent, the company registering both record sales for its trademark foam clogs and record revenue in its third quarter, up by 15 percent to $361.7 million year on year. Global e-commerce also rose by 35.5 percent over the period.
There were also positive performances from the U.S. companies Shoe Carnival, up by 4.2 percent, and Sequential Brands, up by 5.6 percent.
The British company JD Sports Fashion sneaked into the top six, up by 5.4 percent, buoyed by its acquisition of the U.S. chain Shoe Palace for $325 million in mid-December which saw stocks rise 5 percent. The company also enjoyed robust demand throughout the second half of 2020, including the key months of November and December, despite temporary store closures in many territories.
Larger companies generally fared better, but the American giant VF Corp., the biggest footwear and apparel company on our chart with a market capitalization of $33.31 billion is down by 12 percent, even after December’s news of the company’s billion-dollar acquisition of the streetwear brand Supreme caused stocks to rally.
Smaller companies have struggled to compete with the superior firepower of their larger peers:
Stocks for La Chausseria (market capitalization $2.21 million) are down 33.2 percent. Phoenix (market cap $1.16 million) fell 68.7 percent.
Other companies below the one billion mark that lost ground include Geox (down by 35.3 percent), Caleres (also down by 35.3 percent) and Designer Brands (down by 53.8 percent).
Stocks for Shoe Zone, the biggest loser, are down by 62 percent, as the company was badly affected by lockdowns in the U.K. Late November, it warned that the second Covid-19 related lockdown in England has trimmed its revenues by at least £12 million (€13.4m-$16.0m) compared with the previous year despite “good gains” in digital sales.
Meanwile, the luxury sector has rallied following a rebound in demand, driven predominantly by Chinese consumers.
The largest gains were made by European brands:
Prada trumped its European competitors with stock price up by 69.7 percent. The company’s business update indicated its retail sales returned to last year’s levels in December and the Italian luxury goods firm is generating operating profits again. Prada improved its margins in the second half of the year, offsetting the decline suffered in the first part of the year, and enabling it to finish 2020 with Ebit in “positive territory”. In the first half, Ebit, excluding the operating costs of stores that remained closed due to the lockdowns, was a negative €83 million.
Hermès is up by 31.0 percent following strong third-quarter figures, with revenues up by 6.9 percent on an adjusted basis to $2.1 billion, beating estimates by $118.5 million. Mainland China, Korea, Australia, Thailand, and Singapore generated a combined sales increase of 29 percent during the period. The company’s online shop now generates more revenue than its flagship store Faubourg Saint-Honore in Paris.
- The stock price for LVMH is up by 22.3 percent, and Tapestry grew by 14.3 percent.
- Salvatore Ferragamo was down by 14.7 percent, outperforming its Italian rival Tod’s, which fell by 29.5 percent. Ferragamo enjoyed very strong growth in China during the third quarter. The stock price is also regularly lifted by speculations of a takeover.
Aeffe’s stock price dropped by 44.8 percent, the company recording a 23.2 percent fall in sales in the first nine months of 2020.Kering, which was hit by news of a tax probe in December, is also down by 2.5 percent.
E-commerce’s growth seen in 2020 is set to continue, experts believe, with 48 percent of American consumers saying they would be happy to never shop in a physical store again, according to a study by Jungle Scout.
Moreover, there is plenty of room for growth, given that only 12 percent of retail sales occurred online before Covid-19. Both factors explain the sector’s strong performance on the stock markets:
Amazon’s stock price rose 70.8 percent as the company’s market capitalization ballooned by 56.8 percent to $1.62 trillion year-on-year. Net income jumped 200 percent in the third quarter following a surge in online purchases. Some 70 percent of U.S. consumers shopped on Amazon during the quarter, according to Jungle Scout.
Farfetch, commonly dubbed the Netflix of Fashion, outperformed Amazon on the stock market despite its inferior size (market capitalization $29.50 billion). The stock price was up a whopping 533.9 percent, the company bouncing back from its $675 million acquisition of New Guards Group that saw stock price plunge. In the third quarter, revenues rose by 71 percent to $438 million and active customers rose to 2.7 million from 1.9 million.
German apparel specialist Zalando was up by 101.8 percent, with revenues having risen 21.6 percent to $2.2 billion in the third quarter and the number of active customers up by 20.7 percent year-over-year to 35.6 million in the three months.
Asos also performed well, up by 41 percent, on the back of a 10 percent sales growth in the third quarter. Boohoo has partly recovered from the Leicester wage scandal, up by 13.8 percent, which wiped $1.3 billion off the company’s value at the time.