In the second quarter, stocks of footwear companies were generally higher as they benefited from the reopening of the economy, following the easing of Covid-19 restrictions, and a subsequent rebound in the consumption of clothing and shoes.
Large U.S. footwear companies, which had already posted strong gains in the first three months of the year, continued to perform well in the second quarter. Crocs was up by 44.8 percent in the second quarter compared with the first quarter, when it had already risen 28.7 percent. With the release of its first-quarter results, Crocs raised its guidance for the full financial year, predicting that its revenues will grow by between 40 and 50 percent in 2021 from last year’s level of $1,386 million, up from its previous forecast of 20-25 percent growth.
The brand has been benefiting from the move towards casual footwear by consumers who were working from home due to the pandemic lockdowns. “We continue to see consumer demand for our product accelerate globally,” indicated Andrew Rees, CEO of Crocs, in the group’s trading statement.
Caleres added 25.2 percent to the 44.5 percent gain registered in the first quarter after annnouncing that in the first quarter ended on May 1 sales jumped by 60.9 percent year-on-year to $638.6 million. It expects second-quarter revenues to be between $625 million and $650 million, confirming the levels reached in the previous three months.
Skechers also built on its 15.8 percent rise in the first quarter. The group believes it will achieve sales of between $5.8 billion and $5.9 billion for the full financial year, which would compare with levels of $5,220 million in 2019 and $4,597 million in 2020. It also indicated that it sees no structural impediment to reaching an operating margin in the mid-teens in the long term, compared with the 10 percent margin reached in 2019.
Like its American peers, Deckers continued to improve its performance on the stock exchange after booking sales of $2,546 million in the full year ended March 31, up by 19.4 percent on a reported basis and by 18.4 percent at constant currency rates. The company expects sales of $2,950 million to $3,000 million in fiscal year 2022, representing a mid-to-high teen percentage growth.
Meanwhile Genesco’s share price grew by more than 34 percent, after the company “meaningfully” exceeded its expectations by posting a 93 percent year-over-year increase in net sales to $539 million in the first quarter ended on May 1. The company is also facing a challenge from an activist shareholder, Legion Partners Asset Management, which is seeking to take over the board to boost the company’s earnings and share performance. Genesco is holding a shareholder meeting to renew the board on July 20.
Shoe Carnival’s stock performance continued to be positive in the second quarter. The company announced a two-for-one stock split and expects to post record sales of more than $1.15 billion in the full year.
Sequential Brands’ share price suffered a nearly 63 percent drop in the second quarter as the troubled company underwent a management reshuffle in May, the third change at the helm since January 2020. The company also sold the Heelys brand of wheeled shoes for €11 million to BBC International. Most of the proceeds from the sale will be used to pay down debt.
Iconix Brand Group rose by nearly 56 percent after agreeing to be bought by the private equity Lancer Capital, in an all-cash transaction that values the company about $585 million, including net debt.
Italian companies rebound led by Tod’s
Tod’s more than doubled its share price after LVMH increased its stake in the Italian luxury footwear company to 10.0 percent, a move that the market viewed as the prelude to an eventual acquisition. Diego Della Valle, the chairman and main shareholder of Tod’s, reinforced that idea by saying that if he ever decided to sell the company it would be to the French businessman Bernard Arnault, who is the main shareholder of LVMH.
Geox’s share price posted a massive gain of 68.3 percent. The company expects to see “almost double-digit” growth in sales in the first half, as store openings and a positive comparison effect in the second quarter are seen more than offsetting the decline in first-quarter sales.
Italian luxury goods firms Prada, Aeffe, the owner of the Pollini footwear brand, and Salvatore Ferragamo, all posted positive market performances in the quarter. But, Ferragamo lost some of its speculative appeal after the company announced the hiring of Burberry’s CEO, Marco Gobbetti. The appointment of Gobbetti was welcomed by financial analysts, who view him as a “strong” leader for the Italian company. However, his appointment is also seen reducing the chances of the founding family selling the company any time soon, a possibility that had underpinned Ferragamo’s share price in the past.
The share of Dr. Martens finished the second quarter about 20 percent higher than the 370 pence price set for the company’s successful public offering held in January. In the full-year ending in March 2022, the iconic British brand expects revenues to increase by a high-teen rate. From the following year and over the medium-term, it anticipates to achieve a mid-teen rate in revenue growth. The company is also targeting an Ebitda margin of 30 percent in the medium term.
Rizzo Group, formerly known as Venue Retail Group, enjoyed a huge share price rebound, achieved largely during the month of June, when it applied for a three-month extension to its corporate reorganization which began on March 23. The Swedish retailer of suitcases, travel accessories and footwear said that during the restructuring period it had acted to solve its financial issues and improve profitability. The measures included negotiations with landlords to reduce rents as well as shareholder support to complete the rollout of its new store concept. It also obtained a SEK 12.2 million (€1.2m-$1.4m) loan from Switzerland-based Archelio Capital to finance day-to-day operations. Rizzo has the right to repay the loan with newly issued series.
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