Thanksgiving weekend has come and gone, but a number of key footwear brands appear to have made their mark during one of the biggest shopping periods of the year.
While retailers were generally optimistic about early holiday in their Q3 earnings calls, many said they would emphasize value to win over inflation-stricken consumers during an uncertain economic environment. According to a Monday note from Wedbush analyst Tom Nikic, Black Friday shoppers were resilient, yet value-focused during the shopping period this year. Half of the brands and retailers tracked by Wedbush were more promotional this year compared to the prior year, while 25 percent were similarly promotional and 25 percent were less promotional.
Overall, U.S. retail sales on Black Friday (Nov. 24) were up 2.5 percent year-over-year, excluding automotive and not adjusted for inflation, according to data from Mastercard SpendingPulse, which measures in-store and online retail sales. Jewelry and apparel were top gift categories of the day.
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Which brands stood out
When it comes to brand winners, Nikic said Deckers’ Hoka brand (FN’s Brand of the Year winner) and the On label were “the clearest winners” of the Black Friday shopping period, thanks to elevated demand, more shelf space at retail and fewer discounts. He also called out Deckers’ Ugg brand as a “must-have brand for the holiday season, with strong sales trends and rational discounting.”
“[Hoka and Ugg] and On have been two of the fundamentally-strongest names in our coverage year to date,” Nikic wrote. “And we think they’re both poised to continue performing well both fundamentally and in terms of share price.”
Nikic also called out “good demand and reduced promotional activity” at the Crocs brand as well as at Skechers. On the apparel side, Ralph Lauren also did “surprisingly” well, he said.
Morgan Stanley analysts led by Alex Straton called out Aerie, Gap, Hollister and Old Navy as “Black Friday leaders” in a Monday note. In the sportswear segment, Straton said Lululemon promotions were slim and demand appeared strong during the shopping period. However, he noted that traffic at Athleta and Allbirds disappointed this year.
“[With] Allbirds, we wonder if ongoing traffic weakness will require the brand to carry more legacy product into [the New Year] than planned – potentially weighing on margins for longer than currently contemplated in management’s path to profitability,” Straton wrote.
Nikic said that for brands that have already showed signs of weakness this year (such as Vans, Champion and Steve Madden) Black Friday likely did not represent a cure-all for these issues. And the brands that did well — and will continue to do well — are those that are already on a positive growth trajectory.
“Overall, we think that the brands that are best poised to succeed this holiday season are those that have had momentum on their side all year long,” Nikic wrote. “In other words, we think that the ‘winners’ will keep on winning, while it is a tough time for a brand or retailer to execute on a turnaround.”
The retail winners
When it comes to retailers, footwear and specialty apparel stores have continued to be challenged “as consumers shift their spending habits and are pressured from student loan repayments,” wrote Jefferies analyst Randal Konik in a Monday note to investors.
Store traffic data showed that visits to department stores were up 333.8 percent on Black Friday compared to the daily average for the rest of 2023, foot traffic data analytics firm Placer.ai found. Visits to apparel retailers were up 200.1 percent and visits to recreational and sporting goods stores were up 322.9 percent.
According to an analysis of Black Friday from Goldman Sachs, “consumer electronics, toys and sporting goods (footwear) were the areas within stores with the most traffic.” And traffic was stronger at retailers like Dick’s Sporting Goods and Best Buy and in mall retailers like Lululemon and Bath & Body Works.
According to Nikic, Foot Locker was “unusually promotional” this year, which the analyst said defies a typical stance of banking on high-heat product to sell without discounts.
“This level of discounting is highly unusual for Foot Locker, and we think it is reflective of the current challenges they are facing from the tough macro environment (coupled with excess inventory levels),” Nikic wrote.
