Men and women are dressing down their footwear at the office and companies that can deliver the goods will win. The top six categories for footwear sales in the first quarter of 2014 are all casual shoe categories according to SportsScan Info. The biggest increases came in the basketball and walking shoe categories with increases of 21% and 24% respectively.
Foot Locker is just one of the companies that will be able capitalize on this fashion trend. The shoe makers that are running away with this trend include Skechers (SKX - Get Report) and Nike (NKE - Get Report). The chains that will be happy to win these customers include Dicks Sporting Goods (DKS), Hibbett Sports (HIBB) and online retailer Zappos, owned by Amazon (AMZN - Get Report).
Foot Locker owns 43% of the athletic footwear market revenue and has mostly recovered from the financial crisis of 2008 which crippled the company. Foot Locker will benefit from the success of the brands it carries including Nike. According to Stern Agee analyst Sam Poser, 85% of all basketball shoes sales are Nike and Jordan (which is a Nike brand.)
Meanwhile, attitudes toward wearing sneakers in the office are changing, in a shift that is definitely generational. In a new nationwide survey conducted for TheStreet by GfK's Omnitel, 48% of people in the 18-24 age group believe it's OK to regularly wear sneakers in the office, while only 33% of people over 65 think this is acceptable. Men are overwhelmingly in favor with 51% for it, while only 40% of women would wear sneakers in an office setting.
One thing men, women, young and old all agree on -- it's more comfortable. Over 70% of men and women say the reason that they'd wear sneakers in the office is that the shoes are more comfortable. Last year, Skechers began using "Memory Foam" in the foot-beds giving users an instant feeling of comfort. Now Steve Madden (SHOO - Get Report), Dr. Scholl's and other brands are jumping into the trend.
One shoe that designed to be super comfortable is the Nike Flyknit. Sam Poser, an analyst with Stern Agee wrote, "Nike's Flyknit will be a 2015 story as Nike is still trying to determine the optimal price point." Flyknits for men and women range anywhere between $119 and $225 and with its colorful argyle pattern, it isn't a stretch to see them complementing a work outfit.
Nike also owns the Converse line of shoes. These classic canvas sneakers are riding the fashion trend called "normcore." Normcore refers to consumers who don't want big flashy logos, preferring simplicity. This is why TheGap (GPS) is doing well and Abercrombie & Fitch (ANF) isn't. Normcore carries over into the shoe business. If a customer doesn't want the latest LeBron James Graffiti kicks from Nike, then they may be the shopper that wants Converse.
Skechers is also coming back in a big way. Poser said the company's showroom was the busiest he had seen in years. Skechers is performing well in Academy Stores and Finish Line stores plan to start carrying the brand. Relaxed fit is the main growth driver according to Poser. Skecher sales were up 20% year over year in the first quarter of 2014. The only other footwear companies to have a better quarter were Under Armour (UA) and Jordan.
Steve Madden rode the boot trend of the past couple of years and had some real winners, like the Troopa boot. Madden's best-selling style now is the slip-on sneaker in various iterations including pony hair and quilted uppers, but Poser doesn't believe they will offset the deceleration of the boot business. Steve Madden will do well in department stores, where they can stock the slip-ons along with other brands, but a lack of variety will make it harder to meet demand in company-owned stores.