Footwear, Apparel & Accessories Update

Market Update1

The trade war with China continues to be a focus in the space as vendors grapple with ongoing uncertainty, and longer-term, potential supply chain implications. According to the FDRA, ~70% of shoes sold in the US come from China, and the latest round of Chinese tariffs resulted in an additional 15% tax on $110+ billion of Chinese imports, including more than two-thirds of China-made shoes.  The next part of this tranche is currently anticipated to take effect December 15 and would include the remaining share of footwear.

While these tariffs create cost pressure and may impact demand, we continue to see pockets of strength across the industry, supported by a still-healthy US consumer. Innovative, global companies with strong DTC presence are thriving, and select retailers are showing improved performance as well.  Although the pace of deal flow has been muted, several high-profile public and private market transactions will prove interesting barometers on current investor appetite for the sector.

What We've Been Reading

Industries are Banding Together on Tariff Issue

Industries are looking for Congress to play a stronger role on tariff powers. Lobbying groups including the National Retail Federation, are coming together to get support from Congress on the issue. There is concern about the effects that tariffs have on individual businesses, the overall economy and trading relationships. A number of brands and retailers, including Nike, Crocs, Marc Fisher and DSW, have been outspoken on the issue.

Access full article here

Holiday Retail Expects Sales to Climb and E-Commerce to Soar

Holiday season spending is expected to be on the rise this year. There is an anticipated increase between 4.5 – 5%, which is up from the 3% reported last year. E-commerce sales are expected to grow during the holiday season due to the desire for convenience and a seamless customer experience.

The spike in this spending behavior comes from consumer confidence through the continuation of monthly job creation after near record-low employment rates and release of the hold on spending after the government shutdown in December of last year.

Access full article here

What We've Been Hearing2

Dicks Sporting Goods

  • Second quarter earnings report shows sales growth of 3.8%, exceeding expectations and beating results since 2016
  • Their main focus continues to be improving customer experience online and through brick-and-mortar as they face competition by Amazon, Walmart and other sporting good specialty retailers

Cole Haan

  • Private equity-backed footwear brand confirmed that it is preparing to go public
  • Business has generated strong momentum, capitalizing on trend toward more casual wear while proving ability to extend into athletic and outdoor products as well

Nike

  • Delivered robust growth in fiscal Q120 across all geographies (+10% on currency neutral basis), but particularly in international markets (+16%)
  • Digital sales grew 42%, led by mobile and within it, app experiences, as the brand continues to get closer to the consumer

Public Markets Overview

Key Trading Statistics3

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Public Company Sector Performance (12-Month % Change in Stock Price)3

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Consumer and Retail Industry Stock Performance3

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Recent Equity Offerings3

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M&A Overview

Announced Consumer and Retail M&A3

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Note: Transactions based on publicly available information

Recent Equity Offerings3

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Recent Equity Offerings3

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Public Comparables3

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M&A Transactions

Recent North American Consumer M&A3

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1. CNN

2. Quarterly Earnings Release Transcripts

3. Capital IQ

 

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