Investing in Shoe Stocks

Sneaker culture is alive and well. More than just a practical way to cover your feet, shoes and sneakers are also high fashion. Shoes are synonymous with lifestyles; sports and outdoor activity enthusiasts all have purpose-built shoes to match their hobbies. Some shoes are even collector's items these days, and many people make money buying and selling limited-edition shoes online.

The shoe industry overall isn't a high-growth sector. However, with global spending on footwear nearing $500 billion per year -- and slowly but steadily climbing-- there's plenty of room for shoe companies to carve out a niche and increase their sales.

The undisputed leader in global shoe sales, the Nike swoosh adorns lots of team sportswear. The company makes all types of shoes, from everyday casual sneakers to the highest-end fashion kicks. Nike is also the parent of the Converse and Jordan brands.  

Since Phil Knight started selling running shoes in Eugene, Ore., in the 1960s, Nike has turned into one of the world's most recognizable brands. Nike is currently facing some struggles, particularly in terms of declining sales and market share, though it remains the world's largest sportswear brand.

The company has struggled with managing its inventory, leading to excess stock and increased discounting to move products. Consumers are increasingly favoring newer and more innovative brands, particularly in the running and performance footwear categories. Emerging activewear brands and established competitors are also gaining market share.

The company has undergone leadership changes, including the appointment of a new CEO, as it attempts to address these challenges and regain market share. Under CEO Elliott Hill, Nike is prioritizing innovation and developing new products to address consumer preferences and compete more effectively. Nike also pays a modest and rising dividend for people interested in investment income.

2. Adidas

Before Nike, there was Adidas. Although Germany's top producer of sports gear was surpassed by the swoosh long ago and trails Nike in annual sales, it still easily commands second place in global shoe and athletic wear revenue every year. 

While Nike handled the effects of the COVID-19 pandemic a bit more gracefully, thanks to its best-in-class, direct-to-consumer online selling model, Adidas is no slouch. Adidas' growth has far outpaced Nike's financial performance in recent quarters.

From casual gear to specialty sports shoes to limited-edition sneakers highly sought after by collectors, Adidas still has a long runway of growth ahead.

3. On Holding

Founded in 2010, On Holding has raced onto the global shoe scene. The Swiss company has made a name for itself with high-end running shoes and has shown up at elite-level running events all over the world. It's clearly doing something right. In a little more than a decade, On Holding has built a company reporting billions in annual sales.  

On Holding is expanding its lineup of products from lifestyle to outdoor kicks while growing its direct-to-consumer segment. If it's successful with these new product launches, this upstart shoe company could have a lot of runway left.

On Holding is experiencing a period of significant growth, with record-setting sales driven by strong performance in international markets like the Asia-Pacific region. The company has also seen marked success with recent product launches, including the new Cloudsurfer 2.

Deckers Outdoor shoe products can be found in all sorts of retailers around the globe. Its stable of footwear names includes the sheepskin boots brand Ugg, running shoe company Hoka, and sandals and casual footwear brands Teva and Sanuk.

Deckers has benefited from the massive popularity of its HOKA brand and the resurgence of its Ugg products, which have evolved into a versatile lifestyle brand that resonates with the latest generation of footwear consumers. The company has achieved double-digit sales growth for five consecutive years and counting.

There's no telling how long this impressive growth rate will continue, but Deckers remains a top growth stock in the shoe industry right now.

5. Crocs

Crocs aren't everyone's favorite style. The soft clogs, made from a proprietary polymer-based material, were a hot item in the 2000s shortly after the company was founded, but took a step back during the Great Recession. While the quirky shoemaker's sales were stuck in a rut for much of the 2010s, it kept a loyal following -- especially among kids and young adults.

However, the COVID-19 pandemic and the casual "stay-at-home" apparel style it helped foster sent Crocs' popularity soaring again. While growth isn't at pandemic levels anymore, the company reported record annual revenue of $4.1 billion for 2024, a 4% year-over-year increase.

Crocs is working to turn around its Hey Dude brand, which has faced declining sales and struggled with overstocking and ineffective marketing since its acquisition in 2022. For now, Crocs could be a top niche apparel and accessories stock to consider.

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Shoe stocks for the long haul

Shoes are not a growth investment theme overall, but certain brands have enduring appeal and offer the promise of stable investment returns. Since shoes are also a style and fashion statement, there's always room for small upstarts to catch fire and carve out a big niche for themselves among shoppers. However you decide to invest in shoes and sneakers, remember to pick stocks with long-term growth prospects.