That being said, one question in particular that stuck with me was regarding my thoughts and opinions on Skechers
One problem that seems to derail numerous companies within this sector is inventory issues. Skechers might seem like the bargain of the year in this sector because of its forward price-to-earnings ratio of 8.5, but it's all smoke and mirrors unless you look at the inventory levels.
Inventory is all about making sure the right products are on the shelves for customers, otherwise excess inventory will lead to deeper discounts to move the unwanted product and considerably lower margins. Skechers recently became a victim of having the wrong product mix and could see its profit expectations erode even further.
Another habitual offender is K-Swiss
Is this a fad?
Retail consumers are incredibly fickle, and shoes in particular have very little staying power in consumers' minds unless there's a big celebrity name or strong advertising behind them. Heelys
Priced for perfection
Even if footwear companies have staying power, and have proven that they can control inventory levels, overcoming the "priced for perfection" stigma could be a problem.
Footwear companies are having far more issues than I would care to deal with if I were an investor in this space. With the market in year-end rally mode, it might be time to step away from some of these companies before they burn a hole in your pocketbook in 2011.
More sole-related Foolishness:
We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.
Fool contributor Sean Williams does not own shares in any companies mentioned in this article. He would prefer it if you didn't refer to him as the sole man after this article. You can follow him on CAPS under the screen name TMFUltraLong. Nike is a Motley Fool Stock Advisor pick. Try any of our Foolish newsletter services free for 30 days. The Motley Fool has a disclosure policy.
More from The Motley Fool
Can Crocs Keep Going After Last Week's 12% Pop?
Boosting its guidance and a well-received presentation at an investor conference find shares of the footwear maker moving higher.
Why Nike, Inc. Stock Jumped 23% Last Year
Shares of the Swoosh rose on optimism for its turnaround plan, even as results got worse as the year went on.
Better Buy: NIKE, Inc. (NKE) vs. Adidas (ADDYY)
Can the 800-pound gorilla of the athletic footwear market counter its hungriest challenger?