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 collectors' items these days, and lots of young people make money buying and selling limited-edition shoes online.
The shoe industry overall isn't a high-growth sector. But 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.
Investing in shoe stocks
Many shoe stocks are a long-term value investment. They are slower-growing businesses but are profitable and sometimes offer a little dividend income. Other smaller brands that are on-trend and riding consumer momentum are more akin to high-growth stocks. Put simply, there's a shoe stock that fits the needs of investors of all types.
|Nike (NYSE:NKE)||$216 billion||The world's largest shoe brand and premier sportswear company.|
|Adidas (OTC:ADDYY)||$42 billion||Germany-based premium sportswear giant and the world's second-largest shoe company.|
|On Holding (NYSE:ONON)||$8.1 billion||Fast-growing running shoe company from Switzerland and a recent IPO stock.|
|Deckers Outdoor (NYSE:DECK)||$7.9 billion||A holding company for footwear brands UGG, Hoka, Teva, and Sanuk.|
|Skechers (NYSE:SKX)||$6.5 billion||A top maker of casual and running shoes famous for chunky but practical sneakers.|
|Crocs (NASDAQ:CROX)||$4.8 billion||A love-it-or-hate-it brand best known for its soft clogs with holes.|
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. It's still growing, too, especially as consumers in developing markets such as China acquire more wealth and purchase more premium shoes.
It isn't the fastest-growing brand on this list, but it's still expanding at a steady pace. Nike also pays a modest and rising dividend for people interested in investment income.
Before Nike, there was Adidas. Although Germany's top producer of sports gear was surpassed by the swoosh long ago and trails behind Nike in annual sales, it still easily commands second place in global shoe and athletic wear revenue every year.
Much like Nike, Adidas isn't the highest-growth shoe business around. There's also no dividend. While Nike has 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. 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 (albeit slow growth).
3. On Holding
Founded in 2010, On Holding has raced onto the global shoe scene. The Swiss company has made a name for itself making high-end running shoes and has shown up at elite-level running events all over the world. It's doing something right. In just over a decade, On Holding has built a company reporting more than $700 million in annual sales.
On Holding is losing a little momentum as it gets bigger. During the height of the pandemic, the company was more than doubling its revenue on a year-over-year basis. In 2021, sales grew 70% compared to 2020. Management thinks 2022 sales will grow far less than that, mostly as supply chain issues impact its expansion. On Holding is also expanding its lineup into lifestyle and outdoor kicks. If it's successful with these new product launches, this upstart shoe company could have a lot of growth left.
4. Deckers Outdoor
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 was already in growth mode during the past decade, and, thanks to its casual and outdoor footwear, sales exploded during the pandemic. Consumer demand for sandals, multi-purpose boots, and running and hiking gear is stronger than ever. Total sales grew 19% year over year in 2021. There's no telling how long its double-digit percentage growth will continue, but Deckers is a top growth stock in the shoe industry right now.
Back in the day, Skechers was best known as more of a knockoff value footwear brand. While the company still takes many styling cues from its larger athletic footwear peers, it's garnered a global consumer following in its own right. It's a top workplace and casual shoe brand, has a sizable running and golfing footwear lineup, and has even made its mark on street fashion with its big chunky sneakers -- especially internationally in emerging markets.
Skechers has been a double-digit sales growth story for years, thanks to its affordable lineup of shoes and its attention to overseas markets. After a brief dip in sales in 2020, the brand's momentum has continued as effects of the pandemic gradually ease.
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 of 2008-09. While the quirky shoemaker's sales were stuck in a rut for much of the 2010s, it held onto a loyal following -- especially among kids and young adults. However, the pandemic and the casual "stay-at-home" apparel style it helped foster has sent Crocs' popularity soaring again.
Much like Deckers Outdoor, there's no telling how long Crocs' double-digit sales growth will last. However, management believes it can double its 2021 sales by 2026 while maintaining its mid-20% range operating profit margins (among the shoe industry's best). For now, this is a top niche apparel and accessories stock to consider.
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Shoe stocks for the long haul
Shoes overall are not a growth investment theme, but certain brands have enduring appeal and offer the promise of stable investment returns. And, 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.