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There has been a number of interesting developments with a few of the best known companies in the shoe business, so I wanted to take a closer look at each of them. Some of the recent developments that prompted me to review this sector include these factors: Nike (NYSE:NKE) released earnings last week which disappointed investors. Some companies like Sketchers (NYSE:SKX) have also reported weak earnings and inventory issues. Certain companies are seeing insider buying, while others are seeing insider selling. These insider transactions might give clues as to where there might be value, and what companies might be smart to sell or avoid.

It's important to note that all of these companies are facing higher prices for raw materials used in making shoes and higher shipping expenses due to rising energy costs. All of these stocks [except for Deckers (NYSE:DECK)] are in a clear downtrend which says this is a tough business to be in right now. Here are the companies:

Nike (NKE) shares are trading at $76.82. Nike is a leading maker of shoes and athletic apparel, and is based in Oregon. These shares have traded in a range between $66.34 to $92.49 in the last 52 weeks. The 50 day moving average is $85.08 and the 200 day moving average is $79.29. Nike is estimated to earn about $4.47 per share in 2011. Nike insiders have been repeatedly selling their shares. You can see the insider selling here.

What's notable at Nike: Nike reported fiscal 2011 third quarter earnings of $1.08 per share, up about 7% from the 2010 earnings of $1.01 per share. This was a miss from the estimates of $1.12 per share. This was the first earnings miss by Nike in a few years. When you see that Nike shares are still trading for nearly 20 times earnings, while reporting minimal growth of about 7%, I don't see much value or upside in these shares. Furthermore, this stock looks bad technically, as the current price is now below the 50 and 200 day moving average. I would avoid these shares and see where it bottoms out.

Sketchers (SKX) shares are trading at $19.23. Sketchers is a leading maker of shoes, and is based in California. These shares have traded in a range between $17.86 to $44.90 in the last 52 weeks. The 50 day moving average is $20.93 and the 200 day moving average is $25.70. SKX is estimated to earn about $1.39 per share in 2011. SKX insiders have been repeatedly selling their shares. You can see the insider selling here.

What's notable at Sketchers: Sketchers reported a huge drop in profits earning only $3.2 million or 7 cents per share in the fourth quarter, compared to earnings of $27.9 million or 58 cents per share in the same quarter last year. Based on these issues and company guidance, it appears that revenues and margins will be weak for at least the first half of 2011. Sketchers problems appear to be based on inventory issues with it's "Shape Ups" shoes. These shoes claim to help you get toned. Sketchers has too much inventory with this and other product lines, and that has hurt margins. In November, a few SKX insiders sold shares near the lows at prices ranging from about $19.64 to just over $21 per shares. These sales resulted in proceeds of over $500,000. On March 4, 2011, another insider reported selling a considerable amount of stock as well: 30,000 shares for $19.58 per share. I think it is troubling to see multiple insiders recently selling shares near the 52 week lows. I would avoid or sell these shares and watch future earnings reports for signs of improvement.

K-Swiss, Inc. (NASDAQ:KSWS) shares are trading at $10.15. K-Swiss is a leading maker of shoes and athletic apparel, and is based in California. These shares have traded in a range between $8.75 to $14.53 in the last 52 weeks. The 50 day moving average is $10.92 and the 200 day moving average is $11.72. KSWS is estimated to lose about 99 cents per share in 2011. KSWS insiders have been buying shares. You can see the insider buying here.

What's notable at K-Swiss: K-Swiss reported a net loss for the fourth quarter of 2010, at $20,635,000, or $0.58 per share, compared with a net loss of $12,488,000, or $0.36 per share, for the prior-year period. Net loss for the year ended December 31, 2010, was $68,212,000, or $1.94 per share, compared with a net loss of $27,962,000, or $0.80 per share, for the year ended December 31, 2009. I don't see value or upside in these shares, although it is nice to see some insider buying. Furthermore, this stock looks bad technically, as the current price is now below the 50 and 200 day moving average. I would avoid these shares.

Brown Shoe Co. (BWS) shares are trading at $10.90. Brown Shoe is a leading wholesaler and retailer of shoes, and is based in Missouri. These shares have traded in a range between $10.25 to $19.96 in the last 52 weeks. The 50 day moving average is $13.63 and the 200 day moving average is $13.35. Brown Shoe is estimated to earn about $1.31 per share in 2011. BWS insiders have been buying shares. You can see the insider buying here.

What's notable at Brown Shoe: Brown Shoe reported fourth quarter 2010 earnings of 11 cents, missing the estimate of 15 cents. BWS said they have a new IT system which will help them improve future results. The current share price is now below the 50 and 200 day moving average. I would watch these shares and see where it bottoms out. There seems to be some value here at less than 10 times earnings. Another plus is that BWS pays a 28 cent per year dividend which is equivalent to a 2% yield.

Deckers Outdoor (DECK) shares are trading at $81.07. Deckers is a leading maker of shoes with brands like Teva and UGG, based in California. These shares have traded in a range between $40.76 to $94.70 in the last 52 weeks. The 50 day moving average is $81.97 and the 200 day moving average is $63.21. Deckers is estimated to earn about $4.55 per share in 2011. DECK insiders have been selling their shares. You can see the insider selling here.

What's notable at Deckers: Deckers reported that fourth quarter earnings per share increased 30.5% to $2.27 compared to $1.74 last year and for fiscal 2010, earnings per share increased 36.1% to $4.03 compared to $2.96 last year. This stock looks healthy in terms of technicals, and it's the only stock here that I can say that about. However, I would wait for pullbacks if I bought any shares.

Heelys Inc. (NASDAQ:HLYS) shares are trading at $2.32. Heelys is a leading maker of wheeled shoes, and is based in Texas. These shares have traded in a range between $2.03 to $3.63 in the last 52 weeks. The 50 day moving average is $2.77 and the 200 day moving average is $2.75. HLYS insiders have been buying small amounts of these shares. You can see some insider buying here.

What's notable at Heelys: Heelys reported a net loss of $3.2 million, or 12 cents per share, for the quarter ended December 31, 2010, and a net loss of $4.0 million, or 14 cents per share, for the year ended December 31, 2010, versus a net loss of $5.1 million, or 19 cents per share per share for the fiscal year ended December 31, 2009. Heelys has a strong balance sheet, with cash or cash equivalents totalling $67.6 million as of December 31, 2010. However, with revenues declining and losses continuing, the only thing I think investors can hope for is a buyout. This stock also looks bad technically. The current price is now below the 50 and 200 day moving average. I would sell this stock on any rallies unless you are prepared to wait a long time for a buyout which may never come.

This sector is facing many challenges and the only company that is clearly hitting on all cylinders right now is Deckers. Some of these stocks (like BWS) might be interesting "bargains" on dips, or when they start posting improved results, however there might not be much relief if rising material and energy costs continue to rise.

Disclaimer: The data is sourced from Yahoo Finance. The information and data is believed to be accurate, but no guarantees or representations are made. Rougemont is not a registered investment advisor and does not provide specific investment advice. The information contained herein is for informational purposes.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Source: Are These Shoe Stocks in the Bargain Bin?