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Footwear brands are often less heavily burdened by higher gasoline, material and distribution costs than other apparel items, while possessing greater pricing power. Many analysts anticipate that across the board apparel price increases will start in the second half of 2011. For this reason, many investors may be interested in footwear manufacturers that have strong brands and pricing power. Those stronger brands are likely more capable of passing on those increases to their loyal consumer base, while potentially also gaining market share for less capable competitors.

Several footwear manufacturers and brands offer product lines that straddle multiple levels of what might be considered luxury or at least higher-end, name-brand options. Offering several tiers of products may be seen as damaging to the power of the brand’s name as a true status symbol, though an expanded product line allows a greater range of consumers and increased revenue. While some footwear brands or products may not function as a true symbol of social status, the brand name can still convey a level of quality, durability or performance that is generally accepted by its niche market. For example, brands such as Sketchers (NYSE:SKX) and Vans, owned by V.F. Corporation (NYSE:VFC), developed brand names as sneaker options for skateboarding and related alternative sports. Such skateboarding shoe brands are not chosen to portray wealth so much as for their proven level of performance and general acceptance amongst skateboarders. In so doing, the brand is helping the consumer define his or her lifestyle, and the target customer identifies both his or her lifestyle and sense of style with the brand.
After developing strong brand names within alternative sport shoes, both brands also expanded their brands into the casual shoe market on the strength of the lifestyle and sense of style that they represented. Subsequently, Sketchers attempted to further expand its brand into the rapidly growing toning shoe category that the company helped develop.
It is unknown whether the toning category will survive, or whether Sketchers’ expansion of the brand will diminish its brand name recognition amongst the alternative sports community that initially brought Sketchers success. The brand now less represents any single lifestyle as it attempts to expand itself, though the name of the brand becomes more generally known and potentially accepted by the average consumer. Of course, the most dominant brands in footwear are those that are most universal in options and styles offered.
V.F. Corporation is a significantly larger company than Sketchers and owns far more brands than Vans, including The North Face, Nautica, 7 For All Mankind and JanSport, among others, and recently announced the acquisition of The Timberland Company (NYSE:TBL) for about $2.2 billion. With multiple brands, the company can more easily maintain the identity of each brand by not expanding it beyond the range of its strength and character. By segmenting growth in such a manner, VCF can attempt to grow its overall market share while maintaining a focus on brand integrity.
Within footwear, several small and mid-cap companies own many well-known brands. Several of these brands have a strong identity and market-share within a niche market, similar to how Sketchers and Vans have market share amongst skateboarders. Other examples of footwear and apparel accessory companies with current market valuations between about $200 million and $3 billion include Kenneth Cole Productions (NYSE:KCP), K-Swiss (NASDAQ:KSWS), Steve Madden (NASDAQ:SHOO), Wolverine World Wide (NYSE:WWW) and Crocs (NASDAQ:CROX).
Kenneth Cole and Steve Madden are examples of brands that attempt to receive a premium based upon being reasonably affordable options that are still considered highly fashionable. The Crocs brand, alternatively, aims for the casual and recreational market. Wolverine produces multiple footwear types, though its namesake products are boots and other rugged outdoor work-shoes. Of course, the same consumer may require rugged work-boots, fashionable dress shoes and comfortable leisure footwear.
Moreover, some brands, such as Kenneth Cole, license their brand name to outside manufacturers and their businesses primarily involve the design of new products and the general advancement of the brand. Others, such as Wolverine, will attempt to acquire such licenses to manufacture products for strong brands. A prime example of this is its manufacturing of boots under the Harley Davidson name.
Brands that customers come to rely upon for quality and design are likely to survive difficult markets. Customers tend to be loyal to footwear brands, especially where they feel a particular appreciation for that brand's comfort, quality, performance and/or sense of style.
Sketchers’ current attempt to expand the recognition of its brand into other realms of footwear may invariably diminish the perceived and/or actual focus of the brand on providing products appreciated by loyal consumers. Skateboarders and individuals who wear toning shoes appear, at least at first glance, to be unrelated groups of consumers (though possibly related as mother and son).
Alternatively, and assuming the toning shoe market exists in the future, the company may have identified a larger and more lucrative market that will also support the company obtaining a larger market share of the casual shoe market. Generally speaking, changing a brand’s identity is a difficult and dangerous undertaking. It is for just that reason that Kenneth Cole or Steve Madden are unlikely to put out a line of work-boots for men, though both are highly likely to put out multiple fashion-forward dress-boot options for women. Nonetheless, the prices for boots of any kind are likely to go up soon.

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

Disclaimer: This article should not be construed as personalized investment advice as it does not take into account your specific situation or objectives.

Source: Footwear Brands With Potential to Outpace Inflation, Grow Market Share