Baird reports point out some crucial numbers, making a three-year comparison for revenues and inventory levels of active lifestyle footwear, apparel and fitness players.
Segment wise checking trends and inventories for footwear suppliers: August revenues showed strength, with weighted average composite one-year growth of 104.8%, keeping in mind last year's Vietnam disruption. Three-year growth was 19.9% (July +18.5%). M/M rise of 3.5% was seen in August vs. an average August M/M increase of +0.0% indicating continued strong increases in production.
August revenue of key Nike (NKE) suppliers were seen surging on a three-year basis.
A softer outlook for apparels with revenue increasing 24.8% on a weighted-average basis in August, following a rise of 11.3% in July. Three-year growth was 20.8% vs. 33.6% in July. Apparel index fell 4.9% M/M in August which represented a greater-than-usual decline.
Higher production volumes in August for apparel and footwear both could mean higher Q3-ending inventory levels and potentially bigger discounts over the near-term.
Broadly, U.S. CPI report showed a +1.1% M/M increase in combined apparel and footwear prices.
Stocks on radar: Columbia Sportswear Company (COLM); Crocs (CROX); Deckers Outdoor (DECK); Foot Locker (FL); Nike (NKE); On Holding (ONON); Under Armour (UAA); V.F. Corporation (VFC); Wolverine World Wide (WWW)