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Six-Month Outlook Dims for Most Shoe Executives, FDRA Survey Says

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According to the latest Shoe Executive Business Outlook Survey, 87.1 percent of respondents see prospects for shoe shoppers over the next six months “turning weak” or “very weak.” The quarterly survey was released late last week by the Footwear Distributors and Retailers Association + FFANY

Overall, survey respondents trimmed their six-month outlooks for the broader U.S. economy, their respective company’s health and on shoe shopping as all three factors slipped to their weakest levels in the 18-month history of the quarterly questionnaire.

Those expecting their company sales to rise from the prior six months declined by half from Q1 to 37.4 percent as the percentage of respondents forecasting a sales increase in H2 also declined by half to 31.0 percent. More than 33 percent cited inflation as their company’s biggest concern over next six months.

Among other findings:

  • Nearly two-thirds forecast “no change” in H2 hiring versus the 66 percent who expected to hire during the Q1 survey.
  • Some 43.3 percent said they expected to see “flat to lower” footwear prices over H2 against the 86 percent during the Q1 survey that forecast higher prices over the next six months.
  • 46.7 percent of respondents forecast flat to lower landed costs over the next six months and 48.3 percent said they expected their company’s sales to exceed pre-Covid levels in H2. 
  • A record 34.5 percent of respondents cited “new consumer behavior shifts” as their company’s biggest issue over the next six months.
  • 33 percent of respondents said they expected inventories to decline over the next six months, a record high. 

Meanwhile, during a World Federation of Sporting Goods/McKinsey podcast last week, presenters warned attendees of the rising costs for raw materials. Over the last two years, according to McKinsey, metals (+88%) and cotton (+84%) have paced the hikes followed by fibers (+40%) and rubber (+32%). 

McKinsey’s Kevin Bright pointed out several actions being taken by industry companies, including those primarily selling footwear and apparel, now to react to shifting market conditions. These include reductions in prices regionally and/or by channel; a rebalancing of entry and mid-priced products based on margin structure to emphasize the perceived value gap; a discontinuation of low-margin products to make “trading down” less attractive to consumers; increasing Direct-To-Consumer offerings; and optimizing cost structure at the product and category levels. 

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Jul 13, 2022

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