May 3, 2017
Sneakernomics: Why Q1 Did Not Bode Well for U.S. Athletic Footwear Sales
Contrary to the positive overall results we saw in the first quarter of 2015 and 2016, Q1 was a mixed bag that left the total U.S. athletic footwear market down 3 percent for the first three months of 2017. Unit sales were down 2 percent and average selling price was down 1 percent for the quarter.
A warmer-than-last-year January started things off on a positive note, but the delayed EITC tax refunds crushed February as I predicted, as well as colder weather for the month versus 2016. Weak NBA All-Star Game sales also hurt the month. As a result, February sales were down in the mid-teens – the worst monthly performance in memory. March started off well, as the refund checks began to flow, but Easter’s shift to April hurt the end of the month.
For the quarter, men’s athletic footwear sales declined by 3 percent, kids’ sales we down 6 percent, and the women’s market remained flat.
The casual athletic category was a big bright spot for the industry in Q1, with sales up 36 percent versus the prior year, and over 20 percentage points greater than Q1 2016. Classics experienced an 11 percent increase, but this growth was well off the previous trend. The running category struggled in Q1, with sales down 5 percent. Weather shoulders part of the blame. Spring sports were off to a poor start – baseball and soccer footwear sales were each down by more than 20 percent.
In terms of channel performance, shoe chains fared the best of any channel, with sales up in the low single-digits, but this was well off the previous trend. Athletic specialty/sporting goods was again the channel to perform the weakest, with sales down in the mid-single digits. Department stores and national chains both declined in the low single-digits.
Nike, Inc. sales declined in the high single-digits for the quarter. The brand is still facing challenges in basketball, running, and cross training. Adidas sales grew nearly 85 percent, as the brand continues to double-down in the running and casual categories. The growth rate in classics slowed on the anniversary of the big Adidas push into the market last year. Under Armour (UA) athletic footwear sales declined double-digits in Q1, though the brand’s expansion into national chains helped offset significant losses in the athletic specialty/sporting goods channel.
The top-selling styles for Q1 based on dollar sales were the Jordan VI, Nike Air Huarache, Adidas Superstar, Jordan XIII, and Jordan IV.
I expect that the second quarter will be better than the first, with the late tax refund impact over and the late Easter/spring break taken into account. The market still has some Sports Authority liquidation hurdles to overcome, which will temper results somewhat.