The Great Unknown

Yahoo

02-06-2025

What's the way forward? It's the billion-dollar question right now.
As vendors and retailers gather at FFANY in New York this week for the start of the spring '26 buying season, President Donald Trump's trade policy and his punishing tariffs are top of mind.
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It's not known what might happen to duty rates when the temporary 90-day freeze on global tariff hikes ends this summer. (Right now, the pause that ends for most countries is set to conclude on July 9; for China, the date is Aug. 14.)
What is clear is that some footwear prices are going up as consumer confidence remains on shaky ground.
At the same time, the footwear landscape is undergoing rapid consolidation — Dick's Sporting Goods is gearing up to buy Foot Locker, and Skechers is set to go private in the biggest shoe buyout in the industry's history. In the department store sector, the future of Saks Global, which acquired Neiman Marcus in December, is also weighing on the industry, with the cash-strapped company expected to drop up to 600 vendors.
'We're basically in triage mode as we try to figure out what costs will be for our brands and then what retailers can absorb and what consumers can absorb,' said Matt Priest, president and chief executive officer of the Footwear Distributors and Retailers of America (FDRA). He expects an 'elevated pricing landscape' for the foreseeable future due to the uncertainties connected with tariffs, which will make it 'hard for any brand or retailer coming into the June market to fully understand the depth and breadth of what actions lie ahead because it's been so unpredictable to this point.'
Retailers big and small are shifting strategies in real time as tariff realities can change from day to day.
Walmart CEO Doug McMillon told Wall Street during the retailer's first quarter conference call last month that as the tariff numbers have changed, his merchant team has pivoted and recalculated quantities. 'Where it can be more challenging is making decisions related to things like Halloween and Christmas further out. And how do you make a quantity call? And what tariff number do you use?' McMillon's only answer was that the mass discounter has a sales plan and it will 'operate against that sales plan,' meaning that some quantities will be adjusted based on certain tariff assumptions.
A number of independents said they are in wait-and-see mode as Trump's trade policies continue to unfold — and they're focusing on tried-and-true strategies to give them an edge.
'Product is king, and we are always looking for the best shoes at the best prices,' said Lester Wasserman, owner of Tip Top Shoes, which is celebrating its 85th anniversary this year, as well as West NYC. 'We have received plenty of emails from a variety of different vendors, with most of them saying prices will increase roughly $5 to $10 at retail, which in my opinion isn't catastrophic. The tariff situation is still in its infancy and I'm not quite sure anyone knows how it will play out.'
Peter Lawson, VP of Shoe Inn — which has been family-run for more than four decades — said the retailer is focusing on fill-ins for fall, as well as timeless, elevated essentials for spring. Price increases will be strategic, he said.
'We're looking closely at perceived value and margin impact. In some cases, we're consolidating buys or working more closely with vendor partners on exclusives to protect pricing,' Lawson said.
He noted that the boutique chain also continues to diversify its sourcing strategy. 'While China remains important for some categories, we're seeing great opportunities in Italy, Spain, and Portugal, especially for products that emphasize craftsmanship and quality,' he said.
Greg Wagner, president of family-owned Wagner Shoes in Pittsburgh, said the retailer's major objective is to budget seasonal product more accurately. 'Historically we've been guilty of overbuying and carrying too much over. That hurts our turn, gross margin return on investment and cash flow. In the northeast, the boot season is so short that it's very difficult to sell through. We try to leave room for fill-ins, and this fall we should have open to buy,' said Wagner, a fifth-generation family member in the business, which was founded in 1854.
With earnings season in full swing, one big trend among brands across the industry — and in the broader consumer sector — has been to withdraw their full-year guidance as tariff policies and consumer behavior remain difficult to predict.
Crocs Inc. CEO Andrew Rees told analysts that the 'daily uncertainty' on the level of tariffs makes it hard to plan and predict both short- and long-term impacts. He said expectations are that incremental costs from tariffs would see the industry to go up in terms of price, and that if prices go up, 'we would expect volumes to go down and would therefore plan accordingly.' That's not necessarily a bad thing, according to the CEO. A higher price would mean a higher margin, and maybe slightly lower volume, which 'is a much stronger place to be,' he said. (Crocs beat Q1 forecasts.)
Steve Madden Ltd. was already moving production out of China even before the skyrocketing reciprocal tariffs were announced on April 2 (and later paused.)
CEO Edward Rosenfeld said last month during the company's first quarter conference call that whatever was early enough in the production process that could be shifted has been moved. And while Madden is planning strategic price increases on select goods this fall, Rosenfeld said the company is also working with factory partners and suppliers to negotiate price concessions to help with mitigation strategies.
And he told analysts that some wholesale customers are planning more conservatively for fall, mostly due to uncertainty connected with consumer demand.
Like Steve Madden, Wolverine Worldwide is not waiting around for Trump to resolve his ongoing conflict with China.
In the company's first quarter 2025 earnings call, president and chief executive officer Chris Hufnagel told analysts that he is 'optimistic' amid the ongoing tariff dispute as the company has been working since the pandemic to diversify its sourcing.
'[In 2025], less than 10 percent of our products are now expected to be sourced from China, down from the mid-teens just earlier this year,' said the CEO, who was optimistic after its Saucony and Merrell brands posted double-digit growth in the first quarter. 'We're targeting to push this down to near zero in 2026.'
During a Placer.ai webinar on May 22, Coresight Research CEO Deborah Weinswig noted that some footwear manufacturers have product sitting in warehouses in duty-free zones as they take a 'wait-and-see attitude' until there's more clarity on how to proceed over the next few months.
For their part, trade show organizers are prepping for the months ahead by emphasizing face-to-face interactions, innovative product strategies —and flexibility.
Sandi Mines, VP of corporate engagement at FDRA and president of FFANY, said about 20 brands are set to exhibit in the show's pop-up space this week, and overall participation in the show is robust.
Laura Conwell-O'Brien, the longtime executive director of the Atlanta Shoe Market, which will take place Aug. 9-11, encouraged buyers to 'know your numbers' during a challenging climate. 'Retailers who understand what's working [in terms] of styles, price points and consumer preferences can make confident, data-driven buying decisions,' she said.
Flexibility is also essential, she said. 'Amid shifting tariffs, supply chains and trends, adaptability offers a competitive edge. Brands that deliver innovation, reliability and strong support will stand out,' she said, noting that in-person connections are key right now.
Christina Henderson, event director for both The Running Event and Switchback, the new outdoor show debuting June 16 in Nashville with more than 190 brands, said now is the time for the industry to come together.
'Brands are eager to reinvigorate their relationships with specialty retailers, likely because the pandemic outdoor boom has faded, and the pivot to digital is less of a sure thing than it was,' Henderson said. 'And retailers are equally motivated to discover new vendors, new products, and new ideas.'
Even before the recent wave of M&A activity swept across the industry, analysts predicted that store closings would continue to be a major headline.
UBS analyst Michael Lasser in April projected between 40,000 to 50,000 closings by 2029, from the current U.S. store base of around 956,000 locations. In softlines retail, which includes apparel, accessories and footwear, he estimated 12,500 doors will close over the next five years.
But there also could be more openings in certain sectors, like sporting goods. Lasser expects Dick's Sporting Goods and Academy Sports + Outdoors to continue to expand their market share through the addition of new locations. The forecast was less promising for department store stalwarts such as Kohl's Corp., Macy's Inc. and Dillard's, and some specialty stores.
On the consolidation front, the merger of Saks and Neiman Marcus in December is expected to see some change among vendors now that parent Saks Global has formed one buying team for both the Neiman Marcus and Saks Fifth Avenue banners.
In the case of Dick's purchase of Foot Locker Inc., some analysts think the deal could benefit footwear vendors, including Nike Inc. That's because the two retailers target different consumer segments, and the combined entity will pave the way for stronger relationships through multiple platforms.
As for Skechers U.S.A. Inc.'s surprise $9 billion deal with 3G Capital to go private, Needham & Co. analyst Tom Nikic said the decision to sell might have been accelerated by the macro- environment and possible thinking that it might be better to navigate current challenges 'without being under the Street's scrutiny.' (Chairman and CEO Robert Greenberg and his son, Michael Greenberg, the company's president, will continue to run day-to-day operations.)
TD Cowen's John Kernan said that with 3G's playbook of boosting margins through cost- cutting and efficiencies, there's a likelihood that 'we will see Skechers come public again in the distant future.'
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