4 days ago
KeyBanc: Tariff-related price rises raising concerns about footwear affordability
-- Tariff-driven price increases are beginning to weigh on consumer sentiment around footwear, according to KeyBanc Capital Markets' second-quarter survey.
While overall spending intentions improved, concerns over affordability are growing, particularly among younger and higher-income consumers, according to the bank.
'80% of survey respondents noted that they have observed price increases due to tariffs,' KeyBanc wrote. Yet, 'only 19% reported they will keep their spending the same regardless of higher prices,' suggesting price sensitivity is likely to influence future purchase behavior.
Footwear purchase intent is expected to remain strong heading into the back-to-school season, with 78% of respondents planning to buy new shoes within the next three months.
Encouragingly, KeyBanc noted that 40% said they intend to increase their overall footwear spending, up 10 percentage points from the first quarter. Nike (NYSE:NKE) remained the most purchased and favorite brand, while On, HOKA, and Crocs (NASDAQ:CROX) ranked among the top six trending brands.
KeyBanc added that premium brands appear better positioned in the current environment.
'We see continued resilience of the higher income cohort affecting ONON positively,' KeyBanc noted, adding that On has seen 'no demand elasticity from price increases' and continues with '$10+ increases across franchises.'
Still, signs of a value-oriented shift are emerging. '81% of respondents indicated looking for some level of value-oriented products due to tariffs,' the report said, hinting at a possible trade down if affordability remains an issue.
The running category showed mixed results, but KeyBanc remains upbeat about innovation-led brands.
'Winners in the category will be those that continue to innovate and bring newness to product pipelines,' analysts wrote, as the market grows increasingly competitive.
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