NEW YORK -- Has the tide turned? Although the vast majority of footwear industry issues struggled last year, analysts say there may be a new wave breaking on Wall Street. A wide range of footwear stocks have started to rally, according to various economic indicators.
In the Dow Jones ratings of global industries, footwear stocks had a global increase of 23.9 percent this year, beaten only by cable/broadcasting, which had a 28.1 percent rise, and securities brokers, which had a 46.3 percent rise.
In terms of domestic growth, the Dow showed that footwear stocks have risen 44.2 percent, the second greatest increase following that of securities brokers, which rose 50.1 percent.
'Footwear stocks are starting to move,' said Joseph Teklits, analyst with Boston-based Ferris Baker Watts. 'There's definitely money coming back into footwear. It hits the bigger stocks first and it starts trickling down.'
Nike, Nine West Group, Stride Rite, Timberland, Kenneth Cole Productions and Genesco are among companies whose stocks have been rising. 'They're all up nicely since the beginning of the year,' Teklits said. And Venator Group and The Sports Authority have begun to bounce back after hitting lows.
'Not everybody was a momentum investor,' Teklits commented. 'People were looking for beaten-down categories. There were some exciting things that were overlooked. Money flows into it.'
Beaverton, Ore.,-based Nike Inc. has seen growth this year, up from about $40 on Jan. 1 to about $59 Thursday. White Plains, N.Y.,-based Nine West Group Inc. started the year at $15 and, fueled by a prospective takeover, hit $26.5 Thursday. Nashville-based Genesco Inc. started the year at $5 and was up to $10.88. Lexington, Mass.,-based Stride Rite Corp. started the year at $8.75 and hit $12.25 Thursday. Stratham, N.H.,-based The Timberland Co. went from $45.5 to $64.88. And New York-based Kenneth Cole Productions started the year at $18.75 and last week was at $28.06.
'Kenneth Cole started coming back,' said Lee Backus, vice president and analyst with New York-based Buckingham Research. 'People realized it is more than a shoe company. It's a lifestyle brand. I think it's a little bit of the same with Timberland.'
The ebullience, however, is tempered by the fact that the rise is from all-time lows for many companies around the start of the year. And many footwear companies are comparing sales this month to particularly low sales for the same period last year.
Quite a few firms are also still in the doldrums. Payless started the year at $47 and Thursday was still below that at $46.44. Brown Group started the year at $18.50 and was at $14.69 Thursday. Rockford, Mich.,-based Wolverine World Wide, at about $10 last week, started the year at about $13.15. And Long Island City, N.Y.,-based Steven Madden Ltd., a company many analysts see as a sleeping giant, started the year at $8.50 and on Thursday was at $7.88.
'Steve Madden is an anomaly,' said Backus. 'Their business is through the roof, phenomenal. But their stock sits there, it gets lost between the cracks.'
Still, the momentum, analysts say, has shifted. A strong March, albeit bolstered by an early Easter shifting holiday sales from April, has helped fuel hopes that a recovery is under way. BT Alex. Brown's Footwear retail index rose 10.3 percent in March, after falling 2.1 percent in February.
'The industry rebounded significantly in March,' according to BT Alex. Brown analyst Marcia Aaron. 'Five of the six [firms] in the index reported higher results compared with February.'
There have been other signs of strength, including firms buying back stock and insiders snapping up shares. At Fort Lauderdale, Fla.,-based The Sports Authority Inc., five insiders over the past three months purchased nearly 150,000 shares, including 100,000 bought by CEO Martin Hanaka. In the latest buyback, LaCrosse Footwear Inc., La Crosse, Wis., approved buying 375,000 shares.
'The board believes that the company's common stock is significantly undervalued,' said LaCrosse Footwear's CEO Patrick Gantert, 'and that additional stock repurchases are a good use of the company's available cash.'
Some analysts said Manhattan Beach, Calif.,-based Skechers USA Inc.'s decision to go ahead with its stock offering could have a ripple effect. If the offering generates some excitement, that could spill over to other footwear stocks.
Still, it's hardly time to celebrate. According to Aaron, nearly 64 percent of shoe companies reported earnings in February and March below last year's levels. She said she doesn't expect a true turnaround until third quarter. 'We continue to be cautious, given that sales have not shown a consistent pattern of improvement,' Aaron added of athletic footwear retail. 'It is widely believed that first half results will be lackluster, while second half results should be somewhat improved.'
Steven Madden Ltd. and other firms have showed strong business, while their stock has not reflected that. Aaron, who called Madden's stock 'a compelling value at current levels,' said she believed the firm's earnings would rise 38 percent to 11 cents a share for its first quarter.