Michael Jordan was responsible for 32,292 points, two Olympic gold medals, 6 NBA titles, and the Air Jordan shoe. First released in 1984, modern day variants are still available on the shelves and webpages of Footlocker (FL US). The original version of the show worn by Michael Jordan was banned by the NBA for not meeting regulations requiring predominantly white shoes, and Jordan was warned that he would be fined $5,000 every time he stepped on the court with them. He wore them anyway.
Even the greatest athletes such as Jordan take a beating some times. Teams don’t always win in a tough league. It’s the same with companies in a tough sector. It’s difficult to win.
Right now, US footwear retailers are in a tough league. A SportsScan data report last week indicated Skechers was suffering falling sales, and Finish Line (FINL US) shares took a dive as well last week when profits fell.
QMG data indicates the US Footwear Retail sector is doing it tough. Sales are scraping along (see Chart 1 below), and overall we see margins in negative territory (see chart 2 below) due to rising costs and price compression. Footlocker is a key player in this sector, deriving 75% of its revenue from shoe sales. But not everyone gets to “be like Mike”. Winning is difficult in a tough league, and Footlocker is currently playing in one. We will watch their scores with caution.