Investing in shoes is a surefire way to help protect your portfolio in the event of a recession. The following shoe companies all appear to be in for growth in the coming years. With the upcoming back-to-school buying season still weeks away, now could be your time to get in before prices potentially rise leading up to the shopping season.
Foot Locker, Inc. (NYSE:FL), Nike Inc (NYSE:NKE), and Brown Shoe Company, Inc. (NYSE:BWS) are all positioning themselves to make major profits, whether that is by refining global operations or by positioning themselves better for the domestic consumer market.
Having the shoe on the right foot
One of the most impressive features about Foot Locker, Inc. (NYSE:FL) is the store’s margins. The gross margin at the company averaged 42.6% over the last five years, with operating margin averaging 5.8%, and net margin averaging 2.8%. Over approximately the last 12 months, gross margin was at 44%.
Foot Locker, Inc. (NYSE:FL) looks to continue growth. Recently, it was given approval to acquire an athletic retailer in Germany for $95 million.
Analysts’ consensus estimates are for Foot Locker, Inc. (NYSE:FL) to grow its revenue by $200 million this year, which is the same as the guidance given in the company’s first-quarter earnings report. Furthermore, in the first quarter, the company grew the Kids Foot Locker, Inc. (NYSE:FL) brand by 20% compared to last year’s first quarter. The kids segment’s success is important, especially if the company wants to replace the basketball sneaker segment, a business division Morningstar says is dying.
Foot Locker, Inc. (NYSE:FL) does suffer from the problem of having many stores in malls, where foot traffic is decreasing. The company started offering exclusively athletic footwear around four decades ago, at a time when malls were gaining popularity. Despite a turnaround to the economy, foot traffic in malls decreased 6.4% in February from the year-ago period, according to ShopperTrak.
That should concern Foot Locker, but it isn’t enough for me to not love this stock. The company has shown its innovative capabilities in the past, and it will do so again.
Nike Inc (NYSE:NKE) isn’t just doing it in the U.S.
Like with many major retailers, Nike Inc (NYSE:NKE) is looking to China for expansion. The growing middle class there represents a major opportunity for profits in a market that isn’t over-saturated with retail companies. While the company isn’t increasing profits from China yet, it reported flat sales last quarter after sales fell 8% in the previous quarter.