The Zacks Shoes and Retail Apparel industry continues to face considerable challenges, primarily driven by rising input and logistics costs, supply-chain disruptions and elevated SG&A expenses due to digital and store reinvestments. Macroeconomic pressures such as currency volatility, geopolitical tensions, and evolving tax and tariff policies compound these challenges. A weakening consumer confidence environment and a competitive labor market threaten operating margins.

Despite these hurdles, companies are staying aggressive with brand-building initiatives and promotional spending to retain consumer mindshare. Robust consumer demand for activewear, footwear and wellness-driven products, fueled by a growing focus on healthy lifestyles, continues to support top-line growth. Brands are leveraging this momentum through product innovation, expansion of athleisure offerings, and enhanced investment in e-commerce and omnichannel capabilities. Continued investment in innovation, digital infrastructure and customer engagement will be key to navigating cost pressures and unlocking long-term growth potential. Players like Adidas AG (ADDYY Quick QuoteADDYY - Free Report) , Birkenstock Holding plc (BIRK Quick QuoteBIRK - Free Report) and Wolverine World Wide, Inc. (WWW Quick QuoteWWW - Free Report) are well-positioned to capitalize on these trends.

About the Industry

The Zacks Shoes and Retail Apparel industry comprises companies that design, source and market clothing, footwear and accessories for men, women and children under various brand names. Product offerings of the companies mostly include athletic and casual footwear, fashion apparel and activewear, sports equipment, bags, balls, and other sports and fashion accessories. The companies showcase their products through their branded outlets and websites. Some companies distribute products via other retail stores, such as national chains, online retailers, sporting goods stores, department stores, mass merchandisers, independent retailers and catalogs.

A Look at What's Shaping Shoes & Retail Apparel Industry's Future

Cost Headwinds: Companies in the industry have been grappling with elevated costs, driven by a mix of internal reinvestments and external pressures. Commodity price inflation, ongoing supply-chain disruptions, and rising logistics expenses continue to weigh on margins. Many companies anticipate that higher transportation costs will remain near-term headwinds. Meanwhile, stepped-up investments in marketing, digital platforms and store enhancements have pushed SG&A expenses higher. To maintain brand visibility and relevance, companies are allocating more toward promotional campaigns and tech-driven initiatives. On top of these structural challenges, businesses face persistent macroeconomic uncertainty, ranging from geopolitical tensions and trade tariffs to currency swings and shifting tax regimes. Weakening consumer confidence and a tight labor market complicate the landscape, putting additional strain on profitability across the industry.

Consumer Demand Trends: Industry players have been benefiting from strong consumer demand for activewear, athleisure and footwear, a trend set to continue through 2025. Athletic brands offer diverse products, from footwear and yoga wear to jackets and running clothes. The rising focus on fashion is fueling the demand for innovative apparel and footwear in the United States. Companies in the industry are prioritizing product innovation, marketing, store expansion and e-commerce growth to gain market share. Health and wellness trends are also driving footwear brands to expand their offerings. Multi-functional shoes, blending style and versatility, remain especially popular.

E-Commerce Investments: E-commerce has been a key growth driver in the athleisure market. Companies in this segment are building their customer base through websites, social media and other digital platforms. As consumers continue to shop from home, the demand for athletic-inspired apparel and digital sales is expected to be strong. Brands that expand their athletic apparel lines and strengthen e-commerce capabilities are likely to see long-term growth. Investments in faster delivery through improved supply chains and fulfillment processes will give industry players a competitive edge. Additionally, companies are enhancing stores with renovations, better checkout experiences and mobile point-of-sale options to increase their appeal. These efforts to improve the shopping experience across multiple channels are expected to boost store and online traffic, and drive sales.

Zacks Industry Rank Indicates Dull Prospects

The Zacks Shoes and Retail Apparel Industry is an 11-stock group within the broader Zacks Consumer Discretionary sector. The industry currently carries a Zacks Industry Rank #215, which places it in the bottom 12% of more than 250 Zacks industries.

The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates dull prospects for the near term. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

The industry’s positioning in the bottom 50% of the Zacks-ranked industries is the result of a negative earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are gradually losing confidence in this group’s earnings growth potential.

Before we present a few stocks that you may want to consider for your portfolio, let us look at the industry’s recent stock market performance and valuation picture.

Industry vs. Sector

The Zacks Shoes and Retail Apparel industry has underperformed the sector and the S&P 500 in the past year.

Stocks in the industry have collectively declined 33.6% in the past year. Meanwhile, the Zacks Consumer Discretionary sector and the Zacks S&P 500 composite have risen 16.7% and 9.1%, respectively.

1-Year Price Performance

Shoes & Retail Apparel Industry's Valuation

On the basis of forward 12-month price-to-earnings (P/E), commonly used for valuing Consumer Discretionary stocks, the industry is currently trading at 24.41X compared with the S&P 500’s 21.86X and the sector’s 19.45X.

Over the last five years, the industry traded as high as 37.75X and as low as 20.15X, with a median of 26.76X, as the chart below shows.

Price-to-Earnings Ratio (Past 5 Years)

3 Shoes & Retail Apparel Stocks to Watch

Birkenstock: This London-based company manufactures and sells footwear, including sandals, shoes, closed-toe styles, skincare products and accessories. While renowned for its cork-based sandals, Birkenstock has expanded into higher-priced designs. It benefits from strategic pricing, a focus on high-quality products and growth in direct-to-consumer (DTC) channels. A balanced distribution strategy across B2B (wholesale) and DTC has driven its success. There is significant growth potential in Asia, the Middle East and Africa.

Despite inflation and cautious consumer spending, Birkenstock has sustained strong demand, with its premium lines, such as closed-toe styles and the Big Buckle sandal, performing well. BIRK has a trailing four-quarter earnings surprise of 7.8%, on average. The Zacks Consensus Estimate for the company’s fiscal 2025 sales and earnings indicates growth of 21.8% and 36.7%, respectively, from the year-ago quarter’s reported figures. The consensus estimate for BIRK’s fiscal 2025 EPS has moved up 2.7% in the past 30 days. Shares of this Zacks Rank #2 (Buy) company have declined 14.3% in the past year. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Price and Consensus: BIRK

Adidas: This leading manufacturer and seller of athletic and sports lifestyle products in Europe, the Middle East, Africa, North America, Greater China, the Asia Pacific and Latin America is poised to gain from strong demand, compelling products and the robust performance of its online business. Adidas has been benefiting from improved sell-through of all Adidas products in the market. The company has been witnessing improved margins, driven by the recently implemented price increases and an improved channel mix.

The Zacks Consensus Estimate for ADDYY’s 2025 sales and earnings indicates growth of 12.3% and 86.1%, respectively, from the year-ago quarter’s reported figures. The consensus estimate for ADDYY’s 2025 EPS has been unchanged in the past 30 days. Adidas delivered a negative earnings surprise of 48%, on average, in the trailing four quarters. This Zacks Rank #3 (Hold) stock has dipped 1.1% in the past year.

Price and Consensus: ADDYY

Wolverine: The company is engaged in designing, manufacturing and distributing a wide variety of casual and active apparel and footwear. It also manufactures children’s footwear and specially designed boots and accessories for industrial purposes. Wolverine’s focus on brand structure, increasing efficiency by removing costs, strategic review of its portfolio, improving working capital and lowering leverage bode well. The company continues to focus on strengthening its DTC business. Speed-to-market initiatives, deployment of digital product development tools, expansion of e-commerce platforms and frequent product introductions are steadily contributing to Wolverine’s performance.

The Zacks Consensus Estimate for WWW’s 2025 sales and earnings suggests growth of 3.6% and 15.4%, respectively, from the year-ago quarter’s reported figures. The consensus estimate for WWW’s 2025 EPS has been unchanged in the past 30 days. The company has a trailing four-quarter negative earnings surprise of 38.6%, on average. Shares of this Zacks Rank #3 company have rallied 31.4% in the past year.

Price and Consensus: WWW