Zacks Industry Outlook Highlights NIKE, Adidas and Birkenstock

For Immediate ReleaseChicago, IL – March 26, 2025 – Today, Zacks Equity Research discusses NIKE Inc. NKE, Adidas AG ADDYY and Birkenstock Holding plc BIRK.Industry: Shoes & ApparelLink: https://www.zacks.com/commentary/2434643/3-shoes-retail-apparel-stocks-in-focus-as-cost-pressures-loomThe Zacks Shoes and Retail Apparel industry faces ongoing challenges, including rising costs, reduced consumer spending on discretionary items and higher marketing expenses, all of which have pressured profits. Unfavorable currency fluctuations present risks for globally operating companies.However, the industry shows promise, driven by rising consumer interest in healthy lifestyles, and increasing demand for activewear and athletic footwear. Innovation in design has been a key growth driver. Companies prioritizing product innovation, store expansion, digital transformation and omnichannel strategies are well-positioned for success. Investments in product development and e-commerce are advantageous for players like NIKE Inc., Adidas AG and Birkenstock Holding plc.About the IndustryThe 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 FutureCost Headwinds: Companies in the industry have been facing higher costs due to factors like commodity price inflation and reinvestments. Supply-chain disruptions and increased logistics costs have also been significant challenges. Many companies anticipate rising logistics expenses to impact margins in the short term. Higher marketing spending, operating overhead and investments in stores and digital operations have increased SG&A costs. Industry players are also incurring increased expenses to support brand campaigns and digital initiatives. A competitive labor market adds a layer of difficulty, threatening profit margins 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 ProspectsThe 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 #232, which places it in the bottom 6% 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. SectorThe 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 24.9% in the past year. Meanwhile, the Zacks Consumer Discretionary sector and the Zacks S&P 500 composite have risen 3.7% and 9.3%, respectively.Shoes & Retail Apparel Industry's ValuationOn the basis of forward 12-month price-to-earnings (P/E), commonly used for valuing Consumer Discretionary stocks, the industry is currently trading at 24.54X compared with the S&P 500's 20.77X and the sector's 17.86X.Over the last five years, the industry traded as high as 37.75X and as low as 20.15X, with a median of 27.25X.3 Shoes & Retail Apparel Stocks to WatchNIKE: The global leader in athletic footwear, apparel and sports accessories is set to benefit from its Consumer Direct Acceleration strategy. NKE is actively repositioning the brand to enhance competitiveness and drive sustainable, long-term growth. The company is sharpening its focus on sports, accelerating product innovation and strengthening its brand storytelling with bold, high-impact messaging. Additionally, NKE is advancing its innovation pipeline and refining its marketplace strategy to better align with consumer preferences. CEO Elliott has outlined strategic initiatives to revitalize NIKE's momentum through sport. Some actions are already underway, while others are being introduced and fast-tracked.Notably, NIKE is shifting its digital platform to a full-price model, reducing reliance on promotions and scaling back performance marketing investments, which will decrease paid traffic. The Zacks Consensus Estimate for NKE's fiscal 2025 sales and earnings indicates declines of 10.4% and 46.6%, respectively, from the year-ago quarter's reported figures. The consensus estimate for NKE's fiscal 2025 earnings has moved up 2.4% in the past seven days. NIKE delivered an earnings surprise of 42.5%, on average, in the trailing four quarters. This Zacks Rank #3 (Hold) stock has declined 27.2% in the past year. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.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 9.1% and 78.7%, respectively, from the year-ago quarter's reported figures. The consensus estimate for ADDYY's 2025 EPS has moved up 1% in the past 30 days. Adidas delivered a negative earnings surprise of 54.4%, on average, in the trailing four quarters. This Zacks Rank #3 stock has rallied 8.5% in the past year.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 13.8%, on average. The Zacks Consensus Estimate for the company's fiscal 2025 sales and earnings indicates growth of 16.7% and 27.3%, respectively, from the year-ago quarter's reported figures. The consensus estimate for BIRK's fiscal 2025 EPS has been unchanged in the past 30 days. Shares of this Zacks Rank #3 company have risen 2.6% in the past year.Why Haven't You Looked at Zacks' Top Stocks?Since 2000, our top stock-picking strategies have blown away the S&P's +7.7% average gain per year. Amazingly, they soared with average gains of +48.4%, +50.2% and +56.7% per year.Today you can access their live picks without cost or obligation.See Stocks Free >>Join us on Facebook: https://www.facebook.com/ZacksInvestmentResearch/Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.Media ContactZacks Investment Research800-767-3771 ext. 9339support@zacks.comhttps://www.zacks.comPast performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance  for information about the performance numbers displayed in this press release.Zacks Names #1 Semiconductor StockIt's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom.With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report NIKE, Inc. (NKE): Free Stock Analysis Report Adidas AG (ADDYY): Free Stock Analysis Report Birkenstock Holding PLC (BIRK): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks