New Survey Data Pushes Piper Jaffray To Upgrade Foot Locker, Downgrade Steve Madden

Piper Jaffray’s semi-annual survey of the brand preferences and shopping behavior of teens revealed that apparel spending is down 12 percent y/y for upper-income females and down 1 percent y/y for upper income males.

The survey also showed that accessories spending was down 13 percent y/y for upper-income females and up 13 percent y/y for upper-income males. Footwear spending was more stable, up 4 percent y/y for upper-income females and up 2 percent y/y for upper-income males.

Foot Locker Benefitting From Changing Spending Trends

Piper Jaffray’s Erinn E. Murphy upgraded the rating for Foot Locker, Inc. (NYSE: FL) from Neutral to Overweight, with a price target of $67. The analyst mentioned that the stock’s current valuation was attractive and that the teen survey results support underlying strength in Foot Locker’s vendor mix and footwear spending trends.

The survey results showed continued strength of Nike Inc (NYSE: NKE) as the leading footwear brand and the increasing popularity of Adidas. While Nike represented 72 percent of Foot Locker’s sales in FY16, Adidas is estimated to have contributed about 8-10 percent of Foot Locker’s sales, Murphy noted.

A shift in spending towards women’s athletics, as revealed by the survey, bodes well for Foot Locker, the analyst added.

Declining Share In Footwear And Handbag A Concern Area For Steve Madden

Murphy downgraded the rating for Steven Madden, Ltd. (NASDAQ: SHOO) from Overweight to Neutral, while reducing the price target from $38 to $36.

“While we continue to believe Steve Madden remains firmly on plan for Q1 and believe the trends at retail in particular are strong with improved traction across a broad base of fashion cycles, we are stepping to the sidelines,” the analyst wrote.

The survey showed deceleration in Steve Madden’s mindshare in both footwear and handbags, but also revealed continued demand for athletic trends. Although Steve Madden has over the past two years improved the percentage of athletic trend products in its women’s mix from 2 percent to 10 percent, Nike and Adidas have registered incremental gains, Murphy pointed out.