Companies in the Zacks Shoes and Retail Apparel industry are supported by strong premiumization and digital momentum. Consumers are increasingly gravitating toward performance-driven, high-quality products that blend comfort, durability and style, supporting higher price points and stronger brand loyalty. Continuous innovation in cushioning technologies, sustainable materials and product customization, along with expanding direct-to-consumer and e-commerce channels, is improving margins and customer engagement. Investments in data analytics, faster fulfillment, localized supply chains and personalized marketing are enhancing inventory efficiency, pricing control and long-term profitable growth prospects.
However, the industry faces mounting headwinds. Elevated promotional activity, excess inventory and cautious consumer spending are pressuring margins, while rising input costs across materials, freight and wages weigh on profitability. Demand volatility amid macroeconomic uncertainty continues to challenge revenue stability and earnings growth.
Looking ahead, sustainable growth will depend on continued innovation, enhanced digital infrastructure and deeper consumer engagement. Well-established brands like NIKE Inc. NKE, adidas AG ADDYY, Birkenstock Holding plc BIRK, Carter’s, Inc. CRI and Caleres, Inc. CAL remain well-positioned to navigate near-term challenges and capture long-term opportunity.
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 the Shoes & Retail Apparel Industry
Premiumization & Performance Innovation: The Shoes and Retail Apparel industry is benefiting from a powerful shift toward premium, performance-led products. Consumers are increasingly prioritizing functionality, comfort and durability, whether in running shoes, athleisure or everyday wear. Innovations in cushioning technology, sustainable fabrics and customization are allowing brands to command higher price points while deepening customer loyalty. The rise of health-conscious lifestyles and sports participation has fueled the demand for technical footwear and versatile apparel that seamlessly transitions from workouts to daily wear. As brands blend fashion with performance, premiumization continues to support stronger margins and brand differentiation.
Direct-to-Consumer Expansion & Digital Acceleration: Another major growth engine for the Shoes and Retail Apparel market is the rapid expansion of direct-to-consumer (DTC) channels and digital commerce. Brands are investing heavily in e-commerce platforms, mobile apps and data analytics to strengthen customer relationships and improve inventory efficiency. Investments in faster delivery, supply-chain efficiency and fulfillment enhancements are sharpening competitive edges. Personalized marketing, membership programs and seamless omnichannel experiences are enhancing engagement while reducing the reliance on third-party retailers. Faster supply-chain models and localized production are improving responsiveness to trends. As digital penetration rises and brands gain better control over pricing and distribution, the industry is positioned for more sustainable, profitable growth.
Margin Pressure From Promotions & Cost Inflation: Industry players continue to grapple with sustained margin pressure as promotional intensity remains elevated across channels. Excess inventory, cautious consumer spending and aggressive discounting by competitors are forcing brands to sacrifice pricing power to drive volumes. At the same time, input cost inflation, spanning raw materials, freight, wages and sourcing, continues to weigh on profitability. Even as supply chains stabilize from the prior years, structural cost increases and an unfavorable product mix are limiting margin recovery. The result is a tougher operating environment where revenue growth does not always translate into earnings expansion. Consumer demand remains uneven, shaped by macroeconomic uncertainty and shifting spending priorities. Discretionary categories like footwear and apparel are often the first to feel pressure during periods of inflation or economic slowdown.
Zacks Industry Rank Indicates Bright Prospects
The Zacks Shoes and Retail Apparel Industry is a seven-stock group within the broader Zacks Consumer Discretionary sector. The industry currently carries a Zacks Industry Rank #89, which places it in the top 37% 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 bright 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 top 50% of the Zacks-ranked industries is the result of a positive earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are gradually gaining 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 18.9% in the past year. Meanwhile, the Zacks Consumer Discretionary sector has fallen 6.3% and the Zacks S&P 500 composite has risen 19.5%.
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 25.94X compared with the S&P 500’s 22.72X and the sector’s 17.54X.
Over the last five years, the industry traded as high as 37.1X and as low as 20.83X, with a median of 26.53X, as the chart below shows.
Price-to-Earnings Ratio (Past 5 Years)
5 Shoes & Retail Apparel Stocks to Watch
Carter’s: This is the leading marketer of branded apparel and products for babies and young children in North America. The company has taken significant steps in pricing to adapt to market conditions and boost profitability. Its emphasis on essential core products and strong value offerings, particularly in inflationary markets, appeals to budget-conscious shoppers. Carter’s has also seen a notable increase in margin rates due to reduced inbound freight costs, which is a key factor in margin growth. This reflects the company’s focus on efficient cost management and operational improvements.
The Zacks Consensus Estimate for CRI’s 2026 sales indicates growth of 4.5% from the year-ago quarter’s reported figure, while the same for its EPS suggests a 28.1% year-over-year decline. The consensus estimate for CRI’s 2026 EPS has moved up 1.7% in the past 30 days. The company has a trailing four-quarter negative earnings surprise of 0.5%, on average. Shares of this Zacks Rank #2 (Buy) company have risen 1.9% in the past year.
Price & Consensus: CRI
NIKE: 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. It is advancing its innovation pipeline and refining its marketplace strategy to better align with consumer preferences.
NIKE is shifting its digital platform to a full-price model, reducing the reliance on promotions and scaling back performance marketing investments. The Zacks Consensus Estimate for NKE’s fiscal 2026 sales indicates growth of 1.1% from the year-ago quarter’s reported figure. The consensus estimate for NKE’s fiscal 2026 earnings has been unchanged in the past 30 days. NIKE delivered an earnings surprise of 58.6%, on average, in the trailing four quarters. This Zacks Rank #3 (Hold) stock has declined 19.5% in the past year.
Price & Consensus: NKE
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. ADDYY 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 2026 sales and earnings indicates growth of 8.3% and 39.2%, respectively, from the year-ago quarter’s reported figures. The consensus estimate for ADDYY’s 2026 EPS has moved up 0.6% in the past 30 days. adidas delivered a negative earnings surprise of 50.5%, on average, in the trailing four quarters. This Zacks Rank #3 stock has declined 25% in the past year.
Price & Consensus: ADDYY
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 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 14.1%, on average. The Zacks Consensus Estimate for the company’s fiscal 2026 sales and earnings indicates growth of 19.4% and 18.1%, respectively, from the year-ago quarter’s reported figures. The consensus estimate for BIRK’s fiscal 2026 EPS has moved up 1.3% in the past 30 days. Shares of this Zacks Rank #3 company have declined 17.2% in the past year.
Price & Consensus: BIRK
Caleres: This Saint Louis, MO-based company designs, develops, sources, manufactures and distributes footwear in the United States, Canada, East Asia and internationally. Caleres offers a steadily improving investment case, supported by strong momentum in its Brand Portfolio, where Lead Brands continue to gain share and deliver healthy growth. The recent addition of Stuart Weitzman expands its premium positioning, with integration efforts expected to unlock meaningful cost synergies over time. The company is also seeing improving trends at Famous Footwear and strong eCommerce traction, signaling stabilizing consumer demand.
Caleres is prioritizing cost discipline, inventory management and structural efficiencies. These actions position the company for more durable margins and a stronger long-term financial profile. CAL has a trailing four-quarter negative earnings surprise of 15.1%, on average. The Zacks Consensus Estimate for the company’s fiscal 2026 sales and earnings indicates growth of 5.7% and 203.6%, respectively, from the year-ago quarter’s reported figures. The consensus estimate for CAL’s fiscal 2026 EPS has been unchanged in the past 30 days. Shares of this Zacks Rank #3 company have declined 25.4% in the past year.
Price & Consensus: CAL
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This article originally published on Zacks Investment Research (zacks.com).
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