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The sneaker / active world comes undone
Consumer Discretionary
As Nike finally takes steps forward it seems as though its neighbours are falling apart. Adidas has had a hit shoe (Samba) for a few years, yet it has not changed the momentum for the brand. Allbirds, should never have gone public, is retrenching. Kevin Plank is back at Under Armour and the CEO of Brooks is stepping down. Retail Tracker’s thesis: 1) New competition from ON / Hoka has hit several brands hard, while Alo, Gymshark and Vuori have appealed to younger men (and women) as an alternative to UA and ADS apparel. 2) Fashion has changed and with this change comes a change in footwear - for women this means a shift to loafers and ballet flats vs. sneakers. 3) We have not had a new trend in active / sport with white shoes trending for too many years. Bring back some colour and fashion!
Consumer Discretionary
Brian McGough thinks the brand is growing too quickly and outright recklessly. ONON’s model reminds him of when Kors blew up in 2015 - it sold indiscriminately into wholesale, resulting in discounting, and a slowdown in high margin DTC sales. Brian also thinks the situation is reminiscent of early cycle Under Armour which was billed as “the next Nike”. At least UAA was a real brand, he is not convinced ONON is. To date, the company has managed to keep discounting to a minimum, however, this will change in 2023 as 190% inventory growth flows through the channel. Brian sees 50% downside and would pair a short position here against longs in Deckers and NKE.
Consumer Discretionary
IPO'd last year, this Swiss shoe company is on a winning path as it enters the US market - boasting a beautiful design and appealing logo, ON is targeting the fashion x function customer which has proved so successful for the likes of Nike, Lululemon and Moncler. This approach allows for a range of distribution points helping to broaden brand awareness. Retailers like Bandier and Dover Street Market will also help to bring the brand to the younger fashion crowd. This is important, while this shopper can be fickle, this space, unlike denim or beauty, is not seeing new brand launches every year.
