KeyBanc Positive on NKE and CROX Following 3Q25 Footwear Survey

KeyBanc analyst Ashley Owens weighs in on premium brand stocks following the footwear survey.

The analyst commented: "The third edition of our footwear survey. Our KBCM survey provides timely insight into the state of the consumer and brand perception as we navigate the C3Q earnings cycle. The footwear survey aims to gauge current brand and spending preferences, as well as establish a baseline and serve as a comparison for future quarters. In this iteration, we highlight that consumer sentiment has softened slightly and spending momentum is showcasing signs of cooling for the majority of our cohorts ahead of the holiday time period. Footwear purchase outlook and consumer spending softening. Survey results pointed to softening purchase intentions over the past three months as well as for the next three months, with 73% of respondents indicating that they plan to decrease or keep spending at similar levels as we enter into the holiday period. By group, intentions moderated the most among consumers aged 30-44 though the cohort continues to showcase the highest overall intent to purchase. Further, though middle- and higher-income respondents remained more likely to spend in comparison to the lower income cohort, both groups saw pullbacks from the prior quarter. Looking forward toward the holiday season, ~75% of respondents indicated that they planned to make a footwear purchase, demonstrating a modest pullback from 2Q levels. Looking at results by brand, Nike once again saw the most positive backward-looking results from our data, coming in as the favorite and most purchased brand in the last six months. Additionally, Nike, On, HOKA, and Crocs all fell into the top six on the list of trending brands. Tariff-related price increases are raising concerns around affordability (slide 10). Our survey results pointed to increased concern around affordability of products as it relates to price increases. 82% of survey respondents noted that they have observed price increases due to tariffs, while only 17% reported they will keep their spending the same regardless of higher prices. Our survey pointed to increased concern from middle-aged consumers as well as lower-income consumers on the topic. However, the overall economic outlook saw meaningful sequential improvement, signaling that tariff concern could skew short term and seeing impacts from news and headlines.

Premium brands continue to be better positioned in the current environment, while value products show early signs of positivity. Our survey pointed to a more muted spend outlook, though the higher-income cohort continues to hold up better than the middle and lower income. At large, we would expect that companies who focus on this demographic have potential to outperform the broader industry in the NT. Additionally, with regard to value products, we would note that the majority of respondents signaled concerns around affordability, which we believe opens the door to tradedowns to more affordable items should sentiment persist or weaken. Sustainability preferences softening: Interest in sustainability declined sequentially in our 3Q survey, showing further softening in purchase intent relative to three moths ago. We believe this could be a reflection of affordability trade-offs as these products can often carry a higher price point, which may not be as palatable with a consumer that is less confident and feeling stretched due to broader pricing increases.

NKE (Overweight, $90 PT) – Purchases for the brand rose over the past three months, and intention to purchase over the coming months also increased q/q. While the Company lost ‘mindshare’ as a favorite brand in the quarter, we believe the incremental gains in purchasing are driven by recent leans into newness, which was also demonstrated by a +4% increase q/q in the running category. CROX (Overweight, $95 PT) – CROX gained share in the casual and outdoor categories, while HEYDUDE held share in casual. Compared to guidance of U.S. pressures over the NT, we believe this could bode well for results. ONON (Overweight, $68 PT) – Purchases and spending intentions declined for the brand q/q but spend has the potential to remain resilient given the brand skews more toward a higher-income consumer, which seems to be less affected by recent trends. DECK (Sector Weight) – UGG was slightly up q/q in the casual category, but HOKA continues to see pressure. For 3Q, the brand saw declines in prior purchases as well as future purchase intent. CAL (Sector Weight) – Though respondents indicated modestly higher purchase intentions from Famous Footwear, Lead Brands such as Sam Edelman, Naturalizer, and Allen Edmonds softened q/q."

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