Analysts Cut Outlooks on Shoe Industry Because of Tariffs

Tariffs could be problematic for Skechers and Steven Madden, say analysts

May 14, 2019 at 3:07 PM
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Footwear was one of the categories included in the Trump administration's latest list of tariffs on imports from China. Fears around the outlook for the sector has resulted in bearish analyst attention for Skechers USA Inc (NYSE:SKX) and Steven Madden, Ltd. (NASDAQ:SHOO). Let's take a quick look at the analyst notes on SKX and SHOO stocks.

For Skechers, Cowen & Co. mentioned the company in a note that said consumers could see a 10-15% increase in prices at certain retailers because of the tariffs. However, the brokerage firm also suggested many companies won't be able to pass along the cost to consumers, and will see a negative impact on their earnings per share as a result. Cowen, which also weighed in on G-III Apparel (GIII), dropped its price target to $30 from $34.

This is still slightly above the security's current perch near $28, putting it right near the site of a giant February bull gap and just below the 200-day moving average. Meanwhile, options traders have been betting bearishly going all the way back to before last month's earnings miss, with the 10-day put/call volume ratio at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) of 1.39 ranking in the 86th annual percentile.

For SHOO, Piper Jaffray downgraded the stock to "neutral" from "overweight" and lowered its price target by $6 to $32, pointing out that the company relies heavily on China-sourced products. After falling to its lowest point since January earlier, the equity was last seen in positive territory, hovering near $31.91. More broadly speaking, analysts are split on Steven Madden, with half handing out "holds" and the other half saying it's a "strong buy."


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