Although skate shoes are showing some signs of softening, the category certainly is not in crash mode. Conversations within the industry as well as data from SportScanINFO indicates that what's occurring is a slowing in sales gains in the recessionary climate and perhaps a little maturity after several years of high-double digit growth for the category.


Many feel that like many other footwear categories, the skate category is also showing some signs of struggling in the downturn as retailers remain cautious around inventory investments. The increasing popularity of canvas vulcanized shoes — which also carry a lower price than core skate shoes – is also said to be impacting the category. But as skate shoes are increasingly being used as casual shoes – and skate brands themselves move into other categories – many skate shoe insiders claim it's becoming more and more difficult to classify the skate category.


Indeed, many in the action sports community were particularly unsettled by recently reported figures from a leading research firm that skate shoes were down more than 13% this year versus last year.  An industry executive noted that the same analyst quoted in the report published last week in a footwear trade magazine had stated last year that the skate trend “was over” then as well.


However, The SportsOneSource Group found skate footwear was still delivering decent gains given the recessionary climate — albeit less than the strong double-digit growth rates of past years. 

“After several years of strong growth the skate business has begun to plateau,” said Matt Powell, senior retail analyst at SportsOneSource. “It’s very difficult to grow a business exponentially year over year.  The law of large numbers has to come into effect.”


Of those reached by Sports Executive Weekly to discuss the trends in the category, many felt the disparity in the reported trends — SportScanINFO data indicates a mid-teens increase for the year-to-date period — was primarily a matter of how the two firms classify product.  Heelys — which has in the past been included in the category by the other firm — is not included in the skate category in the SSI data.  There was also some speculation as to how the two firms classify Nike Dunk derivative product.  SportScanINFO has the product in the skate category, while some still insist the shoe is a basketball product.


Powell suggested that the skate category has cemented itself as a core category at retail.  “Back-to-school is now very important to the skate category, with sales equal to basketball for the period,” said Powell. “I expect we will continue to see good growth in skate, but not at prior-year rates.”


Part of the blame for any softening in the growth in skate is the increasing popularity of vulcanized shoes and canvas classics like the Converse Chuck Taylor.


On its fiscal third quarter conference call, Quiksilver, Inc., which owns the DC brand, attributed the softening in its footwear revenues partly to a shift towards vulcanized shoes versus the “tough sole/leather uppers that the core skate brands have traditionally been dealing with.” But the economy was also part of the blame. Joe Scirocco, Quiksilver's CFO, said major footwear stores in the U.S. are also delaying shipments that traditionally occurred in the fourth quarter to balance their inventories. On the bright side, he noted that DC business in Europe is still running up double-digits.                           

 

Journeys, which many feel is the largest skate shoe retailer in the U.S., saw second quarter comps slide 9%, with softness across its key product categories except canvas and women's fashion. But its strength in athletic categories-of which skate is a major part-implied that skate was holding its own in the economy. Athletic was up slightly as a percent of overall sales in the period. On a conference call with analysts to discuss second quarter results, Genesco management suggested they saw pressure from expanded distribution of certain brands across trade channels and retailers impacting the business.
Stephen Murray, president of VF Action Sports Americas, which includes Vans and Reef, noted a “a subtle shift from highly constructed performance skate shoes with all sorts of materializations, technical features and benefits to a more deconstructed, lifestyle looking shoe.”

 

He said this is also making the classification of what constitutes skate footwear even more difficult, since although many of these styles have performance benefits — for example, the grip and “board feel” skaters look for — to fit in skate, they also have an aesthetic which can easily translate to lifestyle.  Nike's entry into the market with its SB, 6.0, NKX and Dunk takedowns “has made classification even more difficult,” he said.  “Bottom line,” concluded Murray, “we aren't seeing any weakening of the category.”


R.P. Bess, marketing director at World Industries, said any perceived skate decline is likely getting blurred within the overall decline in sales across all categories.  “Skate doesn’t seem to be weakening” said Bess. “There’s a constant shift in designs, materials, constructions and we’re seeing that happen right now. Some may not be calling these changes ‘skate.’ That might have to do with the perception that ‘skate’ is weakening.”  In particular, he noted that the addition of retro vulcanized brands introducing themselves into the skate category “has a lot to do with the shift, especially with how popular vulcanized has become both in the core of skate and on the fringes.”


John Dickinson, president at World Industries, noted the popularity of vulcanized models may be pulling down prices in the skate space. Simpler in construction, vulcanized shoes tend to cost around $49 or $59 versus a $70 core skate shoe.


Like Murray, Dickinson believes that part of the problem is the new challenges in classifying the business. “It's definitely harder because it's turning into casual footwear,” said Dickinson.  Just like other categories that have gone more mainstream, fewer and fewer buyers of skate shoes are now using them to participate in the sport. On the other hand, many skate brands are extending into other categories – such as vulcanized, joggers, thongs and other categories – to further confuse where the brands and styles are being classified.


From his conversations with retailers, however, Dickinson is hearing that skate is outperforming other athletic styles in a down market. Many of the stores seeing declines are attributing it to the economy, although some stores have told him they had played it too safe with inventory.  But he doesn’t' see a huge shift away from the category.  “Skateboards are definitely weaker, but on the footwear side, we're not seeing it,” said Dickinson.


His worry is that concerns over a decline may scare buyers enough to create a self-fulfilling prophecy. But he remains bullish on the skate category.  “We may be doing more with joggers, vulcanized or slip-ons, but that customer that wants to skate or surf or participate in action sports isn't going to go away,” said Dickinson.