Core Insights - The Textile Exchange's annual report indicates record-breaking material production in 2024, reaching approximately 132 million tonnes across all markets, which translates to four tonnes of fibre produced every second, contributing to an increase in greenhouse gas emissions [1] - Greenhouse gas emissions associated with raw material production in the fashion, home textiles, and footwear sectors have risen by 20% over the past five years, highlighting a concerning trend despite some companies reporting sustainability progress [2] - A record number of 423 brands and retailers are actively replacing conventional materials with certified sources, indicating a shift towards more sustainable practices within the industry [3] Industry Trends - The report emphasizes the critical moment for the industry, nearly 10 years post-Paris Agreement, as greenhouse gas emissions from raw material and fibre production continue to rise significantly, necessitating urgent action [4] - Companies are increasingly reporting their sustainability progress and investing in sourcing fibres from recognized standards and certification programs, which is essential for tracking industry progress and providing credible verification [4][5] - Approximately 34% of global cotton production now comes from certified sources, two-thirds of manmade cellulosic fibres are produced using certified or controlled feedstock, and half of all mohair is certified to Textile Exchange's Responsible Mohair Standard, showcasing advancements in sustainable sourcing [5]

Core Thesis - Deckers Outdoor Corporation is positioned as a strong player in the footwear industry, driven by the success of its brands UGG and Hoka, with a bullish outlook on its growth potential [1][2]. Financial Performance - As of September 3rd, Deckers' share price was $123.67, with trailing and forward P/E ratios of 18.88 and 19.88 respectively [1]. - Hoka experienced a sales growth of 29.3% in the first three quarters of 2025, contributing nearly 42% to total revenue [2]. - UGG, the largest brand, accounted for just over 54% of revenue and grew by 14.9% during the same period [3]. - The company's gross profit margin improved from 50.3% in 2023 to 60.3% by Q3 2025, reflecting a 1000 basis point increase [3]. - Deckers has no long-term debt and boasts a return on invested capital of 32.7%, with net income margins at 25% [4]. Strategic Initiatives - The shift towards direct-to-consumer (DTC) sales has been significant, with DTC now representing over 55% of net sales, up from 43% through wholesale channels [3]. - This DTC model has enhanced digital customer acquisition and expanded profit margins [3]. Valuation and Market Position - A discounted cash flow analysis indicates an intrinsic value of $124 per share, suggesting that the market may be undervaluing the company's growth potential [5]. - Despite strong fundamentals, Deckers' stock has declined nearly 45% year-to-date, indicating a disconnect between its financial performance and market valuation [4]. Market Sentiment - Previous analyses have highlighted Deckers' strong fundamentals and brand equity, with a recent appreciation of approximately 2% in stock price since earlier coverage [6].

Acquisition Details - 3G Capital has finalized the acquisition of Skechers, taking the footwear company private with a deal valued at $9.42 billion [1] - The acquisition price is set at $63.00 per share in cash for all outstanding shares of Skechers [1] - Shareholders have the option to receive $57.00 in cash and one "unlisted, non-transferable equity unit" in a new privately held entity [2] Management and Operations - Skechers will continue to be led by its executive management team, including CEO Robert Greenberg and president Michael Greenberg [2] - The company will remain based in Manhattan Beach, California [2] Business Performance - In the first quarter of fiscal year 2025, Skechers reported sales of $2.41 billion, reflecting a 7.1% increase from the same quarter a year ago [4] - Gross profit for the quarter was $1.25 billion, marking a 6.2% growth from the previous year, although gross margin contracted by 50 basis points to 52.0% due to lower average selling prices [4] Strategic Focus - Skechers plans to sustain its focus on product innovation, international expansion, direct-to-consumer channels, domestic wholesale growth, and investments in global distribution and technology infrastructure [3]

Product & Technology - A first-of-its-kind experience in Times Square allows scanning feet to create 3D models, capturing detailed information for custom orthotics and shoes [1][2] - The company offers fully custom-made 3D printed shoes, delivered in 4 to 6 weeks, representing a game changer for footwear sizing [3] - The company's Luminaires sneaker, a fully custom-made shoe, is priced at $189, competitive with traditional sneakers [20] - The company also offers slides, with the version one priced at $119, making personalized footwear more accessible [21] Manufacturing & Geopolitics - 3D printing enables manufacturing shoes anywhere, including America, potentially disrupting tariffs and traditional production models [5][6] - The company is actively planning to produce 100% American-made footwear using 3D printing, reducing reliance on labor force [7][8][9] - The company aims to improve 3D printing speed, targeting a reduction in printing time per shoe from approximately 12 hours to 1 hour [14] Market & Consumer Trends - There's a shift in consumer preferences towards comfort and personalized fit, moving beyond just styling [4][17] - The company focuses on comfort and easy-to-wear footwear like slides and clogs, offering personalized measurements [17] - The company is exploring different variations of 3D printed shoes, including performance and comfort options [18]

Group 1 - The core viewpoint is that Crocs, Inc. is facing challenges due to tariffs and macroeconomic uncertainty affecting consumer confidence, leading to a year-to-date stock decline of 22% [1] Group 2 - The footwear company operates in the consumer discretionary sector, which is particularly sensitive to economic fluctuations and consumer spending patterns [1] - The current market conditions suggest that consumer discretionary companies like Crocs may continue to struggle if macroeconomic factors do not improve [1]

Core Insights - Footwear prices increased by 1.4 percent in August, marking the highest rise in 17 months and the second fastest in 33 months, reflecting overall inflation trends [1] - Women's footwear prices rose by 2.8 percent, the largest increase in 34 months, while children's shoe prices increased by 0.9 percent, the fastest this year; in contrast, men's footwear prices decreased by 0.2 percent but have risen in 14 of the last 19 months [2] Industry Drivers - Rising footwear prices are attributed to inflation and "onerous" tariffs impacting the market significantly, as over 98 percent of footwear sold at retail is sourced from abroad [3][4] - Duties on footwear imports surged by 108.7 percent year-over-year, reaching $635.8 million, indicating a strong correlation between duties paid and retail footwear prices [4] Economic Context - The Bureau of Labor Statistics reported a 0.4 percent increase in the Consumer Price Index (CPI) for August, with a year-over-year increase of 2.9 percent, indicating a broader inflationary trend [6] - August marked the fourth consecutive month of accelerating inflation, with the core CPI rising by 0.3 percent [7]

Core Insights - The 100th edition of Micam, an international trade show in Milan, reflected a cautious but hopeful sentiment among exhibitors despite ongoing declines in the Italian footwear industry [1][2] Industry Performance - Sales in the Italian footwear industry decreased by 5.6 percent and industrial production fell by 9.5 percent during the first half of the year [2] - The U.S. market is vital for the leather industry, contributing 12 percent to Italy's export turnover, making it the second most important market after France [6] Market Challenges - The unfavorable exchange rate against the euro and increased tariffs are significant concerns for the industry, potentially leading to price increases of 12 to 15 percent [5][7] - Exhibitors expressed uncertainty regarding market conditions, particularly in the U.S., but also identified opportunities for market share growth as competitors exit [9] Strategic Focus - Micam aims to support small and medium-sized enterprises by facilitating connections with potential buyers to enhance their market presence [5] - Brands are encouraged to invest in digitalization, strengthen e-commerce, and diversify international markets to remain competitive [15] Design Trends - The spring '26 season showcased a surge in creative and innovative designs, with brands emphasizing sustainability and craftsmanship [16][20] - Emerging designers at Micam highlighted a commitment to traditional craftsmanship while pushing design boundaries, focusing on sustainability and innovation [22][23] Brand Initiatives - Victoria Shoes launched its first pop-up store in Italy to strengthen ties with the Italian market, celebrating its 110th anniversary [13] - Brands like Flower Mountain and Voile Blanche are focusing on innovative materials and designs, with Flower Mountain celebrating its 10-year anniversary with a special capsule collection [17][20]

Core Insights - Crocs Inc. reported its Q2 2025 earnings on August 7, 2025, surpassing expectations but provided disappointing guidance, resulting in a nearly 30% drop in stock price after the market closed [1]. Financial Performance - The company beat earnings expectations for Q2 2025, indicating strong operational performance [1]. Market Reaction - Following the earnings announcement, the stock price of Crocs Inc. fell by almost 30%, reflecting investor concerns over the company's future guidance [1].

Core Insights - Saucony is launching its AW25 collection from the Saucony SILO line, which emphasizes the blend of heritage, luxury, and performance in footwear design [1][2] - The collection will be available globally starting September 18, 2025, following its initial reveal at Paris Fashion Week in June [1][3] Product Details - The AW25 collection features two new silhouettes, Momentum and Trekker, alongside updated versions of popular styles, showcasing a balance of heritage and material innovation [3][5] - The design process involved collaborations with creative professionals, enhancing the storytelling aspect of the brand's legacy [2][3] Brand Background - Saucony, a division of Wolverine World Wide, Inc., is recognized for its innovative technologies and commitment to inspiring a running culture [4] - The brand has a long history, founded in 1898, and aims to blend innovation, style, and culture in its products [4]

Core Insights - Footwear industry is experiencing disruption due to advancements in 3D printing technology, which could enable production to shift back to the U.S. [1] - Traditional shoe manufacturing remains predominantly in Asia, but 3D printing presents new production possibilities that could change this dynamic [1] Industry Implications - The potential for localized production through 3D printing may reduce reliance on overseas manufacturing, impacting supply chains and logistics in the footwear sector [1] - Companies in the footwear industry may need to adapt to these technological changes to remain competitive and meet evolving consumer demands [1]