Skechers USA Inc. was riding high this summer when the company’s Shape-up toning shoes were flying off store shelves.
But concerns about a slowdown in demand for such footwear, which shoe companies claim help people burn calories and tone muscles, have resulted in Skechers’ stock dropping by 51 percent to $21.53 on Dec. 9 compared with an all-time high of $43.85 in June. The Manhattan Beach footwear and apparel maker had reported in October that several accounts overbooked for the back-to-school sales season and canceled orders.
Sam Poser, an analyst at Birmingham, Ala.-based Sterne Agee & Leach Inc. who follows Skechers, said retailers were expecting sales of toning shoes to continue to grow at a rapid rate. But buyers of toning shoes stopped shopping for themselves once back-to-school season hit.
“The toning business has weakened in the last few months,” he said. “It hasn’t performed as well as people had anticipated.”
Poser, who rates Skechers a buy, said the company now has to distribute the excess inventory, which includes older models of toning shoes, while introducing new toning products to the marketplace.
Skechers is the market leader in the toning shoe category with 52 percent of sales. The company has grown demand for its toning products, including Shape-ups and Resistance Runners, through ad campaigns featuring sports stars and celebrities. Skechers recently announced marketing partnerships with basketball star Karl Malone, and mother-daughter reality TV personalities Kris Jenner and Kim Kardashian.
Meanwhile, Skechers has battled claims that its toning shoes don’t perform as advertised. The company has also been facing increased competition in the toning shoe category from footwear competitors such as Reebok, New Balance and Avia, which continue to expand their offerings with new technology.
But Poser said the competitive landscape hasn’t played a role in Skechers’ dropping stock. Investors are worried that the toning category is falling out of favor with shoppers.
“They are pretending this toning business is just a train wreck and gone,” he said.
So Long, Hunky Santa
“Hunky Santa” won’t be riding his sleigh into the Beverly Center this holiday season.
The Beverly Center said the mall’s “Hunky Santa and the Candy Cane Girls” act, which featured a handsome young man in a Santa costume accompanied by beautiful young women in themed costumes, doesn’t fit its image as a luxury retailer. The act was featured at the mall for the previous nine holiday seasons.
“Hunky Santa had a huge public relations benefit for us,” said Jefferson Brown, general manager at the Beverly Center. “But at the end of the day, we thought that it’s not core to the message of luxury and contemporary retail, and that’s what we need to be about.”
Luxury retailers such as Prada and Omega opened shops at the Beverly Center last month, while Tiffany & Co. is set to unveil its space at the shopping mall this week. The goal is to turn the mall into a superdeluxe destination that can compete with Rodeo Drive or compare to Orange County’s South Coast Plaza.
The Beverly Center, owned by mall owner and operator Taubman Centers Inc., started its luxury transformation in 2007 by weeding out stores such as Gap and Hallmark Cards, and replacing them with upscale brands such as Gucci and Christian Dior. Since then, new tenants include Montblanc, Salvatore Ferragamo and Henri Bendel. Also, Dolce & Gabbana doubled the space of its flagship D&G store this year, while Louis Vuitton is set to expand its store for the third time early next year.
Brown said the success of the mall’s luxury retailers, its top category by sales, has resulted in more high-end brands wanting to open an outpost there.
“Now we are in a position that luxury wants to be here and needs to be here to get that core customer they are specializing in,” Brown said.
Tron Throng
Susan Hancock’s Royal/T, a combination café, temporary retail store and art exhibition space in Culver City, was designed to share art with people who wouldn’t typically go to a gallery or museum.
And Royal/T’s pop-up shop for Disney film “Tron: Legacy,” which hits theaters this week, is doing exactly that.
That’s because “Tron” fans – mostly teenage boys and men – have been stopping by to check out the shop, which opened last month and features movie-inspired apparel and accessories, including Tron T-shirts and futuristic looking high heels by designer Jerome Rousseau that sell for $795.
“‘Tron’ is getting so much publicity and interest that it’s bringing in lots of people to see it,” said Hancock, who opened the space two years ago.
A group of “Tron” fans even traveled from as far as San Diego and San Francisco last week and met at Royal/T to see the pop-up shop. And Royal/T has staged five “Tron”-themed private parties. The “Tron” theme will run through Dec. 23.
Sophia Cesaro, vice president of events at Royal/T, said the store worked with Disney to create the “Tron” experience for fans. The pop-up shop was designed to reflect the futuristic theme. It was decorated with plexiglass and fluorescent blue markings to make the space look like a giant computer.
“It’s bringing in a whole new crowd of men and technically savvy people,” Cesaro said.
Staff reporter Alexa Hyland can be reached at [email protected] or at (323) 549-5225, ext. 235.
