Wealthy boomers are trading in their Nikes for Skechers

• Skechers ranks second only to Nike for US shoppers seeking casual footwear, according to Cowen.
• Demand for Skechers is being fueled by more affluent consumers, making over $100,000 a year.

Skechers is gaining serious momentum on Americans' list of favorite casual sneakers to wear, according to Cowen.

The investment bank said in a note Monday that 19% of the 2,500 US consumers it surveyed preferred Skechers as their lifestyle footwear of choice in 2022. That's second behind only Nike at 24% in its Proprietary Consumer Tracker Survey. Adidas ranked third among respondents.

Skechers is seemingly taking customers away from Nike and Adidas, as high inflation prompts consumers to buy more affordable shoes, Cowen said.

"The company looks to have taken preference from a combination of Nike and Adidas, which appears to indicate that Skechers comfort and value-oriented positioning is resonating with consumers in a macroeconomic environment where discretionary spending is under an increasing amount of pressure," analysts wrote.

Demand for Skechers is also being fueled by more affluent consumers. The company gained most of its market share in casual footwear from consumers earning well over $100,000 last year. Consumer preference for Skechers among respondents who earned less than $100,000 in 2022 was flat year over year.

While more millennials and Gen Z are buying Skechers, older generations of consumers can largely be credited with the company's evolving reputation in casual footwear. Skechers preference share among adults 55 or older was around three times higher than younger customers in 2022, according to Cowen's study.

"The Skechers brand tends to resonate more with an older demographic when looking at casual sneaker preference," Cowen said.

On Monday, Cowen upgraded its rating for Skechers to "outperform" ahead of the company's earnings report on February 2. Argus Research and Williams Trading also upgraded ratings for Skechers this month.

In a note last week, Williams Trading equity analyst Sam Poser said demand for Skechers across "merchandise categories, gender, and geographies remains robust." Skechers expects to reach $10 billion in sales by 2026, the company said in October.

Poser is confident Skechers will deliver end-of-year results in line with company guidance and believes the company is in a great position to "breakout" by the middle of 2023. Retailers should stock up on Skechers, he said.

"Skechers has the most efficient supply chain in our coverage," he said, "and will be in position to meet the increased demand."