Footwear Firms Could Face Headwinds Over Oil, Gas Prices

Kudos to footwear firms that brought goods in early.

That decision to get ahead of tariff increases could provide a small buffer from any immediate fuel surcharges from shippers and freight carriers, as well as keep some shoe prices at current levels for consumers. Crude oil prices are already on the rise amid the backdrop of the ongoing Israel-Iran conflict. And they could go higher before a resolution is found to end the fighting.

Firms are still bringing in inventory before the July 9 global reciprocal tariff deadline — except China, where the deadline is Aug. 14 — and shoe companies could face some fuel surcharges depending on when those orders are sent out. But also they might have some wiggle room in scheduling the timing of those deliveries for later in hopes of oil price stabilization should the Middle Eastern conflict end.

Treasury Secretary Scott Bessent told lawmakers at the House Ways and Means Committee last Wednesday that countries already engaged in trade talks are likely to see an extension to allow those negotiations to continue. Vietnam, a significant producer of athletic performance shoes, is among the countries in trade talks with the U.S. As for the sizable shoe production in China, word surfaced last week that China and the U.S. have an framework for an agreement that would see a 55 percent tariff on China imports to the U.S. The two countries have until Aug. 10 to finalize the new trade deal, which still requires the signatures of U.S. President Donald Trump and China President Xi Jinping.

In addition to bringing forward deliveries, some companies did implement “strategic” price increases on some items. Those companies include Steve Madden Ltd., Nike Inc. and Caleres Inc. At the FFANY and FSNYE June market week earlier this month, energy was high despite global trade tensions over tariff uncertainties. Some brand reps spoke about implementing increases of $2 to $3 in their wholesale pricing, which resulted in a single-digit uptick in retail prices. While that’s not necessarily an issue for premium brands, it is concern for consumers in the lower-income households, where every dollar counts even if they’re shopping at a mass discounter for their shoes.

Shoe prices in May slid 1.6 percent in May as overall inflation remained “tame,” according to data from the Footwear Distributors and Retailers of America (FDRA). But Gary Raines, FDRA’s chief economist, warned that higher prices are coming. He said higher duties could push the average landed cost of footwear imports higher. That could result in higher retail prices for shoes later this year.

For now, U.S. retail sales in May totaled $715.4 billion, down 0.9 percent from April. Retail trade sales were also down 0.9 percent for the month.

“Retail sales, ex auto and gas, grew about 4.6 percent in May versus 2024, demonstrating good growth albeit a modest slowdown from recent months. This will raise questions about consumer sentiment and demand pull-forward in advance of potential tariff related inflation later this year,” said David Silverman, senior director at credit ratings firm Fitch Ratings. “Fitch expects a continued sales slowdown as the year progresses, with declines in discretionary categories for 2025 as consumers reign in goods spending.”

EY-Parthenon senior economist Lydia Boussour expects tariff and policy turbulence will lead to “softness in consumer demand to extend into the summer months and beyond,” noting also that while momentum in retail sales remains robust, it is “rapidly slowing.”

“The early boost from tariff-related buying is fading, with households shifting focus to essentials and value. To keep momentum through the summer, retailers will need to stay agile by adapting their product offerings, fine-tuning pricing strategies, and closely monitoring changing consumer preferences,” said Will Auchincloss, EY-Parthenon’s Americas retail sector leader.

Another potential headwind for footwear firms is the impact of fuel prices on consumer spending. While inflation and price increases due to tariffs are a concern for consumers, also impacting discretionary spending are gas prices at the pump.

Gas prices over the next few months are expected to rise amid the backdrop of the ongoing Israel-Iran conflict. According to AAA, the national average is $3.167 a gallon as of Tuesday, up from a week ago when the average was $3.121 but lower than the year-ago average of $3.446. Gas prices tends to lag crude oil prices.

David Sekera, Morningstar’s chief U.S. market strategist, said the key is how much will oil prices rise, and for how long. “Over time, high and rising oil prices would ripple through the U.S. economy as consumers would have less discretionary spending capacity,” he said, adding that armed conflict in the Middle East tends to send oil prices high due to fears that hostilities will lead to supply disruptions.

Even though there’s the expectation of a pullback on spending, how the consumer will react is anyone’s guess. And if consumers are spending less and taking fewer vacations, a rise in gas prices could even see them change up their staycation plans, where spending tends to focus on eating out at restaurants and at nearby tourist sites. But fewer staycations could free up some cash for discretionary spending, such as for shoes, at least for part of the summer months.

FDRA president Matt Priest told Footwear News that shoes are “recession-proof.” While consumers might choose not to buy a big-ticket item, “they will buy a pair of shoes,” he said.