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Footwear and Apparel Sector Holds $30 Billion Share Buyback Potential, Baird Reports
Summary
An analysis by Baird suggests footwear and apparel companies could execute approximately $30 billion in share repurchases, a move that could drive double-digit earnings growth for firms like Crocs and Wolverine World Wide.
Footwear and apparel companies have the capacity to execute approximately $30 billion in incremental share buybacks, a move that could unlock significant earnings per share (EPS) growth, according to a new analysis from Baird. The investment firm highlighted Crocs (NASDAQ:CROX) and Wolverine World Wide (NYSE:WWW) as firms particularly well-positioned to benefit from increased capital returns.
A Path to Double-Digit EPS Growth
Baird's analysis modeled three theoretical scenarios for accelerated share repurchases, emphasizing a "moderate leverage scenario." Under this model, companies would add 1.0 times incremental leverage, enabling a wave of buybacks representing nearly 20% of the sector's median market capitalization.
The firm projects this could lead to double-digit EPS growth for several companies. Funding for the repurchases would come from a combination of sources:
- Approximately $8 billion in next-twelve-month free cash flow.
- $2 billion to $3 billion from tariff refunds and other one-time proceeds.
- The remainder would be funded through incremental debt.
Key Beneficiaries and Historical Context
AdBaird identified Canada Goose (NYSE:GOOS), Wolverine World Wide, and Crocs as companies that could drive the strongest EPS growth under the moderate leverage scenario, citing their internal cash generation and current valuations. The firm maintains Outperform ratings on both CROX and WWW.
The analysis comes as valuations in the sector remain low while fundamentals are solid, creating a favorable environment for capital return. Baird noted that recent 2026 buyback announcements from Birkenstock (NYSE:BIRK) for $250 million and Levi Strauss (NYSE:LEVI) for $200 million have helped support their respective stock prices.
A Track Record of Returning Cash
Historically, the global brand and retail companies covered by Baird have returned cash to shareholders through buybacks at an average annual rate of 2.5% of their market capitalization since 2007. Leading firms have already made significant reductions to their share counts from peak levels.
According to the report, Crocs has reduced its share count by 40%, Deckers Outdoor (NYSE:DECK) by 39%, and Dick’s Sporting Goods (NYSE:DKS), Nike (NYSE:NKE), and Columbia Sportswear (NASDAQ:COLM) have all reduced their counts by more than 20%.
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