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Consumer Strength Fuels Record Results for These 2 Companies
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We’ve got a stacked earnings schedule this week, with nearly every pocket of the economy being represented.
Among the bunch are two consumer-facing companies – Skechers (SKX - Free Report) and Deckers Outdoors (DECK - Free Report) . DECK shares have been notably strong in 2024, whereas SKX shares have lagged relative to the S&P 500.
Consumer strength has led to robust quarterly results from the pair, with each exceeding Zacks Consensus EPS estimates throughout 2024. In addition, both sport favorable Zacks Ranks, reflecting upward trending estimate revisions among analysts.
With their results looming, let’s take a closer look at results from another consumer-facing company, Nike (NKE - Free Report) , as a light guide.
Nike Forced to Recalibrate Product Portfolio
Nike shares have faced notable pressure following the release of its quarterly results in 2024. Down 30% YTD, the stock has plunged following back-to-back releases. Concerning the knee-jerk reaction in its latest print, the company updated its FY25 outlook following challenges faced throughout the quarter.
Analysts downwardly revised their earnings expectations accordingly following the lowered outlook, landing the stock into an unfavorable Zacks Rank #5 (Strong Sell).
Image Source: Zacks Investment Research
Still, it doesn’t appear that consumer weakness has been driving the retail giant's soft results but rather a reflection of consumers’ shifting preferences. CFO Matt Friend stated, ‘Although our digital business has grown at an approximately 26% CAGR since Fiscal 19, we missed our Q4 plan on softer traffic, higher promotions, and lower sales of certain classic footwear franchises.’
He continued, ‘Therefore, despite continued marketplace demand, we are advancing our timelines to tighten total supply of certain classic footwear franchises – at different paces, across different channels, around the world.’
The company remains focused on rebalancing its product portfolio accordingly, hoping to re-capture consumers through innovation. For example, Nike noticed an opportunity in retro-styled running and moved quickly to add it to its Y2K portfolio. So far, the results have been positive, with Nike now expecting to triple its retro-running business in FY25.
Overall, consumer weakness hasn’t driven the company’s soft quarterly results, but rather shifting preferences. Below is a chart illustrating the company’s revenue on a quarterly basis.
Image Source: Zacks Investment Research
Skechers Posts Record Quarterly Sales
Earnings expectations for Skechers have remained stable over recent months, with the $0.92 per share expected suggesting a 6% decline from the year-ago period. Revenue expectations have actually ticked 0.5% higher to $2.2 billion, reflecting a 10% increase year over year.
The company posted record quarterly sales in its latest release, with direct-to-consumer sales also climbing an impressive 17%.
Image Source: Zacks Investment Research
The CFO’s comments confirmed the brand momentum: 'Skechers continues to reach new milestones in expanding our global footprint. Achieving another sales record and exceptional earnings is a testament to the strength of our brand and our ability to meet consumers’ needs.’
Deckers Outdoor Enjoys Robust Growth
The outlook for DECK’s upcoming release has shifted notably bright, with the $3.52 Zacks Consensus EPS estimate up 22% over the last several months and suggesting a 46% climb year-over-year. Like SKX, brand momentum has led to robust results for the company, including record sales for FY24.
Image Source: Zacks Investment Research
CEO Dave Powers, on the results, ‘HOKA and UGG remain two of the most admired and well-positioned brands in the marketplace, each with a robust innovation product pipeline designed to win with global consumers. Looking forward, our talented teams are highly motivated to continue driving towards the long-term opportunities of these iconic brands.’
Image Source: Zacks Investment Research
Putting Everything Together
While Nike’s (NKE - Free Report) quarterly results brought some scrutiny on the current state of the consumer, the soft results appear to be more of a reflection of shifting consumer preferences, with the company now recalibrating its product portfolio.
However, both Skechers (SKX - Free Report) and Deckers Outdoor (DECK - Free Report) have seen positive tailwinds from a resilient consumer, with their brands appealing nicely. In addition, both have enjoyed positive earnings estimate revisions, providing fuel for shares to move higher.
Both DECK and SKX report on Thursday, July 25, after the market’s close.
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Consumer Strength Fuels Record Results for These 2 Companies
We’ve got a stacked earnings schedule this week, with nearly every pocket of the economy being represented.
Among the bunch are two consumer-facing companies – Skechers (SKX - Free Report) and Deckers Outdoors (DECK - Free Report) . DECK shares have been notably strong in 2024, whereas SKX shares have lagged relative to the S&P 500.
Consumer strength has led to robust quarterly results from the pair, with each exceeding Zacks Consensus EPS estimates throughout 2024. In addition, both sport favorable Zacks Ranks, reflecting upward trending estimate revisions among analysts.
With their results looming, let’s take a closer look at results from another consumer-facing company, Nike (NKE - Free Report) , as a light guide.
Nike Forced to Recalibrate Product Portfolio
Nike shares have faced notable pressure following the release of its quarterly results in 2024. Down 30% YTD, the stock has plunged following back-to-back releases. Concerning the knee-jerk reaction in its latest print, the company updated its FY25 outlook following challenges faced throughout the quarter.
Analysts downwardly revised their earnings expectations accordingly following the lowered outlook, landing the stock into an unfavorable Zacks Rank #5 (Strong Sell).
Image Source: Zacks Investment Research
Still, it doesn’t appear that consumer weakness has been driving the retail giant's soft results but rather a reflection of consumers’ shifting preferences. CFO Matt Friend stated, ‘Although our digital business has grown at an approximately 26% CAGR since Fiscal 19, we missed our Q4 plan on softer traffic, higher promotions, and lower sales of certain classic footwear franchises.’
He continued, ‘Therefore, despite continued marketplace demand, we are advancing our timelines to tighten total supply of certain classic footwear franchises – at different paces, across different channels, around the world.’
The company remains focused on rebalancing its product portfolio accordingly, hoping to re-capture consumers through innovation. For example, Nike noticed an opportunity in retro-styled running and moved quickly to add it to its Y2K portfolio. So far, the results have been positive, with Nike now expecting to triple its retro-running business in FY25.
Overall, consumer weakness hasn’t driven the company’s soft quarterly results, but rather shifting preferences. Below is a chart illustrating the company’s revenue on a quarterly basis.
Image Source: Zacks Investment Research
Skechers Posts Record Quarterly Sales
Earnings expectations for Skechers have remained stable over recent months, with the $0.92 per share expected suggesting a 6% decline from the year-ago period. Revenue expectations have actually ticked 0.5% higher to $2.2 billion, reflecting a 10% increase year over year.
The company posted record quarterly sales in its latest release, with direct-to-consumer sales also climbing an impressive 17%.
Image Source: Zacks Investment Research
The CFO’s comments confirmed the brand momentum: 'Skechers continues to reach new milestones in expanding our global footprint. Achieving another sales record and exceptional earnings is a testament to the strength of our brand and our ability to meet consumers’ needs.’
Deckers Outdoor Enjoys Robust Growth
The outlook for DECK’s upcoming release has shifted notably bright, with the $3.52 Zacks Consensus EPS estimate up 22% over the last several months and suggesting a 46% climb year-over-year. Like SKX, brand momentum has led to robust results for the company, including record sales for FY24.
Image Source: Zacks Investment Research
CEO Dave Powers, on the results, ‘HOKA and UGG remain two of the most admired and well-positioned brands in the marketplace, each with a robust innovation product pipeline designed to win with global consumers. Looking forward, our talented teams are highly motivated to continue driving towards the long-term opportunities of these iconic brands.’
Image Source: Zacks Investment Research
Putting Everything Together
While Nike’s (NKE - Free Report) quarterly results brought some scrutiny on the current state of the consumer, the soft results appear to be more of a reflection of shifting consumer preferences, with the company now recalibrating its product portfolio.
However, both Skechers (SKX - Free Report) and Deckers Outdoor (DECK - Free Report) have seen positive tailwinds from a resilient consumer, with their brands appealing nicely. In addition, both have enjoyed positive earnings estimate revisions, providing fuel for shares to move higher.
Both DECK and SKX report on Thursday, July 25, after the market’s close.