Skechers U.S.A., Inc.’s (SKX Quick QuoteSKX - Free Report) strategic focus on multi-brand offerings, digital enhancement, and global expansion continues to drive its success in a competitive industry. The company's well-executed growth strategies, particularly in the direct-to-consumer (DTC) and international segments, not only reflect its ability to adapt to changing consumer trends but also position it strongly for sustained growth.

With planned investments in new stores, omnichannel capabilities and a second distribution center in China, Skechers is well-equipped to meet its ambitious sales targets and enhance shareholder value. As SKX moves forward, its robust financial position and strategic initiatives indicate a promising trajectory toward achieving its financial and operational goals in 2024 and beyond.

This Zacks Rank #1 (Strongly Buy) stock has outpaced the Zacks Shoes and Retail Apparel industry over the past six months. In the said period, shares of the company have gained 33.7% against the industry’s decline of 11.7%.

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Let’s Dig Deeper

Skechers is expanding its diverse brand portfolio, which includes various styles ranging from fashion and athletic to non-athletic and work footwear, offered at competitive prices. The company's strategy of simultaneously managing multiple brands allows it to introduce products without overshadowing existing ones, thereby attracting a broader customer base.

SKX is enhancing its digital footprint by upgrading website features, mobile applications and loyalty programs. The company is focused on integrating its store and digital ecosystems to create a seamless shopping experience that can drive higher sales. Updates to point-of-sale systems improve customer interactions both online and offline.

The wholesale segment of Skechers is poised for continued growth through 2024, underpinned by consistent product demand and strategic enhancements in logistics and retailer relationships. In the first quarter of 2024, wholesale revenues grew 9.8% year over year to $1.42 billion, with increases across all regions, driven by improved order management and customer satisfaction.

The company’s DTC segment saw a 17.3% year over year increase in sales, reaching $829.9 million in the first quarter of 2024. This growth underscores the strong consumer demand for Skechers' products, and is evident across both brick-and-mortar and e-commerce channels. Notably, international DTC sales jumped 24.1%, while domestic sales increased 8%. The segment’s success is bolstered by effective marketing strategies and continuous product innovation, particularly in comfort technology.

International Business Acts as Key Factor

International operations have been acting as a key growth driver for Skechers, with a 15.2% increase in international sales in the first quarter of 2024, accounting for 64.5% of the total sales. The APAC region stood out with a 15.9% increase, showcasing SKX’s ability to adapt to diverse consumer preferences and capitalize on emerging market trends.

In its push for expansion, Skechers opened 52 company-owned stores in the first quarter, focusing on international markets like China. Despite this expansion, the company strategically closed 29 stores, optimizing its retail footprint. The plan includes opening an additional 155-170 stores globally throughout 2024, emphasizing the integration of innovative comfort technologies and targeted marketing to enhance the retail experience.

Optimistic Outlook

For fiscal 2024, Skechers projects sales between $8.73 billion and $8.88 billion, an increase from the previously mentioned $8.6-$8.8 billion. The projection suggests a significant rise from the $8 billion reported in 2023. The company anticipates earnings per share between $3.95 and $4.10, indicating growth from the $3.49 reported in the previous year.

SKX plans to allocate $325-$375 million in capital expenditure for 2024, targeting strategic areas, such as store openings, omnichannel expansion and distribution infrastructure improvement. The company remains optimistic about achieving its goal of $10 billion in annual sales by 2026.

Stocks to Consider

A few better-ranked stocks are American Eagle Outfitters Inc. (AEO Quick QuoteAEO - Free Report) , Abercrombie & Fitch Co. (ANF Quick QuoteANF - Free Report) and The Gap, Inc. .

American Eagle Outfitters is a specialty retailer of casual apparel, accessories and footwear. The company sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for American Eagle Outfitters’ current fiscal-year earnings and sales indicates growth of 12.5% and 3.3% from the year-ago period’s reported figures. AEO has a trailing four-quarter average earnings surprise of 22.7%.

Abercrombie & Fitch is a specialty retailer of premium, high-quality casual apparel. The company currently flaunts a Zacks Rank of 1. ANF has a trailing four-quarter average earnings surprise of 715.6%.

The Zacks Consensus Estimate for Abercrombie & Fitch’s current fiscal-year earnings and sales indicates growth of 19.1% and 5.6% from the year-ago period’s reported figures.

The Gap is a premier international specialty retailer offering a diverse range of clothing, accessories and personal care products. The company has a Zacks Rank of 2 (Buy) at present.

The Zacks Consensus Estimate for The Gap’s current fiscal-year earnings and sales indicates declines of 0.3% and 4.9% from the year-ago period’s reported figures. GPS has a trailing four-quarter average earnings surprise of 180.9%.