We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Skechers Stock Soars 45% in a Year: What's Next for Investors?
Read MoreHide Full Article
Skechers U.S.A., Inc. (SKX - Free Report) has seen a substantial surge in its stock price over the past year, climbing 45.3% and significantly outperforming the Zacks Shoes and Retail Apparel industry’s steep decline of 12.4%. The company's success can be attributed to its investments in omnichannel capabilities, infrastructure and global market expansion, which have driven notable growth in both its wholesale and direct-to-consumer (DTC) segments.
This strategy, coupled with SKX's dedication to product innovation and its focus on expanding in international markets, has enabled the company to outpace the broader Consumer Discretionary sector's 7.8% growth and the S&P 500 Index's 26.7% rise over the said period. Skechers’ stock closed at $70.15 on Monday, trading 6.6% below its 52-week high of $75.09 reached on June 12, 2024.
Technical indicators also support Skechers’ robust performance, as the stock is trading above its 50-day and 200-day moving averages, indicating strong upward momentum and price stability. This technical strength reflects positive market sentiment and confidence in SKX's financial health and prospects.
From a valuation perspective, Skechers’ shares present an attractive opportunity, trading at a discount relative to historical and industry benchmarks. With a forward 12-month price-to-earnings ratio of 15.26, below the five-year median of 15.41 and the industry’s average of 23.15, the stock offers value for investors seeking exposure to the sector. Additionally, SKX’s current Value Score of A reinforces its attractiveness.
Image Source: Zacks Investment Research
Skechers Enhances Market Position With Multi-Brand Growth
Skechers is reinforcing its foothold in the footwear industry through a diverse brand portfolio that spans fashion, athletic, non-athletic and work footwear. This multi-brand approach allows the company to introduce new products without cannibalizing existing lines, thereby effectively catering to a broad customer base. Recently, Skechers has shifted its focus toward comfort-driven footwear and apparel, responding to the growing demand for more relaxed styles.
To bolster its omnichannel capabilities and expand its DTC business, Skechers is investing in global infrastructure, including retail stores, e-commerce platforms and distribution centers. Key digital initiatives include enhanced website features, mobile apps, loyalty programs and upgraded point-of-sale systems to increase customer engagement.
Skechers anticipates continued growth in its wholesale segment throughout fiscal 2024, driven by sustained product demand and strategic investments in logistics and retailer relationships. In the second quarter, it reported a 5.5% year-over-year increase in wholesale sales, reaching $1.13 billion, fueled by a 14% rise in domestic wholesale sales, with strong gains in men’s and kids’ footwear, along with women’s footwear.
The DTC segment also delivered robust performance, with sales increasing 9.2% year over year to $1.03 billion in the second quarter. This growth highlights the success of Skechers' strategies to enhance direct consumer engagement and elevate the retail experience. International DTC sales surged 15.2% year over year while domestic sales experienced a modest 1.4% increase.
SKX’s International Growth Drives Global Market Success
Skechers' international operations play a vital role in its overall growth strategy. The company’s success in global markets highlights its ability to adapt to diverse consumer preferences, seize emerging trends and implement effective regional distribution strategies.
In the second quarter, international sales grew 6.9% year over year, representing 60% of the company's total revenues. This underscores the importance of its global presence. Notably, the EMEA region saw a 13.7% increase in sales year over year while the APAC region and China experienced growth rates of 2.2% and 3.4%, respectively.
Skechers Raises 2024 Outlook, Eyes $10 Billion Sales by 2026
For fiscal 2024, Skechers has raised its sales forecast to the range of $8.88 - $8.98 billion from the previously projected $8.73-$8.88 billion. This reflects an increase from $8 billion reported in fiscal 2023. The company also expects earnings per share (EPS) to be between $4.08 and $4.18 compared with the earlier guided range of $3.95-$4.10, indicating growth from $3.49 reported last year.
Skechers plans to invest between $325 million and $375 million in capital expenditures. This spending will support crucial strategic initiatives, including new store openings, the expansion of omnichannel capabilities and enhancements to distribution infrastructure. The company remains on track to reach its ambitious target of $10 billion in annual sales by 2026.
How are SKX’s Earnings Estimates Holding up?
Analysts have responded positively to Skechers’ prospects, reflected in upward revisions to the Zacks Consensus Estimate for EPS. In the past 30 days, analysts have increased their estimates for the current year by 5 cents. The consensus estimate for earnings is pegged at $4.16 per share. The estimate for the next year has also been raised by 5 cents to $4.83 per share.
Skechers' Rising Costs, Regional Issues- A Key Hurdle
Despite positive factors, rising operating expenses could impact margins and profitability if not managed effectively, especially amid revenue challenges in certain segments and regions. In the second quarter, total operating expenses increased 16% year over year to $977.9 million.
The Zacks Rank #3 (Hold) company also faces significant regulatory and market challenges in key regions such as China and India, which could negatively affect its stock price. Economic instability and reduced consumer demand in China present ongoing risks while new regulatory standards in India have hurt sales and led to inventory issues. These problems have already resulted in flat international wholesale growth and may pressure the company’s future performance if macroeconomic and regulatory challenges continue.
Nonetheless, SKX’s achievements in both DTC and wholesale channels underscore its robust operational performance and extensive market reach. Additionally, favorable market sentiment and increased earnings revisions reflect confidence in Skechers’ continued success and growth potential.
Boot Barn operates as a lifestyle retail chain devoted to western and work-related footwear, apparel and accessories. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Boot Barn’s fiscal 2025 earnings and sales indicates growth of 8.9% and 10.7%, respectively, from the fiscal 2023 reported figures. BOOT has a trailing four-quarter average earnings surprise of 7.1%.
Abercrombie is a specialty retailer of premium, high-quality casual apparel. It has a Zacks Rank #2 (Buy) at present. ANF delivered a 28.9% earnings surprise in the last reported quarter.
The consensus estimate for Abercrombie’s fiscal 2024 earnings and sales indicates growth of 52.4% and 11.3%, respectively, from the fiscal 2023 reported levels. ANF has a trailing four-quarter average earnings surprise of 210.3%.
Steven Madden designs, sources, markets and sells fashion-forward name-brand and private-label footwear. It currently has a Zacks Rank of 2.
The Zacks Consensus Estimate for Steven Madden’s 2024 earnings and sales indicates growth of 6.9% and 12.4%, respectively, from the year-ago actuals. SHOO has a trailing four-quarter average earnings surprise of 9.5%.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Skechers Stock Soars 45% in a Year: What's Next for Investors?
Skechers U.S.A., Inc. (SKX - Free Report) has seen a substantial surge in its stock price over the past year, climbing 45.3% and significantly outperforming the Zacks Shoes and Retail Apparel industry’s steep decline of 12.4%. The company's success can be attributed to its investments in omnichannel capabilities, infrastructure and global market expansion, which have driven notable growth in both its wholesale and direct-to-consumer (DTC) segments.
This strategy, coupled with SKX's dedication to product innovation and its focus on expanding in international markets, has enabled the company to outpace the broader Consumer Discretionary sector's 7.8% growth and the S&P 500 Index's 26.7% rise over the said period. Skechers’ stock closed at $70.15 on Monday, trading 6.6% below its 52-week high of $75.09 reached on June 12, 2024.
Technical indicators also support Skechers’ robust performance, as the stock is trading above its 50-day and 200-day moving averages, indicating strong upward momentum and price stability. This technical strength reflects positive market sentiment and confidence in SKX's financial health and prospects.
From a valuation perspective, Skechers’ shares present an attractive opportunity, trading at a discount relative to historical and industry benchmarks. With a forward 12-month price-to-earnings ratio of 15.26, below the five-year median of 15.41 and the industry’s average of 23.15, the stock offers value for investors seeking exposure to the sector. Additionally, SKX’s current Value Score of A reinforces its attractiveness.
Image Source: Zacks Investment Research
Skechers Enhances Market Position With Multi-Brand Growth
Skechers is reinforcing its foothold in the footwear industry through a diverse brand portfolio that spans fashion, athletic, non-athletic and work footwear. This multi-brand approach allows the company to introduce new products without cannibalizing existing lines, thereby effectively catering to a broad customer base. Recently, Skechers has shifted its focus toward comfort-driven footwear and apparel, responding to the growing demand for more relaxed styles.
To bolster its omnichannel capabilities and expand its DTC business, Skechers is investing in global infrastructure, including retail stores, e-commerce platforms and distribution centers. Key digital initiatives include enhanced website features, mobile apps, loyalty programs and upgraded point-of-sale systems to increase customer engagement.
Skechers anticipates continued growth in its wholesale segment throughout fiscal 2024, driven by sustained product demand and strategic investments in logistics and retailer relationships. In the second quarter, it reported a 5.5% year-over-year increase in wholesale sales, reaching $1.13 billion, fueled by a 14% rise in domestic wholesale sales, with strong gains in men’s and kids’ footwear, along with women’s footwear.
The DTC segment also delivered robust performance, with sales increasing 9.2% year over year to $1.03 billion in the second quarter. This growth highlights the success of Skechers' strategies to enhance direct consumer engagement and elevate the retail experience. International DTC sales surged 15.2% year over year while domestic sales experienced a modest 1.4% increase.
SKX’s International Growth Drives Global Market Success
Skechers' international operations play a vital role in its overall growth strategy. The company’s success in global markets highlights its ability to adapt to diverse consumer preferences, seize emerging trends and implement effective regional distribution strategies.
In the second quarter, international sales grew 6.9% year over year, representing 60% of the company's total revenues. This underscores the importance of its global presence. Notably, the EMEA region saw a 13.7% increase in sales year over year while the APAC region and China experienced growth rates of 2.2% and 3.4%, respectively.
Skechers Raises 2024 Outlook, Eyes $10 Billion Sales by 2026
For fiscal 2024, Skechers has raised its sales forecast to the range of $8.88 - $8.98 billion from the previously projected $8.73-$8.88 billion. This reflects an increase from $8 billion reported in fiscal 2023. The company also expects earnings per share (EPS) to be between $4.08 and $4.18 compared with the earlier guided range of $3.95-$4.10, indicating growth from $3.49 reported last year.
Skechers plans to invest between $325 million and $375 million in capital expenditures. This spending will support crucial strategic initiatives, including new store openings, the expansion of omnichannel capabilities and enhancements to distribution infrastructure. The company remains on track to reach its ambitious target of $10 billion in annual sales by 2026.
How are SKX’s Earnings Estimates Holding up?
Analysts have responded positively to Skechers’ prospects, reflected in upward revisions to the Zacks Consensus Estimate for EPS. In the past 30 days, analysts have increased their estimates for the current year by 5 cents. The consensus estimate for earnings is pegged at $4.16 per share. The estimate for the next year has also been raised by 5 cents to $4.83 per share.
Skechers' Rising Costs, Regional Issues- A Key Hurdle
Despite positive factors, rising operating expenses could impact margins and profitability if not managed effectively, especially amid revenue challenges in certain segments and regions. In the second quarter, total operating expenses increased 16% year over year to $977.9 million.
The Zacks Rank #3 (Hold) company also faces significant regulatory and market challenges in key regions such as China and India, which could negatively affect its stock price. Economic instability and reduced consumer demand in China present ongoing risks while new regulatory standards in India have hurt sales and led to inventory issues. These problems have already resulted in flat international wholesale growth and may pressure the company’s future performance if macroeconomic and regulatory challenges continue.
Nonetheless, SKX’s achievements in both DTC and wholesale channels underscore its robust operational performance and extensive market reach. Additionally, favorable market sentiment and increased earnings revisions reflect confidence in Skechers’ continued success and growth potential.
Key Picks
Some better-ranked stocks are Boot Barn Holdings, Inc. (BOOT - Free Report) , Abercrombie & Fitch Co. (ANF - Free Report) and Steven Madden, Ltd. (SHOO - Free Report) .
Boot Barn operates as a lifestyle retail chain devoted to western and work-related footwear, apparel and accessories. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Boot Barn’s fiscal 2025 earnings and sales indicates growth of 8.9% and 10.7%, respectively, from the fiscal 2023 reported figures. BOOT has a trailing four-quarter average earnings surprise of 7.1%.
Abercrombie is a specialty retailer of premium, high-quality casual apparel. It has a Zacks Rank #2 (Buy) at present. ANF delivered a 28.9% earnings surprise in the last reported quarter.
The consensus estimate for Abercrombie’s fiscal 2024 earnings and sales indicates growth of 52.4% and 11.3%, respectively, from the fiscal 2023 reported levels. ANF has a trailing four-quarter average earnings surprise of 210.3%.
Steven Madden designs, sources, markets and sells fashion-forward name-brand and private-label footwear. It currently has a Zacks Rank of 2.
The Zacks Consensus Estimate for Steven Madden’s 2024 earnings and sales indicates growth of 6.9% and 12.4%, respectively, from the year-ago actuals. SHOO has a trailing four-quarter average earnings surprise of 9.5%.