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Skechers Gains 26% in a Year on Strategic Initiatives: An Opportunity?
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Skechers U.S.A., Inc. (SKX - Free Report) shares have surged 26% over the past year, significantly outperforming the Zacks Shoes and Retail Apparel industry’s decline of 11.6%. The company responds to shifting consumer preferences by investing in omnichannel capabilities and infrastructure, and expanding its global market reach, leading to substantial growth in both its wholesale and direct-to-consumer (DTC) segments.
This approach, along with SKX’s commitment to innovation in product development and a keen focus on international market expansion, has helped it outperform the broader Consumer Discretionary sector’s growth of 19.5% in the past year. Closing at $62.29 on Friday, Sketchers’ stock is currently trading 17% below its 52-week high of $75.09 attained on June 12, 2024.
Image Source: Zacks Investment Research
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 13.09, below the five-year median of 15.37 and the industry’s average of 25.31, the stock offers compelling 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’ Multi-Brand Strategy Drives Growth
Skechers continues to strengthen its portfolio with a diverse range of fashion, athletic, non-athletic and work footwear, all offered at competitive prices. The company’s multi-brand strategy allows it to introduce new products without affecting its existing brands while expanding its reach to a broader consumer base.
The company is also investing in its global infrastructure, focusing on retail stores, e-commerce platforms and distribution centers. These efforts are aimed at enhancing omnichannel capabilities and growing the DTC business. Skechers has emphasized creating a seamless shopping experience for customers, integrating physical stores with digital platforms and improving loyalty programs.
Skechers’ wholesale segment has shown strong growth, driven by strategic investments in logistics and retailer relationships. In the third quarter of 2024, wholesale sales rose 20.6%, reaching $1.42 billion. This was driven by a 26% increase in domestic sales and an 18% rise internationally. Notable growth was seen in the EMEA region, with a 30.9% year-over-year increase.
The DTC segment also performed well in the third quarter, with sales rising 9.6% to $931.7 million. International DTC sales increased 14.4%, with significant growth of 28% in the EMEA region and a 3.7% rise in domestic sales.
Skechers' strong consumer appeal, particularly for its comfort technology, is reflected in its robust performance across both brick-and-mortar stores and online channels. The company's international business has also been a key driver of growth, with international sales up 16.4% year over year, accounting for 61% of its total sales, underlining the significance of its global footprint.
SKX Raises 2024 Outlook, Targets $10B Sales by 2026
Skechers raised its fiscal 2024 outlook, projecting sales between $8.93 billion and $8.98 billion compared with the previously estimated $8.88-$8.98 billion. This represents growth from $8 billion reported in fiscal 2023. The company has also increased its earnings per share (EPS) forecast to $4.20 and $4.25 from the previously stated $4.08-$4.18, suggesting solid growth from the $3.49 EPS in the prior year.
Skechers is set to invest $375-$400 million in capital expenditure to support key strategic initiatives, such as store openings, omnichannel expansion and improving its distribution infrastructure. These investments align with its goal of reaching $10 billion in annual sales by 2026.
Estimate Revision Favoring Skechers Stock
Analysts have responded positively to Skecher’s prospects, reflected in upward revisions in the Zacks Consensus Estimate for EPS. In the past 30 days, analysts have increased their estimates for the current financial year by 7 cents. The consensus estimate for earnings is pegged at $4.21 per share.
The consensus estimate for the next financial year has also been raised 4 cents to $4.85 per share. The Zacks Consensus Estimate for the current and next year’s sales is pegged at $8.97 billion and $9.82 billion, indicating year-over-year growth of 12.2% and 9.4%, respectively.
Investors can consider betting on Skechers stock due to its strategic alignment with evolving consumer demands and robust growth across multiple channels. The company’s omnichannel and international expansion, coupled with its diverse product line-up, has driven substantial growth in both wholesale and direct-to-consumer segments.
Skechers’ multi-brand strategy, which includes a strong focus on comfort technology, broadens its consumer appeal while minimizing overlap between brands, helping it capture a wide market share. Valuation-wise, SKX offers an attractive entry point, with shares trading at a discount compared to the industry. Upward revisions in earnings estimates further reinforce its growth potential, making it an appealing choice for investors seeking stability and expansion within the footwear industry. The company currently has a Zacks Rank #2 (Buy).
Gildan is a manufacturer and marketer of premium quality branded basic activewear for sale principally in the wholesale imprinted activewear segment of the North American apparel market. It currently sports a Zacks Rank #2. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
The Zacks Consensus Estimate for Gildan’s current financial year earnings and sales indicates growth of 15.6% and 1.5%, respectively, from the 2023’s reported figures. GIL has a trailing four-quarter average earnings surprise of 5.4%.
Abercrombie is a specialty retailer of premium, high-quality casual apparel. It has a Zacks Rank #2 at present. ANF delivered a 16.8% earnings surprise in the last reported quarter.
The consensus estimate for Abercrombie’s fiscal 2025 earnings and sales indicates growth of 63.4% and 13%, respectively, from the fiscal 2024 reported levels. ANF has a trailing four-quarter average earnings surprise of 28%.
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 8.2% and 12.7%, respectively, from the year-ago actuals. SHOO has a trailing four-quarter average earnings surprise of 9.8%.
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Skechers Gains 26% in a Year on Strategic Initiatives: An Opportunity?
Skechers U.S.A., Inc. (SKX - Free Report) shares have surged 26% over the past year, significantly outperforming the Zacks Shoes and Retail Apparel industry’s decline of 11.6%. The company responds to shifting consumer preferences by investing in omnichannel capabilities and infrastructure, and expanding its global market reach, leading to substantial growth in both its wholesale and direct-to-consumer (DTC) segments.
This approach, along with SKX’s commitment to innovation in product development and a keen focus on international market expansion, has helped it outperform the broader Consumer Discretionary sector’s growth of 19.5% in the past year. Closing at $62.29 on Friday, Sketchers’ stock is currently trading 17% below its 52-week high of $75.09 attained on June 12, 2024.
Image Source: Zacks Investment Research
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 13.09, below the five-year median of 15.37 and the industry’s average of 25.31, the stock offers compelling 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’ Multi-Brand Strategy Drives Growth
Skechers continues to strengthen its portfolio with a diverse range of fashion, athletic, non-athletic and work footwear, all offered at competitive prices. The company’s multi-brand strategy allows it to introduce new products without affecting its existing brands while expanding its reach to a broader consumer base.
The company is also investing in its global infrastructure, focusing on retail stores, e-commerce platforms and distribution centers. These efforts are aimed at enhancing omnichannel capabilities and growing the DTC business. Skechers has emphasized creating a seamless shopping experience for customers, integrating physical stores with digital platforms and improving loyalty programs.
Skechers’ wholesale segment has shown strong growth, driven by strategic investments in logistics and retailer relationships. In the third quarter of 2024, wholesale sales rose 20.6%, reaching $1.42 billion. This was driven by a 26% increase in domestic sales and an 18% rise internationally. Notable growth was seen in the EMEA region, with a 30.9% year-over-year increase.
The DTC segment also performed well in the third quarter, with sales rising 9.6% to $931.7 million. International DTC sales increased 14.4%, with significant growth of 28% in the EMEA region and a 3.7% rise in domestic sales.
Skechers' strong consumer appeal, particularly for its comfort technology, is reflected in its robust performance across both brick-and-mortar stores and online channels. The company's international business has also been a key driver of growth, with international sales up 16.4% year over year, accounting for 61% of its total sales, underlining the significance of its global footprint.
SKX Raises 2024 Outlook, Targets $10B Sales by 2026
Skechers raised its fiscal 2024 outlook, projecting sales between $8.93 billion and $8.98 billion compared with the previously estimated $8.88-$8.98 billion. This represents growth from $8 billion reported in fiscal 2023. The company has also increased its earnings per share (EPS) forecast to $4.20 and $4.25 from the previously stated $4.08-$4.18, suggesting solid growth from the $3.49 EPS in the prior year.
Skechers is set to invest $375-$400 million in capital expenditure to support key strategic initiatives, such as store openings, omnichannel expansion and improving its distribution infrastructure. These investments align with its goal of reaching $10 billion in annual sales by 2026.
Estimate Revision Favoring Skechers Stock
Analysts have responded positively to Skecher’s prospects, reflected in upward revisions in the Zacks Consensus Estimate for EPS. In the past 30 days, analysts have increased their estimates for the current financial year by 7 cents. The consensus estimate for earnings is pegged at $4.21 per share.
The consensus estimate for the next financial year has also been raised 4 cents to $4.85 per share. The Zacks Consensus Estimate for the current and next year’s sales is pegged at $8.97 billion and $9.82 billion, indicating year-over-year growth of 12.2% and 9.4%, respectively.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Image Source: Zacks Investment Research
Conclusion
Investors can consider betting on Skechers stock due to its strategic alignment with evolving consumer demands and robust growth across multiple channels. The company’s omnichannel and international expansion, coupled with its diverse product line-up, has driven substantial growth in both wholesale and direct-to-consumer segments.
Skechers’ multi-brand strategy, which includes a strong focus on comfort technology, broadens its consumer appeal while minimizing overlap between brands, helping it capture a wide market share. Valuation-wise, SKX offers an attractive entry point, with shares trading at a discount compared to the industry. Upward revisions in earnings estimates further reinforce its growth potential, making it an appealing choice for investors seeking stability and expansion within the footwear industry. The company currently has a Zacks Rank #2 (Buy).
Other Key Picks
Some other top-ranked stocks are Gildan Activewear Inc. (GIL - Free Report) , Abercrombie & Fitch Co. (ANF - Free Report) and Steven Madden, Ltd. (SHOO - Free Report) .
Gildan is a manufacturer and marketer of premium quality branded basic activewear for sale principally in the wholesale imprinted activewear segment of the North American apparel market. It currently sports a Zacks Rank #2. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
The Zacks Consensus Estimate for Gildan’s current financial year earnings and sales indicates growth of 15.6% and 1.5%, respectively, from the 2023’s reported figures. GIL has a trailing four-quarter average earnings surprise of 5.4%.
Abercrombie is a specialty retailer of premium, high-quality casual apparel. It has a Zacks Rank #2 at present. ANF delivered a 16.8% earnings surprise in the last reported quarter.
The consensus estimate for Abercrombie’s fiscal 2025 earnings and sales indicates growth of 63.4% and 13%, respectively, from the fiscal 2024 reported levels. ANF has a trailing four-quarter average earnings surprise of 28%.
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 8.2% and 12.7%, respectively, from the year-ago actuals. SHOO has a trailing four-quarter average earnings surprise of 9.8%.