Shareholders of Skechers USA Inc (NYSE:SKX) are having a rough day after the casual-footwear maker reported disappointing results for the third quarter and lackluster guidance for the next.
The company reported earnings of 42 cents a share on revenue of $942 million, compared to consensus estimates of 48 cents a share on revenue of $954 million. In addition, Skechers guided fourth-quarter revenue between $710 million and $735 million, which falls around 8% under the Street’s projection of $800 million.
Skechers shares reacted to the disappointing report, falling nearly 15% to $19.46 in after-hours trading Thursday.
“Skechers achieved a new third quarter sales record for the period, and the second highest sales quarter in our 24-year history. This also resulted in a new nine-month sales record of $2.8 billion,” began David Weinberg, chief operating officer and chief financial officer. “The quarterly sales increase was primarily the result of 18.3 percent growth in our international wholesale business, which now comprises 40.1 percent of our total sales, or 47.9 percent including international retail. We believe that our international business represents the greatest growth opportunity with many countries continuing to show strong growth in the quarter, including China at just over 50 percent in net sales. To further grow our business internationally, we have transitioned certain international distributors to our subsidiary or joint venture model, including Israel most recently to a joint venture, and we are in the final stages of South Korea moving to a joint venture as well. We are also pleased with the 16.0 percent sales growth in our global retail business with 556 Company-owned Skechers retail stores, including 150 international locations, at quarter end. Including third-party-owned stores, there are now 1,716 Skechers stores worldwide.”
On the ratings front, Skechers stock has been the subject of a number of recent research reports. In a report issued on October 13, Citigroup analyst Corinna Van der Ghinst maintained a Buy rating on SKX, with a price target of $33, which represents a potential upside of 44% from last closing price. Separately, on October 3, Standpoint Research’s Ronnie Moas initiated coverage with a Buy rating on the stock .
According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Corinna Van der Ghinst and Ronnie Moas have a total average return of 25.4% and 5.3% respectively. Ghinst has a success rate of 55% and is ranked #443 out of 4180 analysts, while Moas has a success rate of 69% and is ranked #72.
Overall, 3 research analysts have assigned a Hold rating and 4 research analysts have given a Buy rating to the stock. When considering if perhaps the stock is under or overvalued, the average price target is $28.33 which is 23.5% above where the stock opened today.
SKECHERS USA, Inc. engages in design, development and marketing of lifestyle footwear that appeals to men, women and children of all ages. It operates its business through three segments: Domestic Wholesale Sales, International Wholesale Sales and Retail Sales. The Domestic Wholesale Sales segment distributes footwear through the domestic wholesale distribution channels: department stores, specialty stores, athletic specialty shoe stores and independent retailers, as well as catalog and internet retailers. The International Wholesale Sales segment products are sold throughout the world. Its product offering, diversified domestic and international distribution channels, and targeted multi-channel marketing. The company has two distinct footwear categories: a lifestyle division that includes the charity line BOBS from SKECHERS, and a fitness division that now includes SKECHERS GOrun, SKECHERS GOwalk, and SKECHERS GOplay performance footwear.