Skechers Dips 4.6% On 4Q Profit Miss

Shares of Skechers USA dropped 4.6% in Thursday’s extended trading session after the footwear company’s fourth-quarter earnings missed the Street’s estimates.

Skechers’ (SKX) 4Q adjusted earnings of $0.24 per share fell short of analysts’ expectations of $0.30 per share and plunged 38.5% year-over-year due to lower sales and higher selling, general & administrative expenses.

Its revenues of $1.32 billion came in marginally ahead of the consensus estimates of $1.31 billion, but decreased by 0.5% year-over-year, as domestic sales declined by 2.8% partially offset by a 1.1% increase in international sales.

The company’s Domestic Wholesale sales increased 1.2%, while International Wholesale sales increased 2.5% in the quarter.

COO David Weinberg said, “We saw our athletic lifestyle, walking and work footwear products for men and women drive Domestic Wholesale growth.” He added that the International Wholesale business growth was “led by a 29.7% increase in China, as well as double-digit increases in Chile, United Kingdom, Germany and Spain, among others.”

Skechers’ Direct-to-Consumer sales declined 6.4% in 4Q, due to the temporary store closures and reduced operating hours. Nevertheless, the company witnessed 142.7% growth in its domestic e-commerce sales. (See Skechers stock analysis on TipRanks)

Following the results, Berenberg Bank analyst Brian McNamara maintained a Buy rating and a price target of $52 (39.9% upside potential) on the stock. In a note to investors, the analyst said that Skechers posted “an impressive result in our view, as the company respectably lapped a record Q4 a year ago.” He added, “With ecommerce representing ~20% of total sales in Q4, we believe SKX has made three years’ worth of progress in the channel in 2020.”

Overall, the Street has a Moderate Buy consensus rating on Skechers based on 4 Buys and 2 Holds. The average analyst price target of $44 implies upside potential of about 18.3% to current levels. Shares are down by about 1.9% in the last year.

Furthermore, TipRanks data shows that financial blogger opinions are 90% Bullish, compared to a sector average of 71%.

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