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Skechers U.S.A. (SKX)
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Skechers USA (SKX - Analyst Report) posted disappointing second-quarter 2011 results. Weak top-line performance coupled with the company's aggressive inventory offloading and reserve for additional product, weighed upon its bottom-line results. The company sold 2 million pairs of Shape-ups for a loss of $21 million to right-size its inventory, and
registered a $4.4 million reserve for additional products.
Total net sales for the quarter dropped 14% due to a 32% fall in domestic wholesale business. Management expects softness in the domestic wholesale business to continue for the remaining year.
We believe that excess toning of inventory will continue to weigh upon average selling prices and margins, and in turn the overall sales and profitability. We have a long-term Underperform recommendation on the stock. Our target price of $15.00, 36.6X 2011 EPS, reflects this view.
Skechers U.S.A. (SKX) : FULL ANALYST REPORT
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