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Skechers (SKX) Strong on Robust Omni-Channel Initiatives

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Skechers U.S.A., Inc. (SKX - Free Report) is focused on boosting its omni-channel capabilities by expanding its direct-to-consumer business and enhancing its foothold internationally. SKX has been gaining from growth in its domestic and international channels for a while now, driven by wholesale and direct-to-consumer sales. Continued global demand for its Comfort Technology footwear is steadily driving results.

Against a challenging operating backdrop, shares of this footwear leader have gained 5.6% in the past year, thanks to this currently Zacks Rank #2 (Buy) player’s aforesaid strengths. The industry has fallen 6.9% over the same time frame. Moreover, the Zacks Consensus Estimate for Skechers’ 2022 sales and earnings per share (EPS) is currently pegged at $7.11 billion and $2.82 each, suggesting respective growth of 13.2% and 8.9% from the corresponding year-ago reported figures. For the first quarter, the Zacks Consensus Estimate for sales and EPS stands at $1.69 billion and 72 cents, respectively, indicating an increase of 18.5% and 14.3% each from the corresponding prior-year reported numbers.

We note that management projected sales in the range of $7-$7.2 billion for 2022, higher than $6.29 billion recorded in 2021. For 2022, management expects earnings per share in the band of $2.70-$2.90, suggesting an increase from adjusted earnings of $2.59 delivered in 2021. Skechers envisions first-quarter 2022 sales between $1.675 billion and $1.725 billion and earnings in the band of 70-75 cents a share. SKX delivered sales of $1.43 billion and earnings of 63 cents a share.

Detailing Strategies

Skechers boasts a diversified portfolio of brands, including a wide range of fashion, athletic, non-athletic and work footwear at compelling prices. SKX is now focused on comfort-based footwear and apparel products. Management is constantly making strategic investments to improve infrastructure worldwide, primarily e-commerce platforms and distribution centers. SKX’s focus on augmenting the omni-channel capabilities, including digital strength bodes well.

SKX has been directing resources for a while to enhance its digital capabilities, including augmenting website features, mobile application and loyalty program. Investments made to integrate store and digital ecosystems for developing a seamless omni-channel experience are likely to drive greater sales. Skechers updated its point-of-sale systems to better engage with customers, both offline and online. Initiatives, such as “Buy Online, Pick-Up in Store” and “Buy Online, Pickup at Curbside” are worth mentioning.

Skechers continued the rollout of e-commerce sites during the fourth quarter of 2021 along with the launch of platforms in the United Kingdom, India, Germany and Austria. Management plans to expand its e-commerce business to additional markets this year. These investments highlight SKX’s progress as an omni-channel retailer. During the reported quarter, its domestic e-commerce business surged 115% from the same-period level in 2019.

Skechers is also committed toward designing and developing new products. In 2022, management plans to introduce more innovative and comfort technology products, build multi-platform marketing campaigns and launch more e-commerce sites around the world. SKX’s comfort, innovation, style and quality are resonating well with its consumers’ choice.

Additionally, Skechers’ international business remains a significant sales driver. SKX is poised to enhance its global reach in the footwear market through its distribution networks, subsidiaries and joint ventures. In fourth-quarter 2021, international sales increased 34% year over year and contributed 65% to total sales. This upside was driven by strong wholesale and direct-to-consumer businesses owing to leniency in pandemic restrictions.

International wholesale segment sales rose 30%, aided by growth in all channels and brand strength. Also, growth of 123.5% in Distributor sales, accounting for a 61.3% sales rise in Europe and an 8.6% sales improvement in China drove the International Wholesale business. Worldwide comparable same-store sales rose 21%, including 36%, internationally.

Wrapping up, Skechers is likely to continue performing well on the back of such sturdy endeavors.

Eye These Solid Picks Too

Some better-ranked stocks are Gildan Activewear (GIL - Free Report) , Columbia Sportswear (COLM - Free Report) and Delta Apparel (DLA - Free Report) .

Gildan Activewear, which manufactures and sells various apparel products, sports a Zacks Rank #1 (Strong Buy) at present. Shares of Gildan Activewear have increased 25.3% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Gildan Activewear’s 2022 sales and EPS suggests growth of 8.9% and 3.3%, respectively, from the corresponding year-ago reported figures. GIL has a trailing four-quarter earnings surprise of 66.6%, on average.

Columbia Sportswear currently has a Zacks Rank #2 (Buy). COLM has a trailing four-quarter earnings surprise of 203.3%, on average. Shares of COLM have increased 2.5% in the past year.

The Zacks Consensus Estimate for Columbia Sportswear's current financial-year sales suggests growth of 17.7% and the same for EPS indicates growth of 8.1% from the respective year-ago period's reported figures.

Delta Apparel currently carries a Zacks Rank of 2. DLA has a trailing four-quarter earnings surprise of 21.3%, on average. Shares of DLA have increased 11.1% in the past year.

The Zacks Consensus Estimate for Delta Apparel's current financial year’s sales and earnings per share suggests growth of 12.3% and 19.1%, respectively, from the corresponding year-ago period's reported numbers.

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