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Skechers (SKX) Focused on Strategic Growth: Time to Hold?
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With greater emphasis on the new line of products, cost containment efforts, inventory management, global distribution platform and solid backlogs, Skechers U.S.A., Inc. (SKX - Free Report) is well positioned to sustain its growth momentum. Also, the company continues to offer a diversified portfolio of brands, including a wide range of fashion, athletic, non-athletic and work footwear, at compelling prices.
We believe that Skechers’ multi-brand strategy will enable the company to roll out new products, without cannibalizing its existing brands. This will also aid it in expanding the targeted demographic profile of customers.
Alongside, management remains focused on product innovation, additional store openings and increasing distribution channels, by entering into international distribution agreements, in order to boost sales and profitability. Moreover, Skechers’ international business remains a considerable sales growth driver for the company, with Europe being the significant market outside the U.S.
In addition, Skechers is poised to reinforce its global footprint in the footwear market through its distribution networks, subsidiaries and joint ventures. Further, the company is transitioning international distributors to subsidiary or joint-venture model.
However, back-to-back earnings and revenues misses have been weighing upon investors’ sentiments. In third-quarter 2016, foreign currency headwinds, rise in general and administrative expenses and higher effective tax rate, hurt the bottom line. It should also be noted that the rate of sales growth in the third and second quarters have diminished significantly from the first quarter. Moreover, the company’s domestic wholesale business remained a drag in the quarter.
Further, these factors compelled management to issue a bleak outlook for the final quarter of 2016. It projects fourth-quarter 2016 net sales in the band of $710–$735 million.
The lower-than-expected results, along with a soft projection, triggered a downward trend in the estimates as well. Over the past 90 days, the Zacks Consensus Estimate decreased 8.5% to $1.62 for 2016 and 10.9% to $1.71 for 2017. Also, the Zacks Consensus Estimate for fourth-quarter 2016 has slumped 57.1% to 9 cents, over the same time frame.
Nonetheless, we noticed that in the past 30 days, the Zacks Consensus Estimate has inched up by a penny for the fourth quarter as well as 2016. Moreover, the Zacks Consensus Estimate for 2017 has climbed by three cents.
Bottom Line
We observed that shares of Skechers have rose 7.4% in the past three months, comfortably outperforming the Zacks categorized Shoes and Retail Apparel industry that declined 1.2%. Further, this Zacks Rank #3 (Hold) stock exhibits a VGM Score of “B”, with a long-term earnings growth rate of 9%.
Key Picks
Some better-ranked stocks in the same industry include Francesca's Holdings Corporation , Caleres, Inc. (CAL - Free Report) and Deckers Outdoor Corporation (DECK - Free Report) .
Francesca's Holdings, with a long-term earnings growth rate of 13.8%, has surged 63.7% in the past six months. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Caleres, which carries a Zacks Rank #2 (Buy), has a long-term earnings growth rate of 11%. The stock has gained 38.3% in the past six months.
Deckers, a Zacks Rank #2 stock, has climbed 15.7% year to date. It has a long-term earnings growth rate of 9%.
Zacks' Top Investment Ideas for Long-Term Profit
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Skechers (SKX) Focused on Strategic Growth: Time to Hold?
With greater emphasis on the new line of products, cost containment efforts, inventory management, global distribution platform and solid backlogs, Skechers U.S.A., Inc. (SKX - Free Report) is well positioned to sustain its growth momentum. Also, the company continues to offer a diversified portfolio of brands, including a wide range of fashion, athletic, non-athletic and work footwear, at compelling prices.
We believe that Skechers’ multi-brand strategy will enable the company to roll out new products, without cannibalizing its existing brands. This will also aid it in expanding the targeted demographic profile of customers.
Alongside, management remains focused on product innovation, additional store openings and increasing distribution channels, by entering into international distribution agreements, in order to boost sales and profitability. Moreover, Skechers’ international business remains a considerable sales growth driver for the company, with Europe being the significant market outside the U.S.
In addition, Skechers is poised to reinforce its global footprint in the footwear market through its distribution networks, subsidiaries and joint ventures. Further, the company is transitioning international distributors to subsidiary or joint-venture model.
SKECHERS USA-A Price and Consensus
SKECHERS USA-A Price and Consensus | SKECHERS USA-A Quote
However, back-to-back earnings and revenues misses have been weighing upon investors’ sentiments. In third-quarter 2016, foreign currency headwinds, rise in general and administrative expenses and higher effective tax rate, hurt the bottom line. It should also be noted that the rate of sales growth in the third and second quarters have diminished significantly from the first quarter. Moreover, the company’s domestic wholesale business remained a drag in the quarter.
Further, these factors compelled management to issue a bleak outlook for the final quarter of 2016. It projects fourth-quarter 2016 net sales in the band of $710–$735 million.
The lower-than-expected results, along with a soft projection, triggered a downward trend in the estimates as well. Over the past 90 days, the Zacks Consensus Estimate decreased 8.5% to $1.62 for 2016 and 10.9% to $1.71 for 2017. Also, the Zacks Consensus Estimate for fourth-quarter 2016 has slumped 57.1% to 9 cents, over the same time frame.
Nonetheless, we noticed that in the past 30 days, the Zacks Consensus Estimate has inched up by a penny for the fourth quarter as well as 2016. Moreover, the Zacks Consensus Estimate for 2017 has climbed by three cents.
Bottom Line
We observed that shares of Skechers have rose 7.4% in the past three months, comfortably outperforming the Zacks categorized Shoes and Retail Apparel industry that declined 1.2%. Further, this Zacks Rank #3 (Hold) stock exhibits a VGM Score of “B”, with a long-term earnings growth rate of 9%.
Key Picks
Some better-ranked stocks in the same industry include Francesca's Holdings Corporation , Caleres, Inc. (CAL - Free Report) and Deckers Outdoor Corporation (DECK - Free Report) .
Francesca's Holdings, with a long-term earnings growth rate of 13.8%, has surged 63.7% in the past six months. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Caleres, which carries a Zacks Rank #2 (Buy), has a long-term earnings growth rate of 11%. The stock has gained 38.3% in the past six months.
Deckers, a Zacks Rank #2 stock, has climbed 15.7% year to date. It has a long-term earnings growth rate of 9%.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>