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Bear of the Day: Skechers (SKX)

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Footwear stocks have not been very popular with investors this year. What lies ahead for this footwear maker whose stock has been hammered this year on growth concerns?

Founded in 1992 and headquartered in Manhattan Beach, California, Skechers (SKX - Free Report) designs, develops, markets, and distributes footwear for men, women, and children in the US and overseas Their products are available in more than 160 countries and territories.

Results Disappoint; Stock Plunges

Skechers’ Q3 earnings of $0.42 per share came in below the Zacks Consensus Estimate of $0.46 per share and were down 2.3% year-over-year. Higher expenses and currency headwinds hurt the bottom line.  This was the second consecutive quarterly miss for the company.

Net sales of $942.4 million were also below the Zacks Consensus Estimate of $953 million but they were up 10.1% year-over-year. The quarterly sales increase was mainly due to strong growth in international business, which now comprises 40.1% of total sales. However domestic net sales decreased 3.4% in the quarter.

Domestic e-commerce business grew 13% during the quarter in which the company also launched its app.

Their guidance for the current quarter was also rather downbeat. Shares plunged almost 17% after the report.

Falling Estimates

Analysts have slashed their estimates for the company after disappointing results.  Zacks Consensus Estimates for the current and the next fiscal year are $1.64 per share and $1.73 per share respectively, down from $1.77 and $1.92, 30 days ago. Declining estimates sent the stock to a Zacks Rank #5 (Strong Sell).

The Bottom-Line

Shares are down about 30% year-to-date and analysts remain bearish on the stock. The management also provided a bleak outlook for the current quarter.
Further the Zacks Industry Rank of 233 out of 265 (bottom 12%) also indicates chances of underperformance in the short-term. It is safer for investors to avoid this stock for the time being.

More Stocks to Sell. Now.

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