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Skechers U.S.A., Inc. (SKX - Free Report) reported fourth-quarter 2021 results with both the top and the bottom line outpacing the Zacks Consensus Estimate and improving year over year. SKX gained from growth across domestic and international channels, driven by strong wholesale and direct-to-consumer sales.
Skechers’ focus on offering signature comfort technology in its products as well as gains from global growth strategy has been yielding for a while. 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 is committed to accomplish sales of $10 billion by 2026.
Shares of this well-known footwear company have jumped 6.8% in after-hours trading on Feb 3. The currently Zacks Rank #3 (Hold) stock has increased 11.9% in the past year compared with the industry's 2.8% growth.
Let’s Analyze the Results
Skechers posted fourth-quarter adjusted earnings of 43 cents a share, beating the Zacks Consensus Estimate of 33 cents. Also, the bottom-line figure surged 79.2% from 24 cents earned in the year-earlier quarter.
SKX generated sales of $1,647.9 million that came above the Zacks Consensus Estimate of $1,540 million. The top line also jumped 24.4% year over year owing to a 9.8% increase in domestic sales and a 34% rise in international sales. On constant-currency basis, total sales grew 24.5%. Management highlighted that this was the second highest quarterly sales in Skechers' history.
Higher sales across the wholesale and direct-to-consumer channels contributed to the upside. Moreover, sales increased in all segments with increases in Domestic Wholesale of 4.6%, International Wholesale of 30.1% and Direct-to-Consumer (DTC) of 30.3%.
Image Source: Zacks Investment Research
While increased unit sales volume and average selling prices aided the Domestic Wholesale business, growth of 123.5% in Distributor sales, a 61.3% sales rise in Europe and an 8.6% sales improvement in China drove the International Wholesale business. DTC sales were driven by strength across the domestic and international retail stores owing to higher average selling price on fewer promotions and elevated prices. Also, DTC comparable same-store sales grew 21.1%, including a rise of 15.2%, domestically and 35.5%, internationally. Worldwide comparable same-store sales rose 21%, including 15%, domestically and 36%, internationally.
The 17% progress in the domestic direct-to-consumer business was owing to a 24% gain in its brick-and-mortar stores, somewhat offset by a 12% decline in domestic e-commerce. However, its domestic e-commerce business surged 115% from the same-period level in 2019.
Skechers continued the rollout of e-commerce sites during the reported quarter along with the launch of platforms in the United Kingdom, India, Germany and Austria. It plans to expand to additional markets in 2022. These investments highlight SKX’s progress as an omni-channel retailer.
Skechers’ joint-venture business grew 10% during the quarter on solid sales in China and Mexico. Growth in the joint-venture business was partly offset by declines across multiple markets in Asia due to COVID-19, inventory headwinds and a decrease in tourism.
Looking at Margins & Costs
Gross profit increased 23.5% year over year to $800.7 million. Gross margin declined 30 basis points (bps) to 48.6% due to increased freight expenses. Higher average selling prices, partly offset by declines in International Wholesale and Domestic Wholesale, resulted in margin expansion in the direct-to-consumer business.
Total operating expenses grew 20.1% year over year to $715.1 million and rose 160 bps as a percentage of sales to 43.4%. Selling expenses increased 24.7% from the year-ago period’s tally to $119.8 million due to higher global demand creation spend. Also, general and administrative expenses jumped 19.1% to $510.9 million due to elevated labor costs, higher volume-driven warehouse and distribution expenses, and the settlement of legal matters.
Store Update
During the reported quarter, Skechers opened 16 company-owned stores including eight in India, two in Columbia and one each in Peru, Italy, Chile and France. Simultaneously, SKX shuttered three locations in the quarter. Management inaugurated an additional net 128 third-party Skechers stores during the reported quarter across 30 countries.
In the first quarter to date, Skechers opened six stores in the United States and one in Italy. Management intends to open an additional 120-150 company-owned locations by the end of 2022. It shut down 11 stores in the United States at January end and anticipates closing another five to 10 locations, majority of which are mall-based concept stores by this year end.
As of Dec 31, 2021, Skechers had 4,306 stores, including 515 company-owned domestic stores, 358 company-owned international locations, 487 joint-venture stores and 2,946 distributor, licensee and franchise stores.
Other Financial Aspects
As of Dec 30, 2021, cash and cash equivalents totaled $796.3 million while short-term investments amounted to $98.6 million. Skechers ended the quarter with long-term borrowings of $263.4 million and shareholders’ equity of $3,259.3 million, excluding non-controlling interests of $282.7 million. Further, total inventory was $1,471 million.
Skechers incurred capital expenditures worth $74 million during the fourth quarter. Management anticipates capital expenditures between $250 million and $300 million for 2022.
Outlook
Management expects supply-chain headwinds to continue in 2022. However, these disruptions will start easing in severity through the course of the year. Skechers projected sales in the range of $7-$7.2 billion for 2022, higher than $6.29 billion recorded in 2021. The Zacks Consensus Estimate for sales in 2022 is currently pegged at $6.93 billion.
For 2022, management expects earnings per share in the band of $2.70-$2.90. Skechers delivered adjusted earnings of $2.59 in 2021. The Zacks Consensus Estimate for 2022 earnings is pegged at $2.93, which is likely to witness downward revisions in the coming days.
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. The Zacks Consensus Estimate for sales and earnings for the first quarter is currently pegged at $1.61 billion and 73 cents, respectively.
For the quarter, SKX expects gross margins to decline slightly from the year-ago period’s level as freight costs will offset the improved pricing.
Crocs, the designer, developer, manufacturer, marketer and distributor of casual lifestyle footwear and accessories, currently sports a Zacks Rank #1 (Strong Buy). Shares of Crocs have declined 26.2% in the past six months. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Crocs’ 2022 sales and EPS suggests growth of 48.7% and 23.2%, respectively, from the corresponding year-ago reported figures. CROX has a trailing four-quarter earnings surprise of 41.6%, on average.
Guess?, which designs, markets, distributes and licenses lifestyle collections of apparel and accessories, carries a Zacks Rank #2 (Buy) at present. Shares of Guess? have moved up 4.8% in the past six months.
The Zacks Consensus Estimate for Guess?’s fiscal 2022 sales and EPS suggests growth of 6% and 11.7%, respectively, from the corresponding year-ago reported numbers. GES has a trailing four-quarter earnings surprise of 97%, on average.
Gildan Activewear, which manufactures and sells various apparel products, carries a Zacks Rank of 2 at present. GIL has a trailing four-quarter earnings surprise of 9.7%, on average. The stock has moved up 16.8% in the past six months.
The Zacks Consensus Estimate for Gildan Activewear’s 2022 sales and EPS suggests growth of 8.2% and 9.4%, respectively, from the corresponding year-ago reported figures. GIL has a trailing four-quarter earnings surprise of around 85%, on average.
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Skechers' (SKX) Q4 Earnings Beat Estimates, Sales Rise Y/Y
Skechers U.S.A., Inc. (SKX - Free Report) reported fourth-quarter 2021 results with both the top and the bottom line outpacing the Zacks Consensus Estimate and improving year over year. SKX gained from growth across domestic and international channels, driven by strong wholesale and direct-to-consumer sales.
Skechers’ focus on offering signature comfort technology in its products as well as gains from global growth strategy has been yielding for a while. 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 is committed to accomplish sales of $10 billion by 2026.
Shares of this well-known footwear company have jumped 6.8% in after-hours trading on Feb 3. The currently Zacks Rank #3 (Hold) stock has increased 11.9% in the past year compared with the industry's 2.8% growth.
Let’s Analyze the Results
Skechers posted fourth-quarter adjusted earnings of 43 cents a share, beating the Zacks Consensus Estimate of 33 cents. Also, the bottom-line figure surged 79.2% from 24 cents earned in the year-earlier quarter.
SKX generated sales of $1,647.9 million that came above the Zacks Consensus Estimate of $1,540 million. The top line also jumped 24.4% year over year owing to a 9.8% increase in domestic sales and a 34% rise in international sales. On constant-currency basis, total sales grew 24.5%. Management highlighted that this was the second highest quarterly sales in Skechers' history.
Higher sales across the wholesale and direct-to-consumer channels contributed to the upside. Moreover, sales increased in all segments with increases in Domestic Wholesale of 4.6%, International Wholesale of 30.1% and Direct-to-Consumer (DTC) of 30.3%.
While increased unit sales volume and average selling prices aided the Domestic Wholesale business, growth of 123.5% in Distributor sales, a 61.3% sales rise in Europe and an 8.6% sales improvement in China drove the International Wholesale business. DTC sales were driven by strength across the domestic and international retail stores owing to higher average selling price on fewer promotions and elevated prices. Also, DTC comparable same-store sales grew 21.1%, including a rise of 15.2%, domestically and 35.5%, internationally. Worldwide comparable same-store sales rose 21%, including 15%, domestically and 36%, internationally.
The 17% progress in the domestic direct-to-consumer business was owing to a 24% gain in its brick-and-mortar stores, somewhat offset by a 12% decline in domestic e-commerce. However, its domestic e-commerce business surged 115% from the same-period level in 2019.
Skechers continued the rollout of e-commerce sites during the reported quarter along with the launch of platforms in the United Kingdom, India, Germany and Austria. It plans to expand to additional markets in 2022. These investments highlight SKX’s progress as an omni-channel retailer.
Skechers’ joint-venture business grew 10% during the quarter on solid sales in China and Mexico. Growth in the joint-venture business was partly offset by declines across multiple markets in Asia due to COVID-19, inventory headwinds and a decrease in tourism.
Looking at Margins & Costs
Gross profit increased 23.5% year over year to $800.7 million. Gross margin declined 30 basis points (bps) to 48.6% due to increased freight expenses. Higher average selling prices, partly offset by declines in International Wholesale and Domestic Wholesale, resulted in margin expansion in the direct-to-consumer business.
Total operating expenses grew 20.1% year over year to $715.1 million and rose 160 bps as a percentage of sales to 43.4%. Selling expenses increased 24.7% from the year-ago period’s tally to $119.8 million due to higher global demand creation spend. Also, general and administrative expenses jumped 19.1% to $510.9 million due to elevated labor costs, higher volume-driven warehouse and distribution expenses, and the settlement of legal matters.
Store Update
During the reported quarter, Skechers opened 16 company-owned stores including eight in India, two in Columbia and one each in Peru, Italy, Chile and France. Simultaneously, SKX shuttered three locations in the quarter. Management inaugurated an additional net 128 third-party Skechers stores during the reported quarter across 30 countries.
In the first quarter to date, Skechers opened six stores in the United States and one in Italy. Management intends to open an additional 120-150 company-owned locations by the end of 2022. It shut down 11 stores in the United States at January end and anticipates closing another five to 10 locations, majority of which are mall-based concept stores by this year end.
As of Dec 31, 2021, Skechers had 4,306 stores, including 515 company-owned domestic stores, 358 company-owned international locations, 487 joint-venture stores and 2,946 distributor, licensee and franchise stores.
Other Financial Aspects
As of Dec 30, 2021, cash and cash equivalents totaled $796.3 million while short-term investments amounted to $98.6 million. Skechers ended the quarter with long-term borrowings of $263.4 million and shareholders’ equity of $3,259.3 million, excluding non-controlling interests of $282.7 million. Further, total inventory was $1,471 million.
Skechers incurred capital expenditures worth $74 million during the fourth quarter. Management anticipates capital expenditures between $250 million and $300 million for 2022.
Outlook
Management expects supply-chain headwinds to continue in 2022. However, these disruptions will start easing in severity through the course of the year. Skechers projected sales in the range of $7-$7.2 billion for 2022, higher than $6.29 billion recorded in 2021. The Zacks Consensus Estimate for sales in 2022 is currently pegged at $6.93 billion.
For 2022, management expects earnings per share in the band of $2.70-$2.90. Skechers delivered adjusted earnings of $2.59 in 2021. The Zacks Consensus Estimate for 2022 earnings is pegged at $2.93, which is likely to witness downward revisions in the coming days.
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. The Zacks Consensus Estimate for sales and earnings for the first quarter is currently pegged at $1.61 billion and 73 cents, respectively.
For the quarter, SKX expects gross margins to decline slightly from the year-ago period’s level as freight costs will offset the improved pricing.
Stocks to Consider
Some better-ranked stocks are Crocs, Inc. (CROX - Free Report) , Guess?, Inc. (GES - Free Report) and Gildan Activewear Inc. (GIL - Free Report) .
Crocs, the designer, developer, manufacturer, marketer and distributor of casual lifestyle footwear and accessories, currently sports a Zacks Rank #1 (Strong Buy). Shares of Crocs have declined 26.2% in the past six months. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Crocs’ 2022 sales and EPS suggests growth of 48.7% and 23.2%, respectively, from the corresponding year-ago reported figures. CROX has a trailing four-quarter earnings surprise of 41.6%, on average.
Guess?, which designs, markets, distributes and licenses lifestyle collections of apparel and accessories, carries a Zacks Rank #2 (Buy) at present. Shares of Guess? have moved up 4.8% in the past six months.
The Zacks Consensus Estimate for Guess?’s fiscal 2022 sales and EPS suggests growth of 6% and 11.7%, respectively, from the corresponding year-ago reported numbers. GES has a trailing four-quarter earnings surprise of 97%, on average.
Gildan Activewear, which manufactures and sells various apparel products, carries a Zacks Rank of 2 at present. GIL has a trailing four-quarter earnings surprise of 9.7%, on average. The stock has moved up 16.8% in the past six months.
The Zacks Consensus Estimate for Gildan Activewear’s 2022 sales and EPS suggests growth of 8.2% and 9.4%, respectively, from the corresponding year-ago reported figures. GIL has a trailing four-quarter earnings surprise of around 85%, on average.