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Skechers (SKX) Focuses on Innovation & International Expansion
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Skechers U.S.A., Inc. (SKX - Free Report) has been the preferred footwear choice for families everywhere on the development of innovative versions of its popular styles and enhancements in comfort technologies.
By introducing the latest designs and partnerships, Skechers continues to cater to its devoted and committed customer base, and broadening its appeal to new demographic groups at an affordable price.
In addition to the highly sought-after Skechers Hands Free slip-ins, Skechers Arch Fit and Skechers UNO collections were launched in second-quarter 2023. Additionally, the expansion of its walking and performance product lines, as well as several successful collaborations, bode well. One of the most notable partnerships was with the iconic rock band, The Rolling Stones.
Image Source: Zacks Investment Research
The global footwear brand focuses on enhancing distribution efficiencies, venturing into new product categories and expanding its international presence. In line with this strategy, Skechers acquired its Scandinavian distributor at the end of May 2023.
This acquisition has played a pivotal role in Skechers' brand expansion across the Nordic region through the establishment of retail stores, e-commerce platforms, and a robust network of wholesale clients spanning Finland, Sweden, Denmark and Norway.
A pivotal driver of Skechers' success is significant growth of the direct-to-consumer (“DTC”) business, wherein sales advanced 29% in the second quarter. Benefitting from ongoing momentum in global DTC operations and widespread international wholesale success, the company has consistently demonstrated the strength of the Skechers brand and the effective execution of an enduring growth plan.
Skechers' international business serves as another significant sales driver. With a focus on global expansion through distribution networks, subsidiaries and partnerships, the company's international sales rose 17.9% year over year in the second quarter, contributing 60% to the total quarterly sales.
High-Cost Woes
Concerns arise regarding the potential negative impacts of increased expenses on the company's margin. In the second quarter of 2023, total operating expenses experienced year-over-year growth of 13.4%. Specifically, selling expenses rose 12.3% from the previous year, whereas general and administrative expenses increased 13.7%.
These cost escalations were primarily attributed to higher labor costs, warehouse and distribution expenses, as well as increased facility-related expenditure, such as rent and depreciation.
Wrapping Up
The company aims for a $10-billion annual sales target by 2026 by expanding its store network, fostering omni-channel expansion and enhancing distribution capabilities. Management projects sales of $7.95-$8.1 billion for 2023, whereas it reported $7.44 billion in 2022. The company envisions earnings per share (EPS) between $3.25 and $3.40, whereas it delivered $2.38 last year.
The third quarter is anticipated to yield sales of $1.95-$2.00 billion and EPS of 70-75 cents. Notably, the company recorded sales of $1.88 billion and EPS of 55 cents in the year-earlier quarter.
This Zacks Rank #3 (Hold) stock has outpaced the Zacks Shoes and Retail Apparel industry in the past year. In the said period, shares of the company have gained 28.6% against the industry’s decline of 9.1%.
The Zacks Consensus Estimate for Urban Outfitters’ current fiscal-year earnings and sales indicates growth of 84.6% and 9% from the year-ago period’s reported figures. URBN has a trailing four-quarter average earnings surprise of 19.2%.
Abercrombie operates as a specialty retailer of premium, high-quality casual apparel. The company currently sports a Zacks Rank #1. ANF delivered a significant earnings surprise in the last reported quarter.
The Zacks Consensus Estimate for Abercrombie’s current fiscal-year sales implies growth of 10.4% from the previous year’s reported number. ANF has a trailing four-quarter average earnings surprise of 724.8%.
G-III Apparel is a manufacturer, designer and distributor of apparel and accessories. The company currently sports a Zacks Rank #1. GIII delivered a significant earnings surprise in the last reported quarter.
The Zacks Consensus Estimate for G-III Apparel’s current fiscal-year earnings and sales indicates growth of 11.6% and 7.9% from the year-ago period’s reported figures. GIII has a trailing four-quarter average earnings surprise of 526.6%.
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Skechers (SKX) Focuses on Innovation & International Expansion
Skechers U.S.A., Inc. (SKX - Free Report) has been the preferred footwear choice for families everywhere on the development of innovative versions of its popular styles and enhancements in comfort technologies.
By introducing the latest designs and partnerships, Skechers continues to cater to its devoted and committed customer base, and broadening its appeal to new demographic groups at an affordable price.
In addition to the highly sought-after Skechers Hands Free slip-ins, Skechers Arch Fit and Skechers UNO collections were launched in second-quarter 2023. Additionally, the expansion of its walking and performance product lines, as well as several successful collaborations, bode well. One of the most notable partnerships was with the iconic rock band, The Rolling Stones.
Image Source: Zacks Investment Research
The global footwear brand focuses on enhancing distribution efficiencies, venturing into new product categories and expanding its international presence. In line with this strategy, Skechers acquired its Scandinavian distributor at the end of May 2023.
This acquisition has played a pivotal role in Skechers' brand expansion across the Nordic region through the establishment of retail stores, e-commerce platforms, and a robust network of wholesale clients spanning Finland, Sweden, Denmark and Norway.
A pivotal driver of Skechers' success is significant growth of the direct-to-consumer (“DTC”) business, wherein sales advanced 29% in the second quarter. Benefitting from ongoing momentum in global DTC operations and widespread international wholesale success, the company has consistently demonstrated the strength of the Skechers brand and the effective execution of an enduring growth plan.
Skechers' international business serves as another significant sales driver. With a focus on global expansion through distribution networks, subsidiaries and partnerships, the company's international sales rose 17.9% year over year in the second quarter, contributing 60% to the total quarterly sales.
High-Cost Woes
Concerns arise regarding the potential negative impacts of increased expenses on the company's margin. In the second quarter of 2023, total operating expenses experienced year-over-year growth of 13.4%. Specifically, selling expenses rose 12.3% from the previous year, whereas general and administrative expenses increased 13.7%.
These cost escalations were primarily attributed to higher labor costs, warehouse and distribution expenses, as well as increased facility-related expenditure, such as rent and depreciation.
Wrapping Up
The company aims for a $10-billion annual sales target by 2026 by expanding its store network, fostering omni-channel expansion and enhancing distribution capabilities. Management projects sales of $7.95-$8.1 billion for 2023, whereas it reported $7.44 billion in 2022. The company envisions earnings per share (EPS) between $3.25 and $3.40, whereas it delivered $2.38 last year.
The third quarter is anticipated to yield sales of $1.95-$2.00 billion and EPS of 70-75 cents. Notably, the company recorded sales of $1.88 billion and EPS of 55 cents in the year-earlier quarter.
This Zacks Rank #3 (Hold) stock has outpaced the Zacks Shoes and Retail Apparel industry in the past year. In the said period, shares of the company have gained 28.6% against the industry’s decline of 9.1%.
3 Red-Hot Stocks to Consider
A few better-ranked stocks are Urban Outfitters, Inc. (URBN - Free Report) , Abercrombie & Fitch Co. (ANF - Free Report) and G-III Apparel Group, Ltd. (GIII - Free Report) .
Urban Outfitters, which specializes in the retail and wholesale of general consumer products, sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Urban Outfitters’ current fiscal-year earnings and sales indicates growth of 84.6% and 9% from the year-ago period’s reported figures. URBN has a trailing four-quarter average earnings surprise of 19.2%.
Abercrombie operates as a specialty retailer of premium, high-quality casual apparel. The company currently sports a Zacks Rank #1. ANF delivered a significant earnings surprise in the last reported quarter.
The Zacks Consensus Estimate for Abercrombie’s current fiscal-year sales implies growth of 10.4% from the previous year’s reported number. ANF has a trailing four-quarter average earnings surprise of 724.8%.
G-III Apparel is a manufacturer, designer and distributor of apparel and accessories. The company currently sports a Zacks Rank #1. GIII delivered a significant earnings surprise in the last reported quarter.
The Zacks Consensus Estimate for G-III Apparel’s current fiscal-year earnings and sales indicates growth of 11.6% and 7.9% from the year-ago period’s reported figures. GIII has a trailing four-quarter average earnings surprise of 526.6%.