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Skechers (SKX) Thrives on DTC Growth & Product Line Expansion
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Skechers U.S.A., Inc. (SKX - Free Report) is focused on delivering comfort, style, innovation and quality across its entire product line. The company is committed to meeting the needs of its customers and providing products that are in high demand.
One of the key factors contributing to Skechers' success has been the substantial expansion of its direct-to-consumer (DTC) business, which saw a 29% year-over-year increase to $939.5 million in second-quarter 2023 sales. This growth resulted from the strong demand for its comfort technology footwear, improved in-store product availability and effective demand creation.
In the second quarter of 2023, Skechers introduced not only the highly popular Skechers Hands Free slip-ins but also unveiled the Skechers Arch Fit and Skechers UNO collections. Furthermore, the company expanded its walking and performance product lines, as well as successfully collaborated with various partners.
Image Source: Zacks Investment Research
Among these collaborations, the standout was with the legendary rock band — The Rolling Stones. Recently, Skechers unveiled a limited-edition collection in partnership with Skechers ambassador Ashley Park, featuring fashion-forward footwear. This launch followed the release of the hit summer movie, Joy Ride. The company has exciting plans to continue launching more captivating collaborations throughout the remainder of 2023.
Skechers' international wholesale business serves as another significant sales driver. This was driven by continued strength across the Asia Pacific (APAC), and Europe, the Middle East, and Africa (EMEA), with double-digit growth in many markets. Regionally, APAC grew 14% and EMEA grew 7% in the second quarter.
Expanding Store Presence
In the second quarter, the company expanded its retail presence by opening 50 company-owned Skechers stores and simultaneously closing 39 stores. These store openings comprised 28 locations in China, eight of which transitioned from franchise to company-owned, as well as eight big box stores in the United States, three stores each in Chile and Vietnam. The acquisition of a Scandinavian distributor led to the addition of 56 Skechers stores across four Nordic countries and two stores in Germany.
As of the end of the second quarter, the total number of Skechers stores worldwide stood at 4,705, with 3,161 being third-party stores. Skechers anticipates opening 90-100 company-owned stores worldwide through the remainder of 2023.
Wrapping Up
Skechers' innovative products, compelling collaborations and expanding global footprint position it as a compelling investment choice with a promising trajectory for sustained growth and profitability. 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, an uptick from the $7.44 billion reported in 2022. The company envisions earnings per share (EPS) between $3.25 and $3.40, a sharp improvement from the $2.38 delivered last year.
This Zacks Rank #2 (Buy) stock has outpaced the Zacks Shoes and Retail Apparel industry in the past year. In the said period, shares of the company have gained 44.4% compared with the industry’s growth of 12.1%.
3 Other Red-Hot Stocks to Consider
A few other top-ranked stocks in the same space are Urban Outfitters, Inc. (URBN - Free Report) , American Eagle Outfitters Inc. (AEO - Free Report) and Abercrombie & Fitch Co. (ANF - Free Report) .
The Zacks Consensus Estimate for Urban Outfitters’ current fiscal-year earnings and sales indicates growth of 83.4% and 6.6% from the year-ago period’s reported figures. URBN has a trailing four-quarter average earnings surprise of 19.2%.
American Eagle Outfitters is a specialty retailer of casual apparel, accessories and footwear. It currently flaunts a Zacks Rank #1.
The Zacks Consensus Estimate for American Eagle Outfitters’ current fiscal-year earnings and sales indicates growth of 33% and 2.2% from the year-ago period’s reported figures. AEO has a trailing four-quarter average earnings surprise of 43.2%.
Abercrombie & Fitch is a specialty retailer of premium, high-quality casual apparel. The company currently flaunts a Zacks Rank #1. ANF delivered a significant earnings surprise in the last reported quarter.
The Zacks Consensus Estimate for Abercrombie & Fitch’s current fiscal-year sales implies growth of 10% from the previous year’s reported number. ANF has a trailing four-quarter average earnings surprise of 724.8%.
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Skechers (SKX) Thrives on DTC Growth & Product Line Expansion
Skechers U.S.A., Inc. (SKX - Free Report) is focused on delivering comfort, style, innovation and quality across its entire product line. The company is committed to meeting the needs of its customers and providing products that are in high demand.
One of the key factors contributing to Skechers' success has been the substantial expansion of its direct-to-consumer (DTC) business, which saw a 29% year-over-year increase to $939.5 million in second-quarter 2023 sales. This growth resulted from the strong demand for its comfort technology footwear, improved in-store product availability and effective demand creation.
In the second quarter of 2023, Skechers introduced not only the highly popular Skechers Hands Free slip-ins but also unveiled the Skechers Arch Fit and Skechers UNO collections. Furthermore, the company expanded its walking and performance product lines, as well as successfully collaborated with various partners.
Image Source: Zacks Investment Research
Among these collaborations, the standout was with the legendary rock band — The Rolling Stones. Recently, Skechers unveiled a limited-edition collection in partnership with Skechers ambassador Ashley Park, featuring fashion-forward footwear. This launch followed the release of the hit summer movie, Joy Ride. The company has exciting plans to continue launching more captivating collaborations throughout the remainder of 2023.
Skechers' international wholesale business serves as another significant sales driver. This was driven by continued strength across the Asia Pacific (APAC), and Europe, the Middle East, and Africa (EMEA), with double-digit growth in many markets. Regionally, APAC grew 14% and EMEA grew 7% in the second quarter.
Expanding Store Presence
In the second quarter, the company expanded its retail presence by opening 50 company-owned Skechers stores and simultaneously closing 39 stores. These store openings comprised 28 locations in China, eight of which transitioned from franchise to company-owned, as well as eight big box stores in the United States, three stores each in Chile and Vietnam. The acquisition of a Scandinavian distributor led to the addition of 56 Skechers stores across four Nordic countries and two stores in Germany.
As of the end of the second quarter, the total number of Skechers stores worldwide stood at 4,705, with 3,161 being third-party stores. Skechers anticipates opening 90-100 company-owned stores worldwide through the remainder of 2023.
Wrapping Up
Skechers' innovative products, compelling collaborations and expanding global footprint position it as a compelling investment choice with a promising trajectory for sustained growth and profitability. 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, an uptick from the $7.44 billion reported in 2022. The company envisions earnings per share (EPS) between $3.25 and $3.40, a sharp improvement from the $2.38 delivered last year.
This Zacks Rank #2 (Buy) stock has outpaced the Zacks Shoes and Retail Apparel industry in the past year. In the said period, shares of the company have gained 44.4% compared with the industry’s growth of 12.1%.
3 Other Red-Hot Stocks to Consider
A few other top-ranked stocks in the same space are Urban Outfitters, Inc. (URBN - Free Report) , American Eagle Outfitters Inc. (AEO - Free Report) and Abercrombie & Fitch Co. (ANF - 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 83.4% and 6.6% from the year-ago period’s reported figures. URBN has a trailing four-quarter average earnings surprise of 19.2%.
American Eagle Outfitters is a specialty retailer of casual apparel, accessories and footwear. It currently flaunts a Zacks Rank #1.
The Zacks Consensus Estimate for American Eagle Outfitters’ current fiscal-year earnings and sales indicates growth of 33% and 2.2% from the year-ago period’s reported figures. AEO has a trailing four-quarter average earnings surprise of 43.2%.
Abercrombie & Fitch is a specialty retailer of premium, high-quality casual apparel. The company currently flaunts a Zacks Rank #1. ANF delivered a significant earnings surprise in the last reported quarter.
The Zacks Consensus Estimate for Abercrombie & Fitch’s current fiscal-year sales implies growth of 10% from the previous year’s reported number. ANF has a trailing four-quarter average earnings surprise of 724.8%.