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Skechers U.S.A., Inc.

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Skechers shares have been hit hard, as it continued with its dismal run in 2016. After witnessing a negative earnings surprise of 5.9% in the second quarter, it again missed the estimate by 8.7% in the third quarter. Foreign currency headwinds, increased G&A expenses and higher effective tax rate hurt the bottom line that also fell 2.3% from the prior-year quarter. Even a 10.1% jump in net sales failed to act as a savior. We noted that the rate of sales growth in the third and second quarters have diminished significantly from the first quarter. Moreover, this was the second straight quarter when the company has missed the revenue estimate. The company’s domestic wholesale business remained a drag in the quarter. These compelled management to issue a bleak outlook for the final quarter. Nevertheless, management is focusing on new line of products, cost containment efforts, inventory management and global distribution platform.


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