Skechers U.S.A., Inc.’s SKX strategic focus on product diversification, digital enhancement and international expansion has positioned it for sustained growth and market leadership.
By investing in omnichannel capabilities, infrastructure andglobal marketpenetration, Skechers effectively meets evolving consumer preferences while achieving significant gains across wholesale and direct-to-consumer (DTC) segments. These efforts underscore its commitment to reaching ambitious sales targets and strengthening its industry presence.
This Zacks Rank #2 (Buy) company has demonstrated remarkable market performance over the past year, significantly outpacing the Zacks Shoes and Retail Apparel industry. Over this period, SKX's shares rose 9.5% against the industry’s 32.7% decline. This performance highlights the company's robust market strategies and resilience during challenging economic conditions.
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Let’s Delve Deeper
Skechers is strengthening its position in the footwear industry with a diverse brand portfolio, covering fashion, athletic, non-athletic and work footwear. This multi-brand approach allows new product introductions without affecting the existing lines, thereby catering to a broad customer base. The focus has shifted toward comfort-based footwear and apparel to meet the rising demand for relaxed styles.
The company is investing in global infrastructure, including retail stores, e-commerce platforms and distribution centers, to enhance omnichannel capabilities and expand its DTC business. Key digital initiatives include improved website features, mobile apps and loyalty programs, along with upgraded point-of-sale systems to boost customer engagement.
Skechers is optimistic about the continued growth of its wholesale segment throughout fiscal 2024. This optimism is supported by consistent product demand and strategic investments in logistics and retailer relationships.
In the second quarter, SKX reported a 5.5% year-over-year increase in wholesale sales, reaching $1.13 billion. This upside was driven by a 14% increase in domestic wholesale sales, fueled by double-digit growth in men and kids’ footwear, as well as gains in women’s footwear.
The DTC segment of Skechers showcased strong performance, with sales climbing 9.2% year over year to $1.03 billion. This growth highlights the effectiveness of Skechers' strategies to enhance direct consumer engagement and improve the retail experience. International DTC sales rose 15.2%, while domestic sales saw a modest 1.4% increase.
Robust International Business
Skechers' international operations play a vital role in its overall growth trajectory. The company's success in global markets highlights its ability to adapt to varied consumer preferences, seize emerging trends and implement effective distribution strategies tailored to each region's unique characteristics.
In the second quarter, international sales grew 6.9%, representing 60% of the company's total revenues, thus emphasizing the importance of its global presence. The EMEA region stood out with a notable 13.7% year-over-year increase in sales, while the APAC region and China demonstrated strong performance with growth rates of 2.2% and 3.4%, respectively.
Promising Outlook
For fiscal 2024, Skechers forecasts sales to be between $8.88 billion and $8.98 billion, up from the earlier guided range of $8.73-$8.88 billion. This indicates a rise from $8 billion in fiscal 2023. It predicts earnings per share to be between $4.08 and $4.18 compared with the previously projected range of $3.95-$4.10. This implies growth from $3.49 per share registered in the last fiscal year.
Skechers plans to allocate between $325 million and $375 million for capital expenditure. This investment will support key strategic initiatives, including store openings, omnichannel capability expansion and distribution infrastructure enhancements. The company is on track to achieve its ambitious goal of $10 billion in annual sales by 2026.
Zacks Estimates
Analysts have responded positively to Sketcher’s prospects, reflected in upward revisions to the Zacks Consensus Estimate for earnings per share. In the past seven days, analysts have increased their estimates for the current quarter by 4 cents. The consensus estimate for earnings is pegged at $1.15 per share. The estimate for the next quarter has also been raised by 7 cents to 76 cents per share.
To wrap up, Skechers is poised to continue its growth trajectory and meet its ambitious targets with substantial investments in infrastructure, technology and international markets. As it progresses, the company's focus on improving the customer experience and expanding its global presence will be crucial in sustaining its competitive advantage and providing long-term value to shareholders.
Other Key Picks
Some other top-ranked stocks are The Gap, Inc. GPS, Abercrombie & Fitch Co. ANF and Urban Outfitters Inc. URBN.
Gap is a premier international specialty retailer that offers a diverse range of clothing, accessories and personal care products. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Gap’s fiscal 2024 earnings and sales indicates growth of 24.5% and 0.2%, respectively, from fiscal 2023 reported figures. GPS has a trailing four-quarter average earnings surprise of 202.7%.
Abercrombie is a specialty retailer of premium, high-quality casual apparel. It sports a Zacks Rank of 1 at present. ANF delivered a 28.9% earnings surprise in the last reported quarter.
The consensus estimate for Abercrombie’s fiscal 2024 earnings and sales indicates growth of 48.9% and 11.1%, respectively, from the fiscal 2023 reported levels. ANF has a trailing four-quarter average earnings surprise of 210.3%.
Urban Outfitters is a lifestyle specialty retailer that offers fashion apparel and accessories, footwear, home décor and gift products. It currently has a Zacks Rank of 2.
The Zacks Consensus Estimate for Urban Outfitters’ fiscal 2024 earnings and sales indicates growth of 9.9% and 5.8%, respectively, from the year-ago reported actuals. URBN has a trailing four-quarter average earnings surprise of 16.9%.
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Abercrombie & Fitch Company (ANF) : Free Stock Analysis Report
Skechers U.S.A., Inc. (SKX) : Free Stock Analysis Report
The Gap, Inc. (GPS) : Free Stock Analysis Report
Urban Outfitters, Inc. (URBN) : Free Stock Analysis Report
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