Skechers USA Inc. is an athletic footwear company based in Manhattan Beach, California. The company was founded in 1992 and is today the second largest performance footwear brand in America. Today, the company designs and makes more than 2,000 different types of shoes. The brand is sold through major department stores, the company’s own website and its own stores. Skechers has a presence in over 100 countries across the globe.
In 1999, Skechers went public, when it offered 7 million shares at $11 per share. Since then, the company has grown and expanded, but never saw such spikes in share prices as that first day of trading. The stocks have also been dropping for the last few months.
However, good news abounded for the footwear company after it released its third quarter results for 2017. Data from FactSet shows that typically, the third quarter is difficult for the company and tends to fare badly. In 2016, the company’s stocks fell 17% after a tough 3rd quarter results. In 2015, it was even worse, with the company shares dropping 32% on the day the third quarter results were announced. In 2014 and 2013, stock still dropped, albeit in single digits. In fact, the last time Skechers announced positive results for the third quarter of the year was 5 years ago. And even then, it wasn’t as big as this year’s third quarter result.
On Thursday, the company reported net earnings of $92.3 million, which comes to $0.59 per share; this was a 41.8% jump compared to the previous year’s net earnings for the same period. Last year’s third quarter results were $65 million in net earnings, which was $0.42 per share. This year’s third quarter net earnings results was way ahead of the consensus analyst target of $0.43 per share.
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International Wholesale Business
Skechers’ revenue also rose to $1,095 billion, up 16.2% from the previous year, thanks to a 26% growth in the company’s international wholesale retail businesses as well as a 1.4% in its US wholesale business and a 17% jump in the company owned stores globally. This is the highest quarterly jump in revenue in the company’s history. Last year’s 3rd quarter revenue was $942 million and the FactSet consensus target was $1,068 billion.
Lower effective tax rates was one of the reasons the company showed a profit in more than a year. However, it wasn’t the only reason. Sketches was able to lower costs and expenses over the year and grow its earnings from operations by 12.7% as compared the last year’s third quarter.
Fourth quarter earnings are also slated to be positive, despite the fact that it will be low season for the footwear company. Typically winters see a decline in demand as the weather turns cold and outdoor activities aren’t as popular. Winter is not the only reason why there is a slump in sales. It is also the end of the school season.
Despite that, Skechers is forecasting a 4th quarter profit of $0.09 to $0.14 per share on $860 million to $885 million net earnings.
Analysts also upgraded the company’s ratings after this performance. Wedbush upgraded the stocks from “neutral” to “outperform” and increased the price target from $25 to $35. Susquehanna re-iterated its “buy” rating and raised their stock price target from $34 to $38. B. Riley kept its “buy” rating and price target at $37.
Skechers has grown 38% this year as compared to the S&P 500, which has grown 15% and the Dow, which has grown 18%.