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Why Skechers’ New Stores Are Expected to Propel Its 2016 Growth

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Nov. 22 2019, Updated 5:48 a.m. ET

Skechers’ point-of-sale retail metrics in 2016

Skechers (SKX) expects to open around 55–65 company-owned retail (XRT) stores in 2016, including 20–25 new store openings in China. Store (VCR) comps for its company-owned retail (XLY) stores are expected to be in the mid to high single-digit range.

Skechers also expects above-average growth in its international wholesale operations, largely due to the strong showings it has projected for China and Europe. Points of sale in China are expected to increase in number by 50%.

Skechers also expects to increase its total number of retail (FXD) (RTH) stores—both owned by the company and owned and operated by third parties—to around 1,600 by the end of 2016, a rise of 250–275 year-over-year.

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Revenue guidance

Skechers expects its second-quarter revenue to be in the range of $875 million–$900 million. Wall Street analysts’ consensus revenue estimate for SKX is $894 million, leaning toward the higher end of the company’s guidance range. According to the consensus, SKX’s revenue is expected to be $3.7 billion in 2016, implying a rise of 18.6% over 2015.

Skechers’ high-growth competitor in the athletic gear industry Under Armour (UA) expects its 2016 sales to come in at $4.9 billion, a 24.3% rise over 2015. Nike (NKE) expects a mid to high single-digit rise in its revenue in fiscal 2016 ended May 31, 2016.

Analysts’ consensus estimate projects revenue of $32.4 billion for Nike in fiscal 2016, an implied rise of 5.9% year-over-year. VF Corporation (VFC) is expected to post revenue of $12.9 billion in 2016, an implied rise of 4.3% over 2015.

Nike’s growth was somewhat tempered by adverse currency factors affecting its international sales in the first three quarters of fiscal 2016. According to an investor presentation in October 2015, Nike expects to take its top line to $50 billion by fiscal 2020, up from $30.6 billion in fiscal 2015. This implies a compound annual growth rate of 10.3% over the period.

We’ll discuss Skechers’ earnings outlook in the next article.

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