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Skechers USA Announces Its New Expansion Plans

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Price movement

Skechers U.S.A. (SKX) has a market cap of $3.5 billion. It rose 0.99% to close at $21.41 per share on November 10, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were 9.1%, -7.2%, and -29.1%, respectively, on the same day.

SKX is trading 2.0% above its 20-day moving average, 3.7% below its 50-day moving average, and 22.6% below its 200-day moving average.

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Related ETF and peers

The SPDR S&P MidCap 400 Index ETF (MDY) invests 0.21% of its holdings in Skechers. The ETF tracks a market cap–weighted index of the mid-cap US companies. The YTD price movement of MDY was 12.0% on November 10.

The market caps of Skechers’s competitors are as follows:

  • Nike (NKE) — $83.9 billion
  • Columbia Sportswear (COLM) — $4.2 billion
  • Steven Madden (SHOO) — $2.4 billion

Latest news on Skechers

In a press release on November 10, 2016, Skechers reported, “Skechers USA, Inc. (SKX), a global leader in lifestyle and performance footwear, today announced that the Company is transitioning its business in South Korea from a third-party distributor to a new joint venture with Luen Thai Enterprises.

“The new Korean joint venture, Skechers Korea Co., Ltd, will enable Skechers to use its proven sales and marketing strategies to further expand the brand in one of our key international markets.”

Performance of Skechers in 3Q16

Skechers (SKX) reported 3Q16 net sales of $942.4 million, a rise of 10.1% over net sales of $856.2 million in 3Q15. This rise was due to a rise in the sale of its International Wholesale business and Global Retail business.

Between 3Q15 and 3Q16, the company’s gross profit margin expanded 40 basis points and its earnings from operations narrowed 19 basis points. The expansion of the gross margin was due to wider domestic wholesale margins, which were offset by narrower global retail margins and the product sales mix.

Its net income and EPS (earnings per share) fell to $65.1 million and $0.42, respectively, in 3Q16, compared with $66.6 million and $0.43, respectively, in 3Q15. SKX’s cash and cash equivalents rose 31.0%, and its inventories fell 15.6% between 4Q15 and 3Q16.

SKX’s current ratio rose to 3.7x, and its debt-to-equity ratio fell to 0.33x in 3Q16 compared with 2.7x and 0.48x, respectively, in 4Q15. The company has projected net sales of $710 million–$735 million for fiscal 4Q16.

In the next article, we’ll discuss Polaris Industries (PII).

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