Skechers tops Wall Street expectations
Skechers (SKX), which reported third-quarter results on October 19, posted a 16.2% YoY (year-over-year) increase in revenues to $1.09 billion. The company cruised ahead of the consensus revenue expectations and the management’s guidance. Wall Street was expecting $1.07 million in 3Q sales.
“Third quarter net sales of $1.095 billion set a new quarterly record for the Company, surpassing our previous record in the first quarter earlier this year by $22 million, and resulted in a new nine-month record with sales exceeding $3 billion,” said David Weinberg, chief operating officer and chief financial officer of Skechers.
Skechers’ performance is particularly impressive when compared to other sportswear players that have been struggling in this highly competitive industry. Sportswear juggernaut Nike (NKE) posted one of its slowest growth quarters in September with the top line increasing only 0.1%. The company also failed to meet Wall Street expectations.
What drove the 3Q top line?
The robust increase in Skechers’ top line was driven by stellar performances in the company’s international wholesale business and company-owned global retail business. Total comp store sales rose 4.4%, while domestic comp store sales rose 3.1%. The company’s domestic wholesale business recorded modest growth of 1.4%.
The international wholesale business represented 43% of Skechers’ top line. After including the retail business, the company’s overseas sales accounted for ~53% of its total sales. Management cited strong results in China and the UK as key drivers for international growth this quarter.
“The strong international growth, including the continued strength in China, the resurgence of the United Kingdom and growth across all of Europe combined with our strong international retail business, resulted in international wholesale and retail representing 53 percent of our total sales in the third quarter,” added Weinberg.
ETF investors seeking to add exposure to SKX can consider the Guggenheim S&P MidCap 400 Pure Growth ETF (RFG), which invests ~1.5% of its portfolio in the company.