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Skechers Stock Fell 21% on July 20

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Jul. 25 2018, Updated 7:32 a.m. ET

Skechers stock fell

Skechers (SKX) missed the same-store sales and bottom-line expectations when it reported its second-quarter results on July 19. Management also lowered the guidance for the third quarter, which disappointed investors and dragged the stock down as much as 35% on July 20.

Management expects the third-quarter sales to be $1.20 billion–$1.225 billion, which represents 9.3%–11.6% growth over the same quarter last year. Analysts expected 15% growth YoY to $1.26 billion.

The earnings guidance was an even bigger disappointment. The third-quarter EPS is projected to be $0.50–$0.55—a 7%–15% decline over the previous year’s earnings. In comparison, analysts expected a 15% rise in the EPS to $0.68 per share.

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Share price movement in 2018

Skechers’ share price closed 21% below the previous day’s closing price on July 20 in response to the company’s weak guidance and mixed results. The company shed 27% on April 20 in response to its first-quarter results and glum guidance. The decline was mainly due to the weaker outlook. Skechers outdid the top-line and bottom-line expectations during the quarter.

Skechers has a YTD (year-to-date) loss of 30.6%. The stock is trading ~61% below its 52-week high price. Skechers is among the worst performing sportswear stocks this year. In comparison, Nike (NKE), Under Armour (UAA), and Lululemon Athletica (LULU) shares have risen 23%, 50%, and 61%, respectively, in 2018.

ETF investors seeking to add exposure to Skechers could consider the iShares Morningstar Small-Cap ETF (JKJ). JKJ invests ~0.5% of its portfolio in the company.

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