Skechers Stock Rose Due to Strong Q4 Earnings



Strong earnings

Skechers (SKX) stock rose 18.2% in after-market trading on February 7. The company announced better-than-expected fourth-quarter earnings.

Skechers’ adjusted EPS of $0.31 in the fourth quarter beat analysts’ expectation of $0.23. The company’s adjusted EPS grew 47.6% on a year-over-year basis compared to the adjusted EPS of $0.21 in the fourth quarter of 2017 (excluding the impact of a discrete income tax expense). The company’s earnings growth was a result of higher sales, improved margins, and the impact of share repurchases.

Skechers’ fourth-quarter sales grew 11.4% to $1.08 billion but lagged analysts’ estimate of $1.11 billion. Foreign currency headwinds dragged down the company’s top line by $22.3 million.

International business continued to be a key growth driver for Skechers and grew 17.9% in the fourth quarter. Overall, international business accounted for 55.6% of the company’s fourth-quarter sales. Skechers’ domestic business sales rose 4.1% in the fourth quarter.

The company’s international wholesale business rose 18.4%, while the domestic wholesale business rose 4.8%. For the company-owned global retail business, the sales rose 7.5%.

Overall, Skechers’ sales rose 11.5% to $4.6 billion in 2018. Columbia Sportswear’s (COLM) sales rose 18.2% to $917.6 million and 13.6% to $2.8 billion in 2018.

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Growth opportunities

For the first quarter, Skechers expects its sales to be $1.275 billion–$1.300 billion compared to $1.25 billion in the first quarter of 2018. In the first quarter, the company expects its EPS to be $0.70–$0.75.

Skechers sees growth opportunities due to innovation and international expansion. The company is looking to capture growth prospects in Latin America, Eastern Europe, and in countries like China, India, and Mexico. Skechers intends to enhance its online e-commerce sites in the US and China. The company also plans to launch an online channel in India. Skechers wants to boost its sales by expanding its retail footprint. As at the end of 2018, the company sold its products through 2,998 company-owned and third-party-owned stores.


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