Skechers’s Q1 results disappoint
Skechers stock was down 10.5% as of 1:32 pm ET today as the company missed analysts’ sales and earnings estimates for the first quarter of 2019.
Skechers reported sales of $1.28 billion in the first quarter, which lagged behind analysts’ expectation of $1.30 billion. Skechers’ sales increased 2.1% on a year-over-year basis, driven by a 9.3% rise in international sales and partially offset by a 6.3% fall in the domestic sales, mainly due to weakness in the domestic wholesale business. Excluding the impact of currency headwinds, the company’s sales grew 5.2% in the first quarter.
Sales of the company’s International wholesale segment increased 8.7% while the Domestic wholesale segment disappointed with a 10.9% fall in sales. Sales of the company’s global retail business grew 6.7%, driven by a 3.3% rise in domestic sales and a 13.2% increase in international sales.
Skechers’s EPS declined 5.3% to $0.71 in the first quarter and missed analysts’ forecast of $0.72. The company’s bottom line took a hit from higher taxes and expenses associated with the company’s operations in China and expenses to support additional Skechers stores.
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Outlook for the second quarter
Skechers expects its 2019 second-quarter sales in the range of $1.200 billion–$1.225 billion, compared to $1.13 billion in the second quarter of 2018. Skechers expects weakness in its Domestic Wholesale business to continue in the second quarter. The company expects its second-quarter EPS in the range of $0.30–$0.35. Analysts expected sales of $1.23 billion and adjusted EPS of $0.38 for the second quarter. The company’s second-quarter guidance incorporates the impact of currency headwinds and the commencement of a joint venture business in Mexico.
Skechers stock was up 54.1% on a year-to-date basis as of April 17. However, today’s decline could wipe out quite a significant portion of that gain.