Yahoo Finance Skechers (SKX) Gains 18.4% in 3 Months: What Should You Do?
Skechers U.S.A., Inc. SKX has experienced a significant upward trend in its stock performance over the past three months, driven by its strategic focus on a diverse brand portfolio, advanced digital capabilities and aggressive global expansion initiatives. The company's well-crafted growth strategies, especially in the direct-to-consumer (DTC) and international markets, showcase its ability to adapt to changing consumer preferences while enhancing its potential for sustained growth and market leadership.
In the said period, the SKX stock has risen 18.4%, outpacing the Zacks Shoes and Retail Apparel industry’s 12.5% decline. The company’s operational prowess has also helped it outperform the broader Zacks Consumer Discretionary sector’s decline of 2% and the S&P 500’s growth of 8.7%. On Jul 8, 2024, Sketchers' stock closed in at $67.74, nearing its 52-week high of $75.09, reflecting strong investor confidence and market optimism about the retailer's prospects.
From a valuation perspective, we note that the stock presents an attractive opportunity, trading at a discount relative to historical and industry benchmarks. With a forward 12-month price-to-earnings ratio of 15.49, below the five-year high of 18.15 and the industry’s average of 20.39, the stock offers compelling value for investors seeking exposure to the sector. Additionally, the stock currently has a Value Score of A, further validating its appeal.
Image Source: Zacks Investment Research
Exploring Growth Endeavors
Skechers continues to diversify its extensive product portfolio, which spans fashion, athletic, non-athletic and work footwear. Managing multiple brands allows the company to launch products without affecting existing ones, thereby attracting a broader customer base.
SKX is enhancing its digital initiatives by upgrading website features, mobile apps and customer loyalty programs. By integrating in-store and online experiences, Skechers aims to provide a seamless shopping journey that drives sales volumes. Improvements in point-of-sale systems are also underway to enhance customer interactions both online and in physical stores, boosting sales and customer satisfaction.
The DTC segment saw a 17.3% year-over-year increase in sales, reaching $829.9 million in the first quarter of 2024. This robust growth spans both physical stores and e-commerce platforms, driven by effective marketing strategies and continuous product innovations, particularly in comfort technologies.
Skechers' international operations have been key drivers of its overall growth. The company's success in global markets reflects its ability to adapt to diverse consumer preferences, capitalize on emerging trends, and leverage effective distribution strategies tailored to each region's unique dynamics.
International sales grew 15.2% year over year in the first quarter, accounting for 64.5% of the total sales. The APAC region, in particular, saw growth of 15.9%, highlighting the company’s ability to adapt to diverse consumer preferences and leverage emerging market trends.
Optimistic Outlook
For fiscal 2024, SKX forecasts sales between $8.73 billion and $8.88 billion, revised upward from the previously mentioned $8.6-$8.8 billion. This projection represents a significant increase from the $8 billion in sales recorded in fiscal 2023. Additionally, the company anticipates earnings per share between $3.95 and $4.10, suggesting growth from the $3.49 reported in the previous year.
Skechers plans to allocate between $325 million and $375 million for capital expenditure. This investment will support key strategic initiatives, such as store openings, omnichannel capability expansion and distribution infrastructure enhancements. The company is confidently progressing toward its ambitious goal of achieving $10 billion in annual sales by 2026.
Wrapping Up
SKX’s robust growth, coupled with strong financial and technical indicators, positions it well for sustained market leadership and success. Over the past 30 days, the Zacks Consensus Estimate for earnings for the current and next fiscal years has increased by 2 cents and 6 cents to $4.08 and $4.64 per share, respectively. Currently, Sketchers carries a Zacks Rank #2 (Buy).
Other Solid Picks
Three other top-ranked stocks in the retail space are The Gap, Inc. GPS, Abercrombie & Fitch Co. ANF and Canada Goose GOOS.
Gap is a premier international specialty retailer offering a diverse range of clothing, accessories and personal care products. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Gap’s fiscal 2024 earnings and sales indicates growth of 21.7% and 0.2%, respectively, from the fiscal 2023 reported figures. GPS has a trailing four-quarter average earnings surprise of 202.7%.
Abercrombie is a specialty retailer of premium, high-quality casual apparel. It flaunts a Zacks Rank of 1 at present. ANF delivered a 28.9% earnings surprise in the last reported quarter.
The consensus estimate for Abercrombie’s fiscal 2024 earnings and sales indicates growth of 47.3% and 10.4%, respectively, from the fiscal 2023 reported levels. ANF has a trailing four-quarter average earnings surprise of 210.3%.
Canada Goose is a global outerwear brand. It currently sports a Zacks Rank of 1.
The Zacks Consensus Estimate for Canada Goose’s fiscal 2025 earnings and sales indicates growth of 13.7% and 5.2%, respectively, from the year-ago actuals. GOOS has a trailing four-quarter average earnings surprise of 70.9%.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Abercrombie & Fitch Company (ANF) : Free Stock Analysis Report
Skechers U.S.A., Inc. (SKX) : Free Stock Analysis Report
The Gap, Inc. (GPS) : Free Stock Analysis Report
Canada Goose Holdings Inc. (GOOS) : Free Stock Analysis Report
