Yahoo Finance Skechers (SKX) Rides On Brand Lineups, Growth Strategies
Skechers U.S.A., Inc. SKX is making significant strides in the market with its diverse brand offerings, innovative digital capabilities and expansive global growth strategies. The company's strategic focus, especially in the direct-to-consumer (DTC) and international segments, showcases its ability to adapt to changing consumer preferences, and positions it for sustained growth and market leadership.
This Zacks Rank #1 (Strong Buy) company has demonstrated remarkable market performance over the past year, significantly outpacing the Zacks Shoes and Retail Apparel industry. Over this period, SKX shares jumped 44.5%, while the industry experienced an 11.8% decline. This performance highlights Skechers' robust market strategies and resilience during challenging economic conditions.
The Zacks Consensus Estimate of current and next year’s sales is pegged at $8.85 billion and $9.70 billion, respectively, suggesting year-over-year growth of 10.6% and 9.6%. Also, the Zacks Consensus Estimate for current and next-quarter earnings is pegged at $4.08 and $4.64 per share, respectively, indicating year-over-year increases of 16.9% and 13.7%.
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Key Drivers
Skechers is committed to maintaining its competitive edge through investments in infrastructure and technology. The company's plans to open retail locations, enhance omnichannel capabilities, and build a second distribution center in China aim to improve operational efficiency and expand its global reach. These initiatives demonstrate Skechers' financial stability and strategic investments, positioning it for continued success in 2024 and beyond.
Skechers' diverse product portfolio, which includes fashion, athletic, non-athletic and work footwear, allows the company to manage multiple brands simultaneously, attracting a broad customer base. This strategy enables product launches without affecting existing lines.
The company is also advancing its digital initiatives by enhancing website features, mobile apps, and customer loyalty programs. By integrating in-store and online experiences, Skechers aims to provide a seamless shopping journey that boosts sales volumes. Improvements to point-of-sale systems are underway to enhance customer interactions, both online and in physical stores, further driving sales and customer satisfaction.
The DTC segment achieved a 17.3% year-over-year increase in sales, reaching $829.9 million in the first quarter of 2024. This growth is evident across both physical stores and e-commerce platforms, driven by effective marketing strategies and continuous product innovations, particularly in comfort technologies.
Strong International Business
Skechers' international business operations are crucial to its overall growth trajectory. The company's success in the 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.
In the first quarter, international sales grew 15.2% year over year, accounting for 64.5% of the total sales. The APAC region, in particular, rose 15.9%, demonstrating Skechers' ability to adapt to diverse consumer preferences and leverage emerging market trends.
Promising Outlook
For fiscal 2024, Skechers forecasts sales between $8.73 billion and $8.88 billion, up 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, including store openings, omnichannel capability expansion and distribution infrastructure enhancements. The company is on track to achieve its ambitious goal of $10 billion in annual sales by 2026.
Wrapping Up
With substantial investments in infrastructure, technology and international markets, Skechers is well-positioned to sustain its growth trajectory and achieve ambitious goals. As it moves forward, the company's commitment to enhancing the customer experience and expanding its global footprint will be key drivers in maintaining its competitive edge and delivering long-term value to shareholders.
Other Key Picks
Some other top-ranked stocks 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. The company currently sports a Zacks Rank #1. 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. The company 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 current fiscal-year earnings and sales indicates growth of 47.3% and 10.4%, respectively, from the fiscal 2023 reported figures. ANF has a trailing four-quarter average earnings surprise of 210.3%.
Canada Goose is a global outerwear brand. It sports a Zacks Rank of 1 at present.
The Zacks Consensus Estimate for Canada Goose’s current fiscal-year earnings indicates growth of 13.7% from the year-ago period’s reported figures. GOOS has a trailing four-quarter average earnings surprise of 70.9%.
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