Skechers Gains 26% in a Year on Strategic Initiatives: An Opportunity?

Core Insights - Skechers U.S.A., Inc. (SKX) shares have increased by 26% over the past year, outperforming the Zacks Shoes and Retail Apparel industry's decline of 11.6% [1] - The company is focusing on omnichannel capabilities and global market expansion, leading to significant growth in both wholesale and direct-to-consumer (DTC) segments [1][5] - Skechers' stock is currently trading at a forward 12-month price-to-earnings ratio of 13.09, which is below its five-year median of 15.37 and the industry's average of 25.31, indicating attractive valuation for investors [2] Financial Performance - In Q3 2024, Skechers' wholesale sales rose by 20.6% to $1.42 billion, driven by a 26% increase in domestic sales and an 18% rise internationally [6] - The DTC segment also saw a 9.6% increase in sales, reaching $931.7 million, with international DTC sales up 14.4% [7] - Skechers raised its fiscal 2024 sales outlook to between $8.93 billion and $8.98 billion, up from the previous estimate of $8.88-$8.98 billion, and increased its EPS forecast to $4.20-$4.25 from $4.08-$4.18 [8][10] Strategic Initiatives - The company is investing $375-$400 million in capital expenditures to support store openings, omnichannel expansion, and distribution infrastructure improvements [9] - Skechers' multi-brand strategy allows for the introduction of new products without impacting existing brands, broadening its consumer appeal [4][12] - The focus on comfort technology has enhanced consumer appeal and contributed to robust performance across both physical and online channels [7][12] Market Outlook - Analysts have positively revised earnings estimates for Skechers, with the consensus estimate for the current financial year increased by 7 cents to $4.21 per share [10] - The consensus estimate for the next financial year has also been raised by 4 cents to $4.85 per share, indicating expected growth of 12.2% and 9.4% for the current and next year's sales, respectively [11]