Why Skechers Stock Dropped Like a Rock Today

Core Viewpoint - Skechers reported a decline in stock price following its Q4 2024 financial results, indicating investor concerns over slowing growth and lower-than-expected earnings per share [1][2][3]. Financial Performance - In Q4 2024, Skechers achieved sales of $2.21 billion, reflecting a 13% year-over-year increase, which was near the high end of management's guidance but slightly below market expectations [2]. - The company reported earnings per share (EPS) of$ 0.65, falling short of management's forecast of $0.70 to$ 0.75 [2][3]. Growth Outlook - Despite achieving double-digit growth in 2024 and setting all-time sales records, Skechers anticipates a slowdown in growth, projecting sales of at least $9.7 billion in 2025, which represents an increase of 8% [3]. - EPS guidance for 2025 is set at$ 4.30 to $4.50, indicating a modest year-over-year growth of only 3% to 8%, which suggests a potential contraction in profit margins [3]. Valuation and Stock Buyback - Skechers is currently trading at approximately 15 times forward earnings, which is considered a fair valuation, especially in the context of the stock's recent decline [4]. - The company has authorization to repurchase nearly$ 800 million in stock, which could be advantageous given the lower share price [4]. Market Position and Long-term Perspective - The company does not appear to be facing significant competitive pressures, as sales have increased in 2024 and are expected to continue rising in 2025 [5]. - Skechers is viewed as a solid long-term investment, although the market may experience fluctuations, and 2025 could present challenges [5].