Skechers (SKX, Financial) is a $2 billion global leader in the high performance and lifestyle footwear industry. It designs, develops and markets more than 3,000 styles for men, women and children. Skechers' success stems from its employees, high-quality, varied product offering, diversified domestic and international distribution channels, and targeted multi-channel marketing. The company’s success is resonated in its stock price as it has moved up consistently over the last few years. Despite the rise, Skechers has more room to grow as it is still recording double digit growth.
For the first quarter, the company recorded revenue of $768 million, ahead of consensus estimate of $707 million and an upsurge of 38.2% in their domestic wholesale business by 30.5% rise in pair shift and 5.9% rise in average price per pair.
The company reported quarterly earnings of $1.10 per share that beats the consensus estimate of $1.01, and up from 61 cents detailed in the year-ago quarter.
Still Bullish
The company has captured a strong position in the market. The market has already priced in robust future growth for Skechers as an outcome of new stores, progressive outcomes from new marketing initiatives and wider appeal of the product variety. Also, through its supply links and subsidiaries, Skechers is set to improve its global spread in the footwear market.
The company’s management team is focused on product innovations. The marketing initiatives consist of partnerships with personalities who will benefit the brand to become more popular to attract new customers. The company observed that they did not have a solid brand existence in the girls' youth market. To overcome this barrier, they signed a contract with singer Demi Lovato, to appeal to the 11-17 year old age range.
The company still struggles in Asia and South America to attain a durable position. As the North American market and European market settle down, these regions will deliver the double-digit growth rates that will drive the company’s future growth.
Future
Skechers had a marvelous quarter, with the company recording the maximum quarterly revenue in its account. In the forthcoming time, the company presumes this robust growth to carry on. To get back on the track in 2013 and 2014 with quick growth, the company underwent major sales falloffs in 2011 and 2012.
Whether this progress can continue further than this year is the question, but for now, it looks like that the company is making every possible effort to grow further, and investors are being rewarded from the strong performance of the company.
Branding and Marketing
When we talk about footwear performance, Skechers is not considered in the same league with some of its main competitors like Nike (NKE, Financial). The company also ran TV campaigns presenting two elite runners during the quarter. The company is working hard on positioning itself to achieve a strong hold in the market as a lifestyle brand with growing demand among adults.
Conclusion
After a terrific year, Skechers is still going strong. The stock is up close to 80% YTD and given the company’s growth prospects, it can still head higher. The company’s increased branding and marketing along with innovative products will help it gain market share from rivals, making it an ideal pick for long-term investors.
