People across the world are obsessed with the athletic trend and this California-based company, Skechers (SKX, Financial) is tapping this trend. It offers a diverse range of lifestyle footwear for men, women and children, as well as performance footwear for men and women.
People prefer sports shoes at cheaper prices. It has become a fashion statement these days. They want more comfort and for this reason they have started wearing athletic clothes instead of other apparel in their daily lives. People are wearing yoga pants on the sidewalk, to the grocery store and many other places where they previously hesitated to wear them. For this reason, the activewear market is booming rather than the general apparel market.
It sprawls over 120 countries and territories worldwide and boasts of more than 1,050 Skechers retail stores, and the company’s ecommerce website.
It works through four segments –Â International wholesale sales, domestic sales, retail sales and ecommerce segment.
Strong first-quarter results
Net sales
It achieved record $768.0 million net sales during the quarter (which was an increase of 40.5% from $546.5 million in the first quarter of 2014).
Net earnings
Net earnings in the first quarter of 2015 were $56.1 million (which was $31.0 million in the prior year period). Net earnings per diluted share in the first quarter 2015 were $1.10 based on 51.1 million weighted average shares outstanding compared to a diluted net earnings per share of $0.61 based on 50.8 million weighted average shares outstanding for the same period in the prior year.
GP
GP during the quarter was $332.5 million, or 43.3% of net sales, (which when compared to $240.4 million, or 44.0% of net sales in the prior year period).
Earnings from operations
Earnings from operations for the first quarter of 2015 were $88.2 million, or 11.5% of net sales, (in comparison to net earnings from operations of $48.2 million, or 8.8% of net sales in the prior year period).
Number of stores update
There were 1,063 stores at the quarter end including 610 international locations owned by distributors or franchisees, and it expects to grow the total Skechers store base to approximately 1,250 by year-end 2015.
Cash and cash equivalents
It has $396.7 million in cash.
(Source: Company’s Website)
Expansion
SKX is currently concentrating on product innovation and image building. It already has a strong brand reputation. It is a global lifestyle leader. It is working towards positioning itself a notch higher in the footwear industry. It is concentrating on its overseas expansion.
The company may expand rapidly in India, since India is witnessing a fast changing retail scenario. Footwear industry in this part of the globe will observe phenomenal growth in the rears to come. Various International players entered this market and provided a significant boost. SKX certainly has very good opportunities here. India is the second-largest footwear producing company after China, accounting about 13% of world footwear production.
It achieved this growth despite significant headwinds, which included the strengthening U.S. dollar, unseasonably cold weather in many markets, and the slowdown at the West Coast ports. It is expanding the European Distribution Centre by over 500,000 square feet, increasing it to more than one million square feet by the first quarter 2016.
Achievements
SKX recently announced that The Wall Street Journal (May 18, 2015) and Money.com (May 19, 2015) have both reported that the Company has moved ahead of competing footwear brands Adidas (ADDYY, Financial), New Balance and Asics to secure the number two brand share position in the U.S. athletic footwear market for the first quarter of 2015.
It has also been named Footwear Brand of the Year and Fashion Footwear Brand of the Year at The Footwear Industry Awards. SKX was also highly commended in the Sports Brand of the Year category. This achievement follows a year when SKECHERS won multiple top industry awards in the United States, including Company of the Year from both Footwear News and Footwear Plus.
(Source: Company’s Website)
To end
Skechers is investing in product innovation, marketing and infrastructure to advance and solidify its brand reputation to gain momentum around the globe. The company is all set for several new key lines launching in both the lifestyle sport and performance running and walking categories.
The company is making good efforts and that can be seen from the results. Footwear sales increased by double digits and women’s sports footwear market increased by triple digits. It has outperformed many of the industry leaders and is working hard to unseat its competitors to become the undisputed leader in the industry.
The company is off to a great start in the first quarter, and it is believed that this accelerated pace will continue. It is presently well positioned in the industry. It achieved an annual sales record of $2.4 billion in 2014 and it can be expected that the momentum will only continue. The constant development of fresh and innovative products that are appealing to a widening audience around the world, the continued marketing support it provides for every key product category, the diverse global distribution strategy, and tremendous logistical support and inventory management are key to its success.
The company has gained steadily by offering stylish products at compelling prices. The company is increasingly focused on rolling out new line of products.
The company offers designs and comfort at very reasonable prices internationally. Naturally, it is becoming a hit among the customers. It is already capturing emerging trends in the athletic industry. The company is in a good phase witnessing high revenues. It is a solid company and has the capacity to attract and add more customers to its cap. According to me, it should be a buy as of now. It is exhibiting bullish behavior. It is going to create shareholder returns in the near future.
