Skechers U.S.A. Inc, (NYSE: SKX)
On Thursday, October 22, 2015 Skechers reported earnings for the third quarter. To say that they missed estimates would be an understatement. Shares were down nearly 30% in heavy, frantic, after hours trading. Blaming the shortfall in the earnings on a few different business segments, shares have now taken out major price support going back as far as May of this year. There were two or three main areas the company attributed to the shortfall in earnings. First, there were heavy legal expenses related to a lawsuit with Converse Inc., and also the foreign exchange rate issues which added to rent expenses that exceeded their expectations in The Times Square New York location, and other legal expenses which may have been carried forward from personal injury settlements.
In Thursday’s session, shares closed up +$0.48 at $46.19. However, in the after hours shares were down $13.54 to $32.65, or -29.31% as of 8 p.m. EST.
Skechers said it earned a record $856.2 million in net sales, but analysts had expected $876.6 million according to Bloomberg. Skechers reported diluted earnings per share of 43 cents, and $66.6 million in net earnings-estimates had been for 54 cents per share.
SKX Technical Analysis
Please see the attached charts below. The first one showing the daily price action with the visible uptrend notated by green arrows. The red shaded area is where shares would open Friday morning. The subsequent chart is the 1 minute chart of the after hours whipsaw trading session immediately after the earnings release. Note the sharp downward price movement from all of the heavy selling. As for now, it seems the upward trend has ended and Skechers has now a lot of work to do in the quarters ahead.
CEO David Weinberg had these comments to offer,
“With product and marketing initiatives that continue to resonate with our consumers worldwide, we achieved a new quarterly sales record of $856.2 million in the third quarter of 2015. These results followed record first and second quarter revenues, resulting in a 34.1 percent net sales increase for the first nine months of 2015 as compared to the same period last year,”-Yahoo Finance/Zacks
“Though we believe the sluggish macro domestic retail environment and declining currency in several key markets had an impact on our net sales, the third quarter was still a sales record,”-InvestorsBusinessDaily
Skechers U.S.A., Inc. designs, develops, markets, and distributes footwear for men, women, and children, as well as performance footwear for men and women under the Skechers GO brand name worldwide. It operates through four segments: Domestic Wholesale Sales, International Wholesale Sales, Retail Sales, and E-commerce Sales. The company offers casual footwear, including boots, shoes, and sandals for men, as well as oxfords and slip-ons, lug outsole and fashion boots, and casual sandals for women; dress casuals, seasonal sandals and boots, and relaxed fit casuals for men and women; casual fusion line for young men and women under the Skechers USA brand. It also provides footwear for men and women comprising Skechers memory foam styles, lightweight performance-inspired athletics, classic athletic-inspired styles, and sport sandals and boots under the Skechers Sport brand name; casual sneakers for females and sporty styles sneakers under the Skechers Active and Skechers Sport Active brand; and footwear for kids, men, and young women under the BOBS from Skechers name. In addition, the company offers technical footwear under the Skechers Performance brand; boots, shoes, sneakers, and sandals for infants, toddlers, boys, and girls under the name of Skechers Kids brand. Further, it provides mens and womens casuals, such as field boots, hikers, and athletic shoes under the Skechers Work brand. The company sells its products through department stores and specialty retail stores, mid-tier retailers, boutiques, and distributor and licensee-owned international retail stores, as well as through its own retail stores and e-commerce Website. As of August 11, 2015, it operated approximately 1,100 SKECHERS retail stores. The company was founded in 1992 and is headquartered in Manhattan Beach, California.-Yahoo Finance