It is nice to see that each day since the report that we have had higher lows.
We are also in tax loss selling season which may be keeping the stock down.
The stock filled the earnings gap down and dropped. It has now retested the low from Oct 28, and now it is easier for the stock to move up than down because of the support based on tangible book value.
Also, analyst reports can be argued as reverse indicators of where the analyst thinks the stock will go.
Very hard to get a read of what is happening inside of skx right now. q4 is soon done. the oct 27th conference call certainly did not sound the alarm that the company was burning. to the contrary, Weinberg was calm and stated the execution issues the company faced to work down inventory by end of q1 without a major impact to gross margins. he also stated that domestic backlog was up 50% and international backlog was up 100%. he also stated the company sales were higher for october 2010 than the prior year.
thru oct,nov,dec, it sure didnt seem like there was rampant discoutns and dumping of product into the market. we also know that holiday sales at retail were very strong across the board. the domestic shoe retailers all posted very strong results so we know the economy was far better than skx would have anticipated on oct 27 in the conference call. we also got the nov 30 wsj interview with Weinberg who explicitly stated that skx was working thru the inventory issue without any major discounting in the holiday season. we did also get the oct/nov sportscan reports which showed toning re-accelerating from the back to school slow down.
i think we traded quite fine in the last 60 days filling the gap in the chart until the poser downgrade. we did also get 2 hedge funds buying nearly 5 million shares in the last 60 days. there just seems to be so much selling pressure and it confounds me to know who continues to sell. we do know that fidelity dumped 5-6 million shares in the last 4 months.
so we dont know for sure what happened to sales/gross margins/net income/inventory for q4. we do know the analysts have slashed expectations for the next 4 quarters on the back of the disappointing 37% sales rise in q3. nobody has said that skx products are not selling well at retail:amazon,zappos,their own stores,famous footwear have all shown nice demand for the entire skx product line. that is the most important factor at the end of the day.
leave the stock price action aside which certainly is not confirming that things are good at skx and that may be a major mistake on my part obviously. it just seems that all anecdotal evidence and the company's very limited guidance would seem to indicate that the situation is righting itself.
what i think is being missed by analysts within this window of uncertainty is 2 things. i think the company's distribution footprint is much larger than it has ever been both domestically and most definitely internationally. their products are carried nearly everywhere in the world as they spent the money to open distributors and retail stores all over the globe. to me, that is the convincing factor in the story. the analysts are staring at their domestic retail business which has the inventory issue and not seeing how vast their distribution is to move product anywhere in the world. again, they had no toner shoe sales internationally up to this point. the roll out of toners which are still very well received in the market handles the inventory issue very nicely.
Weinberg did state that the inventory issue they face now is far easier to clean up than the one they had 2 years ago with international channels and good sell throughs which make the problem very solveable. he also said that when they report q4, it will become clear the road map to right sizing the inventory.
so we need to see if the price action improves as selling pressure abates. we may to wait a while, but i know i am sticking around to see what happens when they have 8 bucks in cash and 2.25 in earnings this year. they need to get q4 behind them and clear up the inventory uncertainty.
I think you have responded to some technical posts in the past. Does it bother you that it failed to continue the uptrend and failed to break the downtrend a few days prior to the downgrade? I just wonder if folks in the know of the coming downgrade sort of led to those failings with selling / shorting ahead of the announcement. The timing of everything here is suspicious. I keep changing my mind on what I think is going on with this company and stock. If it isn't you that responded in the past, I apologize.