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Skechers USA Inc. Message Board

  • littlejimmyvalentino littlejimmyvalentino Oct 3, 2011 11:17 AM Flag

    Long Time No Chat

    Admittedly, silence is not one of my virtues....

    But aren't we all in a waiting period to see what the next quarter will bring?

    Seems to me that poor SKX is getting beat up along with the entire market--maybe a bit more than others because of its international exposure.

    That said, it seems like it's getting beat up more than it should.

    1. From last quarter, the inventory issue appears to be waning.

    2. The new DC is on line.

    3. Would be surprised indeed if there was another inventory debacle or some other huge mishap.

    4. This thing continues to be dirt cheap. And the question might soon become, but for the stupid voting class structure, would somebody like DECK want this thing for the value of the trademarks and that Imperial Valley DC. The shoe game is quickly becoming an issue of distribution--and, think about it, for someone to duplicate it would take years. I'm not a distribution expert, buy my guess is that this thing could potentially handle a hell of a lot more shoes than just SKX--and if that's the case this thing is a license to cut down on costs which is the moral equivalent of printing money.

    5. Hurts to see it down so low. Could have been sympathy to Reebok even though I think SKX is clean.

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    • Hope all has been well for the both of you. Main reason for the post really was just to say hello.

      Can not really add much to LJV's comments, other than on #4, and this is WAY out there. Can the balance sheet stand SKX buying someone to use all the warehouse space?

      Just to keep up with my disclosurers.
      Added a tiny bit yesterday at $13.20. I tried a trade at $14.60 a little while ago, lost my nerve and sold at $14.72 and sold November $14 puts instead, which are now about even (net) if I end up with the stock. As usual, I was to early.

      • 1 Reply to catch83sails
      • Skechers Chief Operating Officer David Weinberg put it another way. The company relies on the Port of Long Beach for the movement of its goods, and the Moreno Valley site was the only place large enough to accommodate that much square footage in a single location. The $250-million distribution center will replace six smaller warehouses in Ontario.

        So let's do the math...

        Right now, the entire market cap of the company is roughly $660MM. This means, get this, that the cost of the distribution center is worth MORE than 1/3 of the entire company.

        This thing is so big that if you were driving 60 miles per hour, it would take you more than a minute to get from one side to another.

        What I do not know (and maybe others can shed some light) are the distribution needs of other shoe companies. It would make sense that SKX is not the only shoe company needing a place near that Long Beach terminal.

        It would be easier to buy the whole company than to build the distribution center.

    • ljv, welcome back. I basically agree with your points.

      I've been playing this very passively for the last 4-5 months ... just been short 50 Jan $15 puts. Today, I added 10 more for a price of $2.65.

      Good luck to you and all SKX holders.

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