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Skechers U.S.A., Inc. Message Board

  • jkwelli jkwelli Dec 8, 2010 10:22 AM Flag

    SKX $100 Million Repurchase Plan

    Here is my $100 million share repurchase plan.

    The standard mantra, “manage company not the stock” is just that, standard, less productive, uncreative thinking.

    SKX can do more than one thing with its record cash of $240 million.

    At a conservative $2.50 EPS, SKX will have over $100 million more in next year.

    SKX invests this money and receives little interest. What 1% per annum?

    Keep in mind that SKX does NOT have to retire shares that it repurchases.

    They can be used for employee awards rather than expanding float.

    The shares repurchased CAN be reissued at a higher price, say when SKX’s price/book value is 2-3.

    They are NOT obligated to even repurchase $1 million.

    Details for Repurchase Plan Administrator:

    1) Purchase shares ONLY when Price to Book is less than 1.25
    2) Purchase shares ONLY on a predominately down day.
    3) Do not exceed $1 million per day
    4) DO not exceed $12.5 Million per quarter. This will spread it out over a minimum of 2 years.

    This would be a nice $100 million weight over the shorts head.

    Give the 24%+ of float short, this is the perfect time for such a strategy.

    I recommended this strategy in March 2009 for GNW. Its price was under $1, they had over $1 billion in cash. I recommended they buy $100 million immediately in their stock with intent to later reissue at higher price.

    GNW went from under $1 at time of my recommendation to $19.85 within a year.

    Company should have listened to me.

    They would have made $2 billion. That is more than five times more than they are expected to make in a year.

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    • I am going to go you one better in my analysis. the excess inventory only means something if it is older/slow moving items. Who cares if they stop purchases from the factories for a 2 or 3 month period and push out purchase times as long as what they own is what they need to sell in to the retailers? I dont believe that the current inventory is the old style shape ups and thus hard to move except with deep discounts. Considering the demand that is coming in 2011, I am happy they have lots of inventory to fill in when sales take off.

      If the excess inventory is what is actually selling well at retail, it gets worked down in the ordinary course of business by scaling back purchases, being selective on discounting and shipping to international markets which has zero shape up products at this time.

      if anyone knows whether the 100 million of shape ups is the old style and will ultimately be proven to be obsolete, please let us know, but i dont think that is the case. Remember, stocks trade off of "better or worse" news so I find it hard to believe the actual news could be worse, as mentioned on this board, even writing off the 100 million and starting fresh shouldnt have taken 1 billion off the market cap.

      • 2 Replies to cklicata
      • The SKX inventory surfaced at 2010 Back to School (Jul/Aug), which is sort of an end of year clearence right? Basically SKX produced a mass amounts of product that had been selling well for this back to school, so logic holds that it's older product? Anyone know when the latest models have been released? I need more information to know for sure and I hope I'm wrong-- SKX has to continue to compete, especially since their share is under attack. And the Reebock toners are making headway right now.

        True about good fundamentals, true about over-reaction, true about over-all value and yes, I'm still very long on this, but I've just pulled back just in case. This is the first time I've had reason to doubt, so I can't be all in anymore.

      • u r clueless

    • I agree completely on the buyback. The time to do it is now at 21 bucks and change, not at 30-40 bucks in 6 months. Everything you say is totally on point and valid and every major, large undervalued company is doing it in a big way. That said, I wouldnt hold your breath waiting for them to do it. They generally dont do things like that.

      We are acting like we want instant gratification. We need to wait it out and let things settle in. Sit and wait, 2011 will be a great year for the economy in general and skechers specifically.

20.33+0.25(+1.25%)Oct 27 4:02 PMEDT