Sketchers Considers Stake in LA Clippers

Zacks

Skechers USA Inc. (SKX) hinted that it is seeking to acquire a stake in the Los Angeles Clippers basketball team, which is expected to be up for sale after it was involved in a controversy following racist remarks made by its owner, Donald Sterling. Shares of this footwear retailer dropped roughly 5% Friday.

Manhattan Beach, CA-based Skechers has been renowned in the athletic performance footwear market, and a stake in Clippers would help augment its brand value. The company in 2011 introduced Skechers Performance Division and line of Skechers GO footwear, and brought on board Olympic medalist Meb Keflezighi, who triumphed the 2014 Boston Marathon and became the first American to do so since 1985.

In the past, Skechers has signed other great icons and personalities like Joe Montana, Larry Bird, Wayne Gretzky, Evander Holyfield, Karl Malone, Mark Cuban, Tommy Lasorda and Rick Fox for its product endorsements.

Skechers kick-started 2014 as its top and bottom lines for the first quarter surpassed the Zacks Consensus Estimate and recorded year-over-year growth as well. Furthermore, the company set records of reporting the highest sales ever for the first quarter and second highest quarterly sales in its 22-year history of operation.

First-quarter earnings of 61 cents a share was favorable when compared to the Zacks Consensus Estimate of 33 cents. Moreover, the reported figure rose over fourfold from 13 cents in the prior-year quarter.

Increased demand for products, product innovation across multiple categories and healthy performance across all revenue channels led to a 21% rise in revenues to $546.5 million in the first quarter, which surpassed the Zacks Consensus Estimate of $507 million.

With increased focus on the new line of products, cost containment, inventory management, global distribution platform, healthy Apr 2014 order rates and backlogs, the company is confident of sustaining the growth momentum throughout 2014.

Skechers currently has a Zacks Rank #1 (Strong Buy). Other attractive stocks in the shoe and related apparel industry include Brown Shoe Co. Inc. (BWS), Carter's, Inc. (CRI) and Rocky Brands, Inc. (RCKY) all holding a Zacks Rank #2 (Buy).

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