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5:55 am Skechers USA (SKX)

Skechers USA (SKX) is indicated approximately +9% higher in after-hours trading after the company reported better than expected Q4 sales and in-line EPS, and management said that they're comfortable with Q1 consensus.

If you're not familiar with the company, SKX makes footwear for men, women, and children. It sells its products wholesale primarily through department stores and shoe stores, as well as through its own retail locations and online. The company has carved out a recognizable niche for itself, and has been growing rapidly in recent years due to robust consumer demand for its offerings, strong pricing power, and rising average selling prices as the company continually rolls out new, higher-end shoes. Another key component of its growth strategy has been to aggressively expand into international markets.

Following a long series of better than expected quarters dating back to 2013, the stock was hit hard following disappointing Q3 results on October 22, which reflected the crucial back-to-school season. Management attributed the miss to the sluggish domestic retail environment and negative foreign exchange rates.

In this context, last night's Q4 report was reassuring. Sales rose +27% to $722.7 million, which was a new record and comfortably exceeded expectations. EPS rose +19% to $0.20 (excluding a penny in higher tax expense), which was in-line with investor expectations. Management also said that they remain comfortable with analysts' current consensus range of $885 million to $920 million in net sales and $0.50 to $0.55 in earnings per share for Q1.

During the conference call, the company provided some color on the quarter: "The growth we achieved in the quarter and for the full year was due to the strength of our men's, women's, and kid's lines, led by the global acceptance of our Skechers Sport, Skechers GOwalk, Relaxed Fit, and sporty styles for kids. The gains in the U.S. came despite sluggish retail environment in the back half of the year and within our international business, despite negative impact of foreign currency exchange rates in several key markets. We believe the momentum we experienced throughout 2015 will continue through 2016."

International sales were a particular bright spot, with Q4 international sales up +65% despite currency issues in several key markets such as Brazil, Canada, and Chile.

Perhaps more encouraging was management's commentary in the press release that: "As we look at the coming year, we believe our Company-owned retail stores are on target with mid- to high-single digit retail comps in January and we are continuing to gain market share. We have had a very strong start to the first quarter with January sales up approximately 35 percent compared to January 2015 as well as a strong first week of February. Our backlogs are up 9.5 percent at December 31, 2015, which were impacted by some distributors pulling forward orders from January to December. During the fourth quarter, our distributor sales increased 91.6 percent as compared to the same period last year. Additionally, our incoming order rate in January was also very strong with both our domestic wholesale and European subsidiary businesses ordering closer to season, which is resulting in increasingly improved backlogs for the first quarter."

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