Skechers U.S.A. Inc. SKX is an appropriate investment option as the company’s shares have rallied approximately 30% compared with the overall Consumer Discretionary sector’s growth of 16.2%. In contrast, the industry has declined 67.5% in the past six months.
That said, let’s delve into the factors that make this Zacks Rank #2 (Buy) stock a promising bet.
Growth Initiatives Well on Track
Skechers is focused on its new line of products, corporate upgrades and store remodelling projects, cost-containment efforts, inventory management, and global distribution platform. Further, the company’s domestic e-commerce business is performing well. Notably, the metric registered an increase of 35.3% during the first quarter of 2019. Additionally, it is making efforts such as product innovation, additional store openings and increasing distribution channels by entering distribution agreements to boost sales and profitability.
Sturdy International Business a Key Catalyst
International business is a major sales growth driver for Skechers, with Europe and China being significant markets outside the United States. The company witnessed sales growth of 9.3% during the first quarter of 2019 across its international business, representing 57.8% of total sales. Skechers’ international wholesale business grew 8.7%, while direct-to-consumer business increased 13.2%. Management expects international business to sustain momentum and increase at a mid-teen rate both in the second quarter and for the full year.
Solid performance in the international wholesale and the global retail businesses is aiding results. Further, Skechers completed the transition of Indian joint venture to a wholly-owned subsidiary. It also entered a deal to form a joint venture in Mexico with its current distribution partner. Both investments are expected to be accretive to 2019 earnings.
All said, we expect Skechers’ growth plans to help keep its stellar show on.
3 More Stocks to Bank On
Adidas ADDYY, with a long-term earnings per share growth rate of 15%, sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Deckers Outdoor Corporation DECK, with a long-term earnings per share growth rate of 11.6%, carries a Zacks Rank #2.
Lululemon athletica LULU, with a long-term earnings per share growth rate of 18.4%, also carries a Zacks Rank #2.
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