Skechers (SKX) Gains From Robust Sportswear & E-Commerce
Skechers U.S.A., Inc.’s SKX entrance into sports categories and strategic alliances underscore its commitment to innovation and adaptability in the market. These efforts reflect a pro-active strategy to capture market segments and respond to changing consumer tastes.
Management’s strategic vision is clear in its efforts to leverage the increasing demand for comfort technology products, establishing Skechers as the preferred brand for consumers seeking style and functionality. Additionally, SKX's investments in digital capabilities have not only enhanced its e-commerce presence but also improved customer engagement.
The company offers a broad selection of products spanning fashion, athletic, non-athletic and work footwear at appealing prices. The brand has recently shifted its emphasis toward comfort-oriented footwear and apparel, aligning with the growing consumer trend toward more relaxed lifestyles in work and leisure settings.
In a strategic move to enhance its footprint in North America, Europe and other crucial regions, Skechers has rolled out three collections in partnership with Snoop Dogg. This initiative, coupled with collaborations with Martha Stewart and the Rolling Stones, has significantly boosted the brand's profile.
Innovation is at the heart of Skechers' operations, as seen in unique offerings like the Hands-Free Slip-ins and Arch Fit. The brand's marketing strategies, leveraging global influencers, underscore its dedication to merging comfort with modern style.
The Direct-to-Consumer (DTC) segment plays a vital role in Skechers' business model, with DTC sales rising 23.8% year over year in the third quarter of 2023, reaching $850.4 million and representing 42% of the total sales.
The company saw a 14.1% increase in domestic DTC sales and a significant 33.3% jump in international DTC sales year over year. The DTC unit volume also grew 18.8%, alongside a 4.3% increase in the average selling price. The exceptional performance of its retail stores worldwide and the success on international e-commerce platforms have been instrumental in driving this growth.
Financial Goals
Skechers has set ambitious sales targets, aiming to reach $10 billion in annual sales by 2026. With management actively investing in store openings, omnichannel capabilities and expanding distribution, particularly in key markets like India, China and Chile, the company appears optimistic about achieving its sales target of $7.95-$8.05 billion and earnings per share target of $3.33-$3.43 for financial year 2023.
To wrap up, Skechers has showcased significant growth and adaptability by venturing into new sports categories and forging strategic partnerships. With a notable uptick in DTC sales and a product lineup focused on comfort, Skechers is poised for sustained success, surpassing industry standards and confidently advancing toward its ambitious sales objectives.
Other Players in the Industry
As Skechers continues to make waves in the footwear industry, it is essential to take a closer look at the broader competitive landscape.
Deckers Outdoor Corporation DECK is a leading designer, producer and brand manager of innovative, niche footwear and accessories developed for outdoor sports, and other lifestyle-related activities.
Deckers is committed to building HOKA into a major player in the performance athletic market. The HOKA brand is expected to rise more than 20% in fiscal 2024, with most of the increase likely to come from the brand's DTC business. Deckers’ UGG brand’s revenues are anticipated to rise in the low-single digits, backed by international expansion and gains from DTC.
American Eagle Outfitters Inc. AEO is a specialty retailer of casual apparel, accessories and footwear for men and women. The company’s efforts to rationalize inventory and contain costs are paying off.
The strong performances of key brands like American Eagle and Aerie, coupled with expansions into premium and activewear segments, indicate growth potential. The introduction of store designs and online enhancements demonstrates its commitment to improving the customer experience.
Urban Outfitters Inc. URBN is a lifestyle specialty retailer that offers fashion apparel and accessories, footwear, home décor and gift items. The company seems a promising bet due to its solid business strategies and sound fundamentals.
Management has been strengthening its direct-to-consumer business, enhancing productivity across existing channels and optimizing inventory levels. URBN’s strategic growth initiative, the FP Movement and store-growth endeavors are also impressive.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
American Eagle Outfitters, Inc. (AEO) : Free Stock Analysis Report
Skechers U.S.A., Inc. (SKX) : Free Stock Analysis Report
Deckers Outdoor Corporation (DECK) : Free Stock Analysis Report
Urban Outfitters, Inc. (URBN) : Free Stock Analysis Report
