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Skechers (SKX) Looks Good on Robust Omni-Channel Initiatives

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·4 min read
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Skechers U.S.A., Inc. SKX has managed to stay afloat amid a tough operating landscape, thanks to its focus on boosting omni-channel growth via expanding the direct-to-consumer business as well as enhancing its foothold internationally. SKX has been gaining from growth in its domestic and international channels for a while now, driven by wholesale and direct-to-consumer sales. In addition, continued global demand for its Comfort Technology footwear is steadily yielding results.

Shares of this footwear leader have gained 10.5% in the past three months against the industry’s 2.7% fall. A Value Score of B for this presently Zacks Rank #3 (Hold) stock further speaks volumes for the stock.

For 2022, the Zacks Consensus Estimate for Skechers’ sales and earnings per share (EPS) is currently pegged at $7.31 billion and $2.84 each. These estimates suggest growth of 16.3% and 9.7%, respectively, from the year-ago period’s corresponding figures. This reflects analysts’ optimism about the stock.

Management projected revenues in the range of $7.2-$7.4 billion for 2022, suggesting growth from $6.29 billion recorded in 2021. SKX envisioned adjusted earnings per share in the band of $2.90-$3.00, indicating growth from $2.50 earned last year.

Let’s Delve Deeper

Skechers is banking on digital initiatives, including the Buy Online, Pick-Up in Store and Buy Online, Pickup at Curbside capabilities. SKX has been directing resources to enrich its digital capabilities. The strategy includes augmentation of website features, mobile application and loyalty program. Management is consistently making investments toward integrating store and digital ecosystems to develop a seamless omni-channel experience.

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SKX has also been enhancing its distribution facilities and supply-chain production capabilities for a while. Skechers continued the rollout of e-commerce sites during the first quarter of 2022, along with the launch of platforms in the United Kingdom, India, Germany and Austria. Management plans to expand to additional markets in 2022. These investments highlight SKX’s progress as an omni-channel retailer.

During the first quarter of 2022, Skechers recorded double-digit growth in both its physical stores and e-commerce business, mainly driven by a 15% increase in the average price per unit from higher demand for comfort technology offerings and lower promotions. Management launched sites in the Netherlands and Italy, and intends to unveil more across Europe, Asia and South America in 2022. These solid omni-channel efforts will continue driving SKX’s performance in the future.

Additionally, Skechers’ international business is a significant sales driver. SKX is poised to expand its global reach in the footwear market through its distribution networks, subsidiaries and joint ventures. In the March quarter, international sales increased 25.5% year over year and this business accounted for nearly 57% of the sales, reflecting sturdy brand awareness worldwide. Regionwise, sales increased 31% year over year to $946.9 million in the Americas, 49% to $441.2 million in EMEA and 4% to $431.5 million in APAC.

Skechers is also quite focused on comfort-based footwear and apparel products as consumers are embracing a relaxed lifestyle. SKX is making strategic investments to improve the infrastructure worldwide, primarily e-commerce platforms and distribution centers. SKX is focused on designing and developing new products. In 2022, management plans to introduce more innovative and comfort technology products, build multi-platform marketing campaigns and launch more e-commerce sites around the world.

We believe that a greater emphasis on the new line of products, cost-containment efforts, inventory management and the global distribution platform are likely to keep driving SKX’s results ahead.

Eye These Solid Picks

Rocky Brands RCKY, a key designer and marketer of premium-quality footwear and apparel, currently sports a Zacks Rank #1. RCKY delivered an earnings surprise of 17% in the last reported quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Rocky Brands’ 2022 sales and EPS suggests growth of 23.1% and 22.8%, respectively, from the corresponding year-ago figures.

Delta Apparel DLA manufactures activewear and lifestyle apparel products. DLA flaunts a Zacks Rank of 1 at present.

The Zacks Consensus Estimate for Delta Apparel’s current financial-year sales and EPS suggests growth of 14.6% and 45.8%, respectively, from the corresponding year-ago figures. DLA has a trailing four-quarter earnings surprise of 41.1%, on average.

Footwear dealer Caleres CAL flaunts a Zacks Rank of 1 at present. CAL has a trailing four-quarter earnings surprise of 62.9%, on average.

The Zacks Consensus Estimate for Caleres’ current financial-year sales and EPS suggests growth of 5.2% and 1.8%, respectively, from the corresponding year-ago figures.


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