Skechers (SKX) Stock Pummeled on 3Q Earnings Miss
Shares of Skechers Inc. (SKX) were trading down -12.54 or -27.15 percent to $33.65 per share in Friday’s premarket after the company announced lower than expected earnings for the Skecher’s third quarter yesterday after the market close. Skechers stock closed at $46.19, up +0.48 or +1.05 percent in Thursday’s regular trading session.
Based in Manhattan Beach, California, Skechers Inc. was founded in 1992 by former LA Gear founder and Chief Executive, Robert Greenburg and his son Michael.
For the company’s fiscal third quarter, Skechers reported adjusted earnings per share of $0.58, nevertheless, after non-recurring items and a $0.15 per share charge that the company took due to legal expenses and the result of the settlement, net earnings came to $66.6 million or $0.43 per diluted share.
Net sales came in at $856.2 million compared to $674.3 million in the same period one year ago. The analyst consensus was for the company to report earnings of $0.55 per share on revenue of $876.5 million.
Robert Greenberg, Skechers’ Chief Executive Officer said in a statement that, “The Company continued its positive sales trend in the third quarter with double-digit gains in our international subsidiary, distributor and joint venture operations, including a triple-digit increase in China. To build our brand during the period, we aired numerous commercials for kids with our animated characters, as well as a new Sugar Ray Leonard Skechers Sport spot, a BOBS from Skechers spot featuring the No. 1 song ‘Riptide’ from Vance Joy, and our Demi Lovato commercial during the excitement over her new single ‘Cool for the Summer,’ among others.”
The company said that the lower than expected results were directly affected by the strong U.S. Dollar — impacting earnings with a loss of $13.5 million — deferred rental costs on the company’s new Fifth Avenue, New York City retail store and legal costs on personal injury lawsuits in addition to expenses on an intellectual property suit against Converse.
While third quarter numbers were significantly lower than the analyst consensus, Skechers achieved profitability in its international operations despite the strong dollar. In addition, despite missing analyst estimates for revenue, the company’s quarterly sales were the highest in Skechers’ 23 year history.
Even with the almost thirty percent decline in Skechers’ stock this morning, shares are still significantly higher than they were in early 2014, when the stock was trading below $10 per share. Nevertheless, Skechers’ stock is still down more than twenty points or -37 percent from its high of $54.53 made in mid August.
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