SKX - Embedded Expectations Analysis - 2019 08 16
Skechers U.S.A., Inc. (SKX:USA) currently trades near historical averages relative to UAFRS-based (Uniform) Earnings, with a 12.4x Uniform P/E, implying bearish expectations for the firm, and management has concerns about their ability to sustain gross margins and drive growth.Specifically, management may be concerned about further declines in their wholesale business and continued gross margin erosion. Furthermore, they may lack confidence in their ability to sustain recent reductions in selling expenses, and may be exaggerating the benefits they will realize from increasing scale. Moreover, they may lack confidence in their ability to provide value in shoe categories other than running, and may be exaggerating the value of their spokespeople. In addition, they may lack confidence in their ability to sustain recent domestic sales growth and achieve double digit growth in 2019. Finally, they may lack confidence in their ability to cross sell their products across demographics and capture market share previously held by Payless Shoes.
Skechers USA designs and markets Skechers-branded lifestyle footwear for men, women and children, and performance footwear for men and women under the Skechers Performance brand name. The company also designs and markets men's and women's Skechers branded lifestyle apparel, and license the Skechers brand to others for accessories, leather goods, eyewear and scrub manufacturers, among others. The company's product offering is sold through department and specialty stores, athletic and independent retailers, boutiques and internet retailers. In addition to wholesale distribution, the company's footwear is available at its direct-to-consumer websites and its own retail stores.
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