Skechers U.S.A., Inc.’s (SKX) expansion into new sports categories and strategic collaborations showcases its commitment to innovation and market adaptability. The company’s forward-thinking approach underscores its proactive measures to seize new market segments and cater to evolving consumer preferences.
The company’s keen foresight is evident in its ability to tap into the burgeoning demand for comfort technology products, cementing its status as a go-to choice for consumers seeking a blend of style and functionality. Skechers’ investment in digital capabilities has not only strengthened its e-commerce presence but has also elevated customer engagement.
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Expanding Product Range Signals Promise
Skechers continues to offer a wide array of products, spanning fashion, athletic, non-athletic, and work footwear, all at competitive prices. Lately, the company has emphasized comfort-oriented footwear and apparel, aligning with the growing trend of consumers seeking a more relaxed lifestyle in both work and leisure settings.
Skechers has introduced three collections in partnership with Snoop Dogg, bolstering its market presence in North America, Europe, and other key regions. This collaboration, along with tie-ups with Martha Stewart and the Rolling Stones, has heightened the brand’s visibility.
The company’s commitment to innovation shines through its diverse product lines such as the Hands-Free Slip-ins and Arch Fit. SKX’s marketing initiatives, featuring global influencers, underscore its focus on seamlessly blending comfort with contemporary style.
DTC Business – A Key Growth Driver
The direct-to-consumer (DTC) business has significantly contributed to Skechers’ overall performance. DTC sales witnessed a notable year-over-year surge of 23.8% in the third quarter of 2023, amounting to $850.4 million and constituting 42% of total sales.
The company achieved a 14.1% surge in domestic DTC sales and a substantial 33.3% rise in international DTC sales. Additionally, the DTC unit volume displayed an 18.8% upturn, accompanied by a 4.3% increase in the average selling price. The robust performance of retail stores globally and significant outperformance on international e-commerce platforms were pivotal in driving growth.
Financial Projections
Skechers is optimistic about reaching its goal of $10 billion in annual sales by 2026. Notably, the management is actively investing in various avenues, including store expansions, enhancing omnichannel capabilities, and bolstering distribution capacity in key markets such as India, China, and Chile.
For 2023, the company aims to achieve sales within the range of $7.95-$8.05 billion, compared to $7.44 billion in 2022. Furthermore, it anticipates earnings per share of $3.33-$3.43, up from the previously mentioned $3.25-$3.40, against the $2.38 reported in 2022.
Conclusion
This Zacks Rank #2 (Buy) stock has outperformed the Zacks Shoes and Retail Apparel industry over the past year. Notably, the company’s shares have surged 36.6% during this period, contrasting with the industry’s decline of 20.4%.
Skechers has demonstrated remarkable growth and agility through its foray into new sports categories and strategic partnerships. With a notable increase in DTC sales and a diverse product range focused on comfort, Skechers is well-positioned for sustained success, surpassing industry benchmarks and confidently progressing toward its ambitious sales targets.
Three Other Promising Stocks to Consider
A few other top-ranked stocks are The Gap, Inc. (GPS), Abercrombie & Fitch Co. (ANF), and Deckers Outdoor Corporation (DECK).
The Gap is a leading international specialty retailer offering a wide range of clothing, accessories, and personal care products. The company currently holds a Zacks Rank #1 (Strong Buy). You can explore the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Gap’s current fiscal-year sales indicates a 387.5% growth from the figures reported in fiscal 2022. GPS has a trailing four-quarter average earnings surprise of 138%.
Abercrombie is a specialty retailer of premium, high-quality casual apparel. The company boasts a Zacks Rank #1 at present. ANF delivered a remarkable 60.5% earnings surprise in the last reported quarter.
The Zacks Consensus Estimate for Abercrombie’s current fiscal-year sales implies a 15.1% uptick from the figures reported in fiscal 2022. ANF has a trailing four-quarter average earnings surprise of 713%.
Deckers is a leading designer, producer, and brand manager of innovative, niche footwear and accessories. It currently holds a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for Deckers’ current fiscal-year earnings and sales signals a 21.9% and 11.7% growth, respectively, from the figures reported in fiscal 2023. DECK has a trailing four-quarter average earnings surprise of 26.3%.
