On Friday, Williams Trading maintained a Buy rating on Skechers USA (NYSE:SKX) with a steady price target of $80.00. The firm anticipates that Skechers' growth will become apparent in the weeks ahead, as the back-to-school season kicks off and European inventory levels are adjusted. Skechers is experiencing increasing demand across various channels, regions, and product lines.
The company's second-quarter results for 2024 surpassed earnings per share (EPS) expectations but fell short on revenue targets and did not meet consensus estimates. The shortfall was attributed to delayed wholesale shipments to Europe, which were impacted by the inability to use the Suez Canal due to conflicts in the Middle East. This necessitated rerouting shipments around the Cape of Good Hope, resulting in a delay of over two weeks for European deliveries.
It is estimated that approximately $50 million worth of orders slated for the second quarter will be delivered in the third quarter of 2024 due to these delays. Consequently, at the close of the second quarter, Skechers' on-hand inventory in Europe was approximately 40% lower than usual, while in-transit inventory saw an increase of over 150%.
Despite the logistical challenges, Skechers reported a 13.7% increase in sales in Europe for the second quarter of 2024. The company's resilience in the face of supply chain disruptions has been noted, with expectations of a rebound in the upcoming quarter as delayed shipments reach their destinations.
In other recent news, Skechers USA Inc . reported a record $2.16 billion in Q2 sales, marking a 7.2% increase year-over-year. This growth was attributed to strong demand for the company's products across all regions and segments, despite supply chain disruptions and economic challenges. Notably, Skechers also achieved over $1 billion in direct-to-consumer sales for the first time.
In addition to these milestones, the company announced a new $1 billion share repurchase plan. Skechers also increased its full-year sales guidance to between $8.875 billion and $8.975 billion, indicating confidence in its growth trajectory.
Despite a slowdown in foot traffic in physical stores and regulatory changes impacting sales in India, the company saw international sales grow significantly, particularly in physical retail and e-commerce channels. Skechers continues to focus on scaling the business for profitable growth and plans to open additional stores worldwide.
InvestingPro Insights
As Skechers USA (NYSE:SKX) navigates through the supply chain challenges and sets its sights on the back-to-school season, investors might find the latest data and insights from InvestingPro particularly enlightening. Skechers is trading at a P/E ratio of 16.62, which is attractive given the company's near-term earnings growth. Moreover, the company's P/E ratio has adjusted slightly downwards to 16.35 over the last twelve months as of Q1 2024, suggesting a stable valuation in the face of recent market fluctuations.
InvestingPro Tips indicate that analysts have revised their earnings upwards for the upcoming period, reflecting confidence in the company's potential for growth. Additionally, Skechers is noted for its low price volatility, providing a level of assurance for investors looking for stability in their portfolio. With liquid assets surpassing short-term obligations and the company operating with a moderate level of debt, the financial health of Skechers appears robust.
For those seeking more in-depth analysis, InvestingPro offers additional tips on Skechers, including insights into profitability, historical returns, and dividend policies. To access these valuable tips and more, consider using the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
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