On Tuesday, Williams Trading maintained its Buy rating and $82.00 price target for Skechers USA (NYSE:SKX), following insights from the company's product team. With a market capitalization of $10.4 billion and impressive revenue growth of 10.1% over the last twelve months, the firm's analyst highlighted the strength of Skechers' new performance running shoes, which are offered at price points below $160.
These products were well-received for their design and affordability. According to InvestingPro, analysts maintain a strong buy consensus on the stock, with additional insights available to subscribers.
The analyst noted a potential concern regarding the brand's marketing strategy. The prominent 'S' logo on the side of the shoes could deter serious runners and specialty retailers from purchasing the new line. This logo decision seems to follow a trend set by other established athletic brands that feature large logos on their products, like New Balance with its 'NB' insignia.
The comparison was drawn to Adidas (OTC:ADDYY) (ADS/BER-NR), which previously emphasized bold 3-stripes on its running shoes but has since adopted a more subtle approach, resulting in improved sales. Despite these concerns, Skechers maintains a healthy gross margin of 53.1%.
Despite this, Skechers was praised for its diverse and compelling offerings in various sports categories, including basketball, pickleball, and soccer. Moreover, the company is poised to expand its reach by entering the tennis market next year. The analyst's comments suggest that while Skechers is adapting to branding strategies common in the athletic footwear industry, it is also making significant strides in broadening its product portfolio across different sports disciplines.
For a comprehensive analysis of Skechers' growth strategy and financial outlook, access the detailed Pro Research Report available on InvestingPro.
In other recent news, Skechers USA Inc (NYSE:SKX). reported record sales of $2.35 billion in the third quarter of 2024, marking a 16% increase from the previous year.
The company's earnings per diluted share also rose significantly by 35% to $1.26. This growth was primarily driven by a 21% surge in wholesale operations and a 9.6% increase in Direct-to-Consumer sales. Despite regional challenges, particularly in China, Skechers saw substantial growth in international markets, which now account for 61% of total revenue.
In addition to these financial highlights, the company's Chief Financial Officer, John Vandemore, expressed optimism about recent holiday sales, describing the results as "very encouraging." However, Needham recently initiated coverage on Skechers with a Hold rating, citing near-term challenges such as a difficult market in China and moderating gross margins.
The company's full-year 2024 sales are projected to fall between $8.925 billion and $8.975 billion, with earnings per diluted share expected to range from $4.20 to $4.25. Despite a 5.7% decline in sales in China due to macroeconomic challenges, Skechers ended the quarter with a strong liquidity position, with $1.6 billion in cash and $2.42 billion in total liquidity.
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