Skechers Q3 Earnings Beat, DTC Sales Rise Y/Y, FY2024 Guidance Up

Skechers U.S.A., Inc. SKX reported impressive third-quarter 2024 results, with the top and the bottom line surpassing the Zacks Consensus Estimate. Also, both metrics improved year over year. Following impressive performance, this Manhattan Beach, CA-based footwear company raised its fiscal 2024 guidance. As a result, shares of SKX rose 5.9% during the after-market trading session yesterday.Find the latest EPS estimates and surprises on Zacks Earnings Calendar.Skechers achieved a record-breaking quarter with strong demand across all distribution channels, highlighted by growth in both Wholesale and Direct-to-Consumer (DTC) sales. International and domestic markets saw substantial increases, with notable expansion in Europe, the Middle East & Africa (“EMEA”), driven by broad growth across all countries, strong performance in the Americas, especially in the United States and Canada, and steady gains in Asia-Pacific. The widespread appeal of Skechers’ comfort technology, coupled with ongoing investments to enhance customer experience and operational capabilities, positions the brand for sustained growth and success globally. In the past year, shares of this company have gained 31.7% against the industry’s 5.3% decline.Skechers U.S.A., Inc. Price, Consensus and EPS Surprise Skechers U.S.A., Inc. price-consensus-eps-surprise-chart | Skechers U.S.A., Inc. QuoteSkechers’ Quarterly Performance: Key InsightsSkechers posted third-quarter earnings of $1.26 per share, surpassing the Zacks Consensus Estimate of $1.15. The bottom line increased 35.5% from the year-earlier quarter.SKX generated sales of $2.35 billion, which beat the consensus estimate of $2.30 billion. Also, the top line grew 15.9% year over year, driven by the rise of 16.4% and 15.3% in international and domestic sales, respectively. Improvements in domestic and international sales were driven by robust sales in DTC and Wholesale. On a constant-currency basis, total sales grew 15.9%.The company’s wholesale increased 20.6% year over year to $1.42 billion, while DTC rose 9.6% to $931.7 million. The Zacks Consensus Estimate for wholesale and DTC sales was pegged at $1.33 billion and $955.4 Million, respectively.Wholesale increased 21.6% year over year in the Americas (“AMER”), 30.9% in EMEA and 5.1% in the Asia Pacific (“APAC”). Wholesale average selling price declined 0.5%, whereas the unit volume increased 21.2% year over year.DTC sales growth included increases of 3.7% in domestic sales and 14.4% in international sales. The DTC unit volume rose 10.7% and the average selling price declined 1%. Also, growth of 5% in the AMER, 10% in the APAC and 28% in the EMEA aided the segment’s performance.Image Source: Zacks Investment ResearchSKX’s Region Wise Performance DetailsRegion-wise, sales increased 13.6% year over year to $1.16 billion in the AMER, 30.2% to $625.6 million in the EMEA and 7.4% to $566 million in the APAC. The Zacks Consensus Estimate for net sales in the AMER, EMEA and APAC regions were pegged at $1.11 billion, $531.4 million and $617.9 million, respectively, for the quarter under review.Skechers’ Margins & Costs UpdateGross profit increased 14.1% year over year to $1.22 billion. However, the gross margin contracted 80 basis points (bps) to 52.1%, primarily driven by lower average selling price. Total operating expenses grew 15.2% year over year to $989.6 million. The metric, as a percentage of sales, decreased 30 bps to 42.2%. This Zacks Rank #4 (Sell) company’s selling expenses grew 18.4% from the year-ago period to $211.2 million due to higher demand creation expenditures. Also, general and administrative expenses jumped 14.4% to $778.5 million. Increased costs resulted from higher brand demand creation expenditure, along with elevated labor and facility costs, such as rent and depreciation.SKX’s Financial Health SnapshotAs of Sept. 30, 2024, cash and cash equivalents totaled $1.35 billion, whereas short-term investments amounted to $113.8 million.Skechers ended the quarter with long-term borrowings of $49.4 million and shareholders’ equity of $4.36 billion, excluding non-controlling interests of $461.5 million. The company incurred a capital expenditure of $113.9 million in the quarter.In the third quarter of 2024, the company repurchased 1.4 million shares of its Class A common stock for $90 million. As of Sept. 30, 2024, $910 million remained available under the share repurchase program.Skechers Store UpdateAs of Sept. 30, 2024, SKX had 5,332 stores, including 592 domestic stores, 1,151 international locations and 3,589 distributors, licensees and franchise stores.In the third quarter, the company opened 42 domestic stores, 149 international stores and 315 distributors, licensees and franchise stores. It closed 13 domestic stores, 83 international stores and 246 distributors, licensees and franchise stores in the same period.SKX’s 2024 OutlookFor 2024, management targets sales between $8.93 billion and $8.98 billion compared with the previously mentioned $8.88 billion and $8.98 billion. It predicts earnings per share (“EPS”) between $4.20 and $4.25 compared with the previously stated $4.08 and $4.18. Management anticipates a capital expenditure of $375-$400 million for 2024. The company remains committed to achieving $10 billion in sales by 2026 and delivering sustainable long-term and profitable growth.For the fourth quarter of 2024, SKX is likely to achieve sales between $2.17 billion and $2.22 billion and EPS between 70 cents and 75 cents.Key PicksWe have highlighted some better-ranked stocks in the broader discretionary sector, namely G-III Apparel Group, Ltd. GIII, Gildan Activewear Inc. GIL and Crocs, Inc. CROX. G-III Apparel Group, Ltd. is a manufacturer, designer and distributor of apparel and accessories, currently sports a Zacks Rank #1 (Strong Buy).  You can see the complete list of today’s Zacks #1 Rank stocks here. It has a trailing four-quarter average earnings surprise of 118.2%. The Zacks Consensus Estimate for GIII’s current fiscal-year sales indicates growth of 3.3% from the year-ago reported figures.Gildan Activewear Inc. is a manufacturer and marketer of premium quality branded basic activewear. It carries a Zacks Rank #2 (Buy) at present. The consensus estimate for Gildan Activewear’s 2024 earnings and sales indicates growth of 14% and 1.4%, respectively, from 2023’s reported levels. GIL has a trailing four-quarter average earnings surprise of 5.5%.Crocs develops and manufactures lifestyle footwear and accessories. It currently has a Zacks Rank #2. It has a trailing four-quarter earnings surprise of 14.9%, on average. The Zacks Consensus Estimate for Crocs’ current financial-year sales and earnings implies an improvement of 4.2% and 7.3%, respectively, from the prior-year actuals.7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +23.7% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Skechers U.S.A., Inc. (SKX): Free Stock Analysis Report Crocs, Inc. (CROX): Free Stock Analysis Report G-III Apparel Group, LTD. (GIII): Free Stock Analysis Report Gildan Activewear, Inc. (GIL): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks