Skechers Transforms in Japan - Analyst Blog
March 06 2012 - 11:03AM
Zacks
Following its sluggish fourth-quarter 2011 results,
Skechers USA Inc (SKX) is trying hard to
reposition itself for 2012. Yesterday, the company announced its
intention to double its business in Japan over the next three to
five years by transitioning its business model from a third-party
distributor to a wholly owned subsidiary.
Japan has been one of the company’s biggest distribution
markets. Thus, the company plans to roll-out new Skechers retail
stores across the country, including its collection of performance
and lifestyle footwear for men, women and children for boosting
revenues.
International business remains a significant growth driver for
the company’s sales. International wholesale business’ revenue
jumped 12% to $487.3 million during fiscal 2011 and International
retail sales surged 22% during fiscal 2011.
Further, management remains committed to focus on new lines of
products, including ‘Skechers GOrun,’ opening of additional
Skechers stores and increasing distribution channels with the
development of international distribution agreements to improve its
sales and profitability.
Skechers reported a loss of 54 cents per share in the fourth
quarter of 2011 compared with earnings of 7 cents in the prior-year
period. On a reported basis, including one time items, Skechers
delivered a loss of $1.18. The Zacks Consensus Estimate stood at a
loss of 23 cents for the quarter.
Moreover, Skechers, which competes with Deckers Outdoor
Corporation (DECK) and Nike Inc. (NKE),
stated that total net sales for the quarter dropped 37.7% to $283.2
million from the prior-year quarter, reflecting lower sales of
high-priced toning shoes and sluggish performances across other
footwear lines, principally in domestic wholesale business. The
reported revenue was well short of the Zacks Consensus Estimate of
$322 million.
The company appointed Hirokazu Iwasaki as the new representative
director and country manager of Skechers Japan.
Currently, we maintain a long-term Neutral recommendation on the
stock. However, Skechers retains a Zacks #5 Rank that translates
into a short-term Strong Sell rating
DECKERS OUTDOOR (DECK): Free Stock Analysis Report
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SKECHERS USA-A (SKX): Free Stock Analysis Report
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