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What: Shares of Skechers USA Inc (SKX -0.82%) dove last month on a disappointing second-quarter earnings report, falling 19% according to data from S&P Global Market Intelligence. As you can see from the chart below, the stock got slammed on July 22 due to the second quarter earnings report.
So what: The country's second favorite footwear maker missed estimates on both the top and bottom lines. Earnings came in at $0.48 per share, down from $0.52 and below expectations at the same mark. Revenue increased 9.7% to $877.8 million, but that was also short of the analyst consensus.
The poor performance was due in part to sales being pulled from April to March in the domestic channel; in addition, domestic sales actually fell 5.4% in the quarter, though international growth was strong. CEO Robert Greenberg noted political and economic uncertainty during the quarter and challenges in the domestic retail space, which have been reflected in other retailers' performance as well.
Now what: Skechers rose quickly on strong growth, and the stock is coming undone just as fast now as that growth story is in question. Last quarter marked its slowest revenue growth since 2012. The company has invested in expanding abroad, where it's found consistent sales growth, but the domestic decline is concerning. Rival Nike has also posted slowing growth of late, a sign that consumer tastes may be changing.
Guidance for the current quarter -- the key back-to-school season -- was also weaker than expected, as the company sees sales of $950 to $975 million, below the analyst estimate of $1.02 billion. Trading at a price-earnings ratio of just 13 now, Skechers is a good value if it can muster a comeback, but the underwhelming guidance and declining domestic sales are disconcerting.
