A Big Upgrade for Skechers

After spending much of the past year in the doldrums, Skechers (NYSE: SKX  ) has impressed enough top-performing members of our 170,000-strong Motley Fool CAPS community recently to hover around four stars. A total of 414 members have given their opinion on the trendy shoe purveyor, with many of them offering analysis and commentary explaining the recent optimism.

Skechers' recent sales growth has caught the attention of many CAPS members who see good potential to profit following a big fall in the share price. Hot-selling toning shoes and the benefits they purportedly bring have faced skepticism from the likes of Nike (NYSE: NKE  ) and the American Council on Exercise studies, but CAPS members who are bullish on the stock see it as more than a fad and expect the company to come out on top of the debate.

Skechers' recent success isn't isolated to its own footwear. Other shoemakers such as Deckers Outdoor (Nasdaq: DECK  ) and Crocs (Nasdaq: CROX  ) have seen an uptick in demand for their products around the globe as well. Deckers and Crocs posted big second-quarter earnings growth, while Skechers set its own sales and earnings records in the second quarter.

And while other U.S.-based apparel companies such as Coach (NYSE: COH  ) are successfully capitalizing on growing international recognition of their brands, many investors see the same potential for Skechers to grow beyond U.S. borders. Sales in its international wholesale segment shot up 27% in the second quarter, and it aims to grow its international business to about 25%-30% of total sales this year.

Skechers is also taking a more direct approach aimed at maintaining the momentum of its toning shoe sales. Similar to the ambitious plans of venerated shoe kings Nike and Under Armour (NYSE: UA  ) to rapidly expand their branded store count, Skechers plans to open 37% more stores this year and target its Shape-ups toward athletes. It believes its own well-trained employees can spread the Shape-ups message better than a department store like J.C. Penney (NYSE: JCP  ) that sells other brands, and hopefully prevent them from becoming a passing trend.                          

Do you think Skechers deserves its raised status? Add your thoughts in the comments box below, or head over to CAPS to rate the company and check out all the information and opinions the community offers, absolutely free.

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Fool contributor Dave Mock recently upgraded his ice cream sundae recipe with a sprinkle of toasted almonds. He owns no shares of companies mentioned here. Under Armour is a Rule Breakers pick. Coach and Nike are Stock Advisor choices. Under Armour is a Hidden Gems selection. The Fool owns shares of Coach and Under Armour.

True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community. The Fool's disclosure policy currently holds a .340 batting average.


Read/Post Comments (3) | Recommend This Article (8)

Comments from our Foolish Readers

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  • Report this Comment On September 21, 2010, at 8:57 AM, ragrillo wrote:

    I believe Skechers is a solid story, and I've taken advantage of the severe decline to accumulate shares. I explain the reasons behind my conviction in the following analysis:

    http://investbyads.blogspot.com/2010/07/skechers-shape-up-yo...

  • Report this Comment On September 25, 2010, at 2:16 AM, ayaghsizian wrote:

    I've sold puts at 22.50 and bought stock at 22. I plan on buying much more if it drops a little more. Up to 20% of my net worth.

    First reason, so many people like skechers shoes, not just shape ups.

    Second reason, skechers has alot of cash, making alot of money, but priced like it's going out of business in a few years.

    I just wish I could buy long term call options. (there's no market as far as I know)

  • Report this Comment On November 07, 2010, at 9:15 AM, ddog12345 wrote:

    skechers is a dying company just like Motely Fool is

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