Skechers Sprints Ahead, Eyes the Long Run

The global shoe wholesaler and retailer is enjoying industry tailwinds and firm footing in a competitive market. With a comfortable valuation, this is an attractive, premium business.

Apr 30, 2014 at 3:49PM

Footwear giant Skechers (NYSE:SKX) is walking over the competition with recent earnings results that were beyond both internal and external expectations. Its latest guidance calls for even better times ahead, as the company noted acceleration in nearly all categories since the already-strong beginning of the year. This is a business with a great understanding of current trends and a diversified portfolio that embraces a wide range of consumer taste profiles. Between the shoe brands and the stores themselves, Skechers is a global powerhouse, growing quickly despite its two-decade history. The icing on the cake is a relatively cheap valuation to drive the deal home.

Kickin' it
In the first quarter, Skechers' sales grew by an impressive 21% on their way to a record first-quarter sales high for the company. During a time of continued economic tepidity and challenging weather across much of the country, this is particularly impressive. Everything about the company's results looked great, from double-digit sales increases at the wholesale business to a 5.6% jump in same-store sales at the physical locations. So many retailers have been clawing to maintain steady comparable-store sales figures, let alone trek higher, and have leaned heavily on the "bad weather" excuse as a reason for poor performance in recent months. Clearly, if the right products are being sold, shoppers will venture out of the house.

The bottom line skyrocketed from $6.7 million in net earnings in 2013's first quarter to $31 million in the recently ended period. Some of that jump in the bottom line was due to timing, such as the shift of marketing expense from the first quarter to the second quarter due to the Easter holiday. Nonetheless, the results are incredible.

The rest of the year looks bright, too. Skechers plans to add 60 to 70 stores around the world, and it has noticed an uptick in backlogs and order rates since the beginning of 2014.

Why it's a buy
Skechers is growing at least as good if not better than many of its peers. Look at peer Wolverine World Wide for comparison. The company, which does not operate stores but has an extremely valuable catalog of brands, saw first-quarter sales decline nearly 3%, though it is still on track for a record year in 2014.

Wolverine World Wide trades at 15.2 times forward earnings and holds an EV/EBITDA of 12.15 times. Skechers trades at 15.6 times forward earnings with an EV/EBITDA of 11.13 times, reflecting the strength of its balance sheet. The company's current assets handily outweigh total liabilities.

The shoe business is resilient in the difficult retailing world, and many of the players are posting impressive growth. Skechers is one of the best in the business, and luckily doesn't trade at a premium.

Looking ahead, investors should keep an eye on areas such as marketing spending compared to sales growth. Skechers spends on celebrity endorsements, which has clearly been working well, but is a pricey way to market. As long as sales trends continue, though, this shouldn't be a problem. All in all, this a top performer with the wind at its back -- growth investors, take notice.

Is your credit card on its last leg?
The plastic in your wallet is about to go the way of the typewriter, the VCR, and the 8-track tape player. When it does, a handful of investors could stand to get very rich. You can join them -- but you must act now. An eye-opening new presentation reveals the full story on why your credit card is about to be worthless -- and highlights one little-known company sitting at the epicenter of an earth-shaking movement that could hand early investors the kind of profits we haven't seen since the dot-com days. Click here to watch this stunning video.

Michael Lewis has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.


Compare Brokers