Shares of Skechers (NYSE:SKX) rose on Friday after the footwear company reported mixed third-quarter results and provided strong fourth-quarter guidance. While Skechers' revenue fell short of expectations, earnings declined by less than expected. The stock was up about 14.9% at 11 a.m. EDT.
Skechers reported third-quarter revenue of $1.176 billion, up 7.5% year over year but $40 million short of the average analyst estimate. Currency was a headwind during the quarter, reducing the revenue growth rate by 1 percentage point.
Revenue growth was driven by an 11.8% increase in international wholesale revenue and a 10.6% increase in global retail sales. The international distributor business returned to growth in the quarter, posting an 11.6% revenue increase, while the domestic wholesale business suffered a 3% sales decline.
Earnings per share came in at $0.58, down from $0.59 in the prior-year period but $0.06 better than analysts were expecting. Gross margin edged up 0.4 percentage points year over year, offsetting an increase in operating expenses. Skechers' operating profit rose 6.4%, but a higher tax rate led to the per-share earnings decline.
Skechers expects to generate revenue between $1.100 billion and $1.125 billion in the fourth quarter, along with earnings per share between $0.20 and $0.25. Analysts were expecting revenue and EPS of $1.08 billion and $0.18, respectively.
Shares of Skechers tumbled after its second-quarter report in July in part due to rapidly rising costs. The company was able to keep costs in check during the third quarter, pushing the bottom line above expectations. Skechers will need to keep it up for the stock to regain the ground it's lost this year.