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Why Skechers Stock Rose 11% in May

By Demitri Kalogeropoulos – Updated Jun 8, 2020 at 9:11AM

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The footwear specialist attracted more investors as Wall Street looked past the widespread closures hurting the retailing industry.

What happened

Shares of Skechers (SKX -0.69%) outperformed a surging stock market last month. The stock rose 11% in May compared with a 4.5% increase in the S&P 500, according to data provided by S&P Global Market Intelligence.

Yet the boost only erased a portion of the losses that investors have seen in recent months, and the stock is still down over 15% since the start of 2020.

A shopper picks out new shoes.

Image source: Getty Images.

So what

The footwear giant's last earnings report, in late April, showed that first-quarter earnings were nearly cut in half through the early days of COVID-19 store closures. Management expressed confidence in a potentially quick rebound, and investors last month bought into that optimistic reading as it appeared possible that the pandemic's effect on the economy may be lessening.

Now what

Now that its retailing partners are reopening, Skechers should have positive comments to make about its outlook when it announces second-quarter results in mid-July. But that period will cover some of the biggest COVID-19 impacts, including any potential inventory writedowns associated with seasonal merchandise that missed its demand window. As a result, operating trends will likely get worse for the apparel specialist before they begin improving in the second half of 2020.

Demitrios Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Skechers. The Motley Fool has a disclosure policy.

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Skechers U.S.A., Inc. Stock Quote
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