Shares of footwear company Skechers (NYSE:SKX) soared on Friday following the release of the company's financial results for the first quarter of 2021. To summarize, it generated record revenue, margins rebounded, and Wall Street loved it. As of noon EDT, the stock was up more than 16%.
With the COVID-19 pandemic hurting physical retail, Skechers' sales fell 12% in 2020. While sales in the fourth quarter were down less than 1% (showing marked improvement), investors didn't really know what to expect going into this first quarter because management hadn't provided guidance. Therefore, it was a pleasant surprise to see Q1 sales were up 15% year over year to over $1.4 billion -- a record quarter.
Skechers maintained profitability in 2020, despite strenuous circumstances. However, its net income plummeted 72% to just $98.6 million. But it seems the hard times are over now. The company earned $98.6 million in Q1 alone, matching last year's profits. Gross profit, operating margin, and net income all rebounded back to more historical levels as the business made a full recovery and even returned to growth.
Contributing to gains today, a Morgan Stanley analyst believes Skechers stock is poised to continue outperforming this year, according to The Fly. This bullish outlook is due to upbeat guidance from Skechers management. For 2021, management believes it will generate revenue of $5.8 billion to $5.9 billion and earnings per share (EPS) of $1.80 to $2. For perspective, this top-line guidance is roughly 12% higher than its pre-pandemic revenue in 2019, which is solid growth for an established apparel company like Skechers.