What happened
Shares of Skechers (SKX +0.00%) were moving higher today after the casual-footwear company posted better-than-expected results in its second-quarter earnings report.
As of 12:44 p.m. ET, the stock was up 9.7%.
Image source: Getty Images.
So what
Skechers said revenue increased 7.7% to $2.01 billion, driven by a 29.1% increase in direct-to-consumer sales. That result topped estimates at $1.93 billion.
International growth was particularly strong, with revenue outside the U.S. up 17.9%, including 27% growth in India and 29% in Germany. It also acquired its Scandinavian distributor, which will help boost international growth in the coming years.
The company also brought inventory back under control, with inventory down 18.3% to $332 million, which helped drive gross margin up 460 basis points to 52.7%. Although operating expenses also rose, the gross margin leverage led to a 69% jump in earnings per share of $0.98, easily beating estimates at $0.54.
COO David Weinberg said, "We were able to deliver our product more effectively and improve our inventory levels, which enabled the robust sales across our comfortable, innovative, stylish, and high-quality collections."
The company also continues to expand its store base with 4,705 total stores, which includes distributor, licensee, and franchise stores.
NYSE: SKX
Key Data Points
Now what
For the third quarter, the company expects revenue of $1.95 billion to $2 billion, which was slightly below analyst estimates of $2.07 billion. On the bottom line, it sees earnings per share of $0.70 to $0.75, which was also lower than expectations at $0.93.
However, investors seemed to overlook that, as full-year guidance was solid at $7.95 billion to $8.1 billion in revenue, representing 7.9% growth at the midpoint, and within range of the consensus at $8.08 billion. It also expects earnings per share of $3.25 to $3.40, up from $2.38 in 2022 and ahead of the average estimates at $3.19. Over the long term, the company is targeting $10 billion in annual sales by 2026.
Skechers has historically been a volatile stock, but it's also found a niche in casual footwear and been an outperformer over the last decade.
At a price-to-earnings ratio of 16.7, the stock still looks like a good buy, especially in a global economic recovery.
