Skechers (NYSE:SKX) has been recovering well from its "toning shoes" disaster that happened in 2011, which caused a huge dent in its revenue and profitability. This is evident from its estimate-beating second-quarter results declared in July. The strong performance has resulted in solid year-to-date gains in its share price.

The company has outperformed peers such as Wolverine World Wide (NYSE:WWW), Brown Shoe (NYSE:CAL), and even Nike as shown in the chart below.

SKX Chart

SKX data by YCharts

Impressive performance
The strong performance has been driven by Skechers' solid strategies, especially in its e-commerce segment. Skechers posted impressive growth in e-commerce sales with revenue growing a whopping 37.2% in the reported quarter. Sports footwear sales have been growing faster online than other categories including apparel, fashion footwear, and fashion accessories.

Skechers performed well in the international market as well, registering double-digit growth, with good orders from China, Chile, and Canada. Moreover, the global athletic footwear market is estimated to be worth $84.4 billion in 2018 and the global footwear market is estimated to be $211.5 billion by the same period, which means that Skechers' addressable market is quite big.  Skechers operates around the world with stores in India, China, and other regions in Asia. It has 276 distributor-owned or licensed Skechers retail stores around the world and 124 Skechers stores in Asia. It also has presence in Canada, Spain, Portugal, Ireland, the Netherlands, UAE, etc. So, with presence around the world, the company is in a good position to benefit from the growth of the footwear market. 

Growth strategies
Skechers is rapidly expanding its footprint in international markets and this will help the company compete with global leaders. In addition, this expansion will also reduce dependence on just a few markets, thereby leading to diversification and help the company fight off regional economic downturns more effectively.

Skechers plans to open 35-40 stores by the end of the year, including additional stores in Chile, Canada, Spain, France and the U.K. The company has opened a store in India as well. India and China are the regions where Skechers is focusing to grow its sales in the next two to three years.

Other positives are Skechers' cost control measures and expansion of gross margin to 45.5% from last year's 44.6%. This improvement helped the company post earnings of $0.14 per share -- beating analyst estimates of $0.03 by a big margin -- and a massive improvement over last year's loss of $0.07 per share.

Other options
If Skechers has been turning its business around, Wolverine has also been doing well. Wolverine reported strong results on the back of a strong performance by its 2012 acquisition of Collective Brands' PLG brands. This acquisition added about four new brands to Wolverine's portfolio.

Revenue increased 103% year over year to $716.7 million, beating consensus estimates. The growth was driven by the strong performance of its acquired brands .

It cannot be denied that Wolverine's strategy of growth through acquisitions seems to be yielding good results, and one can expect the momentum to continue in the upcoming quarters. The company increased its full-year earnings guidance to $2.73-$2.83 per share from $2.60-$2.75 per share earlier.

Brown Shoe, on the other hand, is following a different strategy than Wolverine. It has expanded into Canada, and this seems to be a good move as the size of the Canadian footwear market was $6.2 billion in 2012 . This is expected to grow at an annual rate of 4.6% till 2017 to be worth $7.8 billion, and it is evident that Brown Shoe is looking to benefit from this growth.

Moreover, Brown Shoe has also been spending on advertising and marketing through various media such as television, online channels, and also through sponsorship programs. The company had also initiated a rewards program to drive sales during the back-to-school shopping season, and this strategy worked as there was a 6% jump in back-to-school shoppers in the recent quarter. This indicates that Brown Shoe is implementing the right strategies and investors should take a closer look at it.

Final words
Skechers' turnaround seems to be coming around nicely and the stock has outperformed peers. The company is growing through the online channel and is also strengthening its international presence. But this growth comes at a price since Skechers is richly valued at a P/E of 51x.

So, conservative investors should instead look at Wolverine or Brown Shoe, which have identical P/E ratios of 30. But more aggressive and growth-oriented investors can consider Skechers as its earnings are expected to grow in the high teens for the next five years according to analysts. 



Meetu Anand 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.