Skechers USA (NYSE:SKX) is considering acquiring a stake in the LA Clippers as a vehicle to promote its brands and products. The acquisition would boost its opportunities for marketing and help to transform its image from a maker of inexpensive shoes to a maker of serious athletic products. It currently has around 3.4% of the athletic-footwear market, a market which is dominated by Nike (NYSE:NKE).

The NBA is forcing Donald Sterling to sell the Clippers after he made racist remarks that got him banned. The stock dropped after Skechers' announcement because investors were worried that the company would take money out of its advertising budget to pay for the acquisition. There could be further worries ahead as Sterling's lawyer indicated that a lawsuit might happen if the other owners force Sterling to sell.

The impact of the Boston Marathon win 
Meb Keflezighi won the 2014 Boston Marathon with a time of 2 hours, 8 minutes, and 37 seconds to mark the introduction of Skechers' new GOmeb Speed 3 shoes, manufactured to his specifications. The win, the first by an American man since 1983, is also an important win for Skechers. 

The shoes will be available in stores later this year, and demand is expected to be strong. To boost its newly found reputation in this category, the company is one of the key sponsors of the Houston Marathon and will design and introduce new products for this event. More than 500,000 Americans participated in marathons in 2013, and all of them are potential customers.

Better-than-expected quarterly results
Retail companies have been adversely affected by the extreme winter weather as it took a toll on store traffic. Skechers is one company that bucked the trend by producing excellent results. Its earnings per share of $0.61 rose more than 400% year-over-year and came in well ahead of the consensus estimate of $0.33 per share. Its sales of $546.1 million were ahead of the consensus estimate of $508.7 million and surpassed its result of $451 million for the same quarter of the previous year. 

The company seems to be acquiring market share from Nike, especially in the walking-sneaker segment where its market share has risen to 50.5% in 2013 from 34% in the previous year, while the figure for Nike has dropped from 8% to 4%.

Strong wholesale business
According to the company, a strong performance in the wholesale division drove the solid results. Both the domestic and international wholesale businesses posted double-digit increases and demand from consumers was much stronger than expected. 

The strong consumer demand can be attributed to product innovation related to comfort as well as the publicity from Meb Keflezighi, who used the company's shoes to win the Boston Marathon. The domestic wholesale business increased by just under 21%. Meanwhile, the international wholesale business took off, registering triple-digit growth in Turkey, Taiwan, and Indonesia. This momentum is expected to continue for the rest of the year.

The future outlook
2014 should be good for the company with increased emphasis on new products, further attempts at cost containment, better inventory management, and a healthy distribution platform. Management remains committed to product innovation, the expansion of the store network, and growth in international distribution by developing new international distributors. 

The Skechers' GoWalk line of walking-shoe products dominates the category and recent growth has been driven by an increase in market share here. The company has no real competition here and the rest of the market is pretty much fragmented. After the Boston Marathon win, the GoRun line has exciting prospects and could take market share from the likes of Nike and Under Armour (NYSE:UAA).

How the competition stacks up 
Skechers is the fourth-largest sneaker brand in the United States if you consider Nike and Jordan to be a single brand. This represents growth of 22% from its position last year, and its overall market share is around 3%. This growth in market share has significantly outstripped the growth of its peers. The company has touched share-price highs in the past and then fallen back, but this time its share price growth looks far more sustainable. 

The strong results have set off upward revisions of the consensus estimates for Skechers to EPS of $1.98 per share in 2014 and $2.73 per share for 2015. The shares currently trade at around $42.24 or around 16 times forward earnings, compared to 22 times for Nike and well over 40 times for Under Armour. Skechers looks to be well undervalued compared to top peers.

Under Armour could threaten Skechers. The company is still in the early stages of moving into the shoe market, but its running-shoe sales grew by 25% in April versus the previous month. The strong performance was driven by the launch of its Speedform Apollo shoe. Under Armour still only owned 2.3% of the footwear market in the U.S. at the end of the first quarter. Also, despite its strong performance in running shoes, Under Armour's basketball shoe sales were flat during the first quarter. Its market share for this category fell to 0.3%.

Bottom line 
Skechers is a lesser-known brand, but it's looking to change that with its move to get involved with the LA Clippers. It also got a big marketing win with the Boston Marathon. All in all, Skechers is having success on the marketing front. For investors who look to add a shoe stock to their portfolios, Skechers is worth a closer look.