Skechers conquers second position in US footwear race

Accounting for the 5 percent of the market, Skechers has passed up Adidas to take over the second place in the sports footwear market in the United States.

According to the ‘Wall Street Journal’, Skechers accounts for 5 percent of the market, while Adidas comes in at third places with 4.6 percent. Nike and Jordan Brand hold a joint number one with a combined 62 percent of sneakers sold in the US.

Retail sales for Skechers rose by 19 percent for the quarter ending in March, compared to a growth of 10 percent for Nike. After dipping earlier this decade, Skechers’ sales have returned to the growth’ path, adding 29 percent last year to 2.4 billion dollars. Its shares are trading around a record, up 1.3 percent on Monday at 102 dollars.

Skechers’ earnings to grow at 20 percent annual rate

“Although Skechers' shares are rallying, its valuation is still conservative. It is currently trading at 19x forward earnings. In addition, the company's earnings are expected to grow at 20 percent per year for the next five years, outpacing the industry average of 14.13 percent. This makes the company an attractive buy even after the recent upsurge,” sums up ‘Seeking Alpha’ the current market view on the stock.

“Skechers has been gaining momentum following its impressive first-quarter 2015 performance. Shares of this designer, developer, marketer, and distributor of footwear have surged roughly 31 percent since April, 22 when the company announced its results. We believe that the company's strong fundamentals are capable of providing further impetus to the stock,” said Zacks Equity Research in a note to investors.

In the same vein, the research firm highlights that “After delivering a negative earnings surprise of 2.3 percent in the final quarter of 2014, this Zacks Rank #3 (Hold) company commenced 2015 on an upbeat note. Although the first quarter was marred by foreign currency headwinds, adverse weather conditions and West Coast port-related dispute, the company delivered earnings of 1.10 dollar per share that beat the Zacks Consensus Estimate by 8.9 percent and surged from 61 cents recorded in the year-ago quarter.”

On May,15 Trade-Ideas LLC identified Skechers USA (SKX) as a new lifetime high candidate, trading at a new lifetime high. Currently there are 5 analysts that rate Skechers USA a ‘buy’.

The company has a market cap of 4.2 billion dollars and its shares are up 79.8 percent year-to-date.

Running is the largest U.S. athletic footwear category by retail sales, according to SportsOneSource, reports ‘NASDAQ’. For the first time, sales of fashion-focused casual shoes are driving sales instead of the more sophisticated running shoes that long propelled the category, according to the firm.

 

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