Skechers shares rise on $1 billion buyback, more upbeat outlook

By Bill Peters

'We are extremely encouraged by the demand for Skechers product as demonstrated in second-half orders, which has led us to raise our full-year outlook for sales and earnings,' exec says

Shares of Skechers USA Inc. rose after hours on Thursday after the comfort-footwear maker announced a $1 billion buyback and bumped its full-year profit outlook higher, as retailers stocked up on Skechers shoes and the company made gains abroad.

Skechers (SKX) said it expected to hit full fiscal year sales of $8.875 billion to $8.975 billion, up from a prior range of $8.725 to $8.875 billion. The company said it expected to earn between $4.08 and $4.18 a share, up from earlier expectations of $3.95 to $4.10.

Shares rose 2.8% after hours. The stock has managed a 2.2% gain for the year so far.

For the second quarter, management said that international direct-to-consumer sales - or sales made through the sneaker maker's own stores and e-commerce network - "were particularly bright spots," despite shakiness in China's economy and disruptions to the world's shipping channels.

David Weinberg, Skechers' chief operating officer, said the company is "extremely encouraged by the demand for Skechers product as demonstrated in second-half orders, which has led us to raise our full-year outlook for sales and earnings."

The company reported second-quarter net income of $164.5 million, or 91 cents a share, compared with $181.6 million, or 98 cents a share, in the same quarter last year. Adjusted for currency fluctuations, Skechers earned 97 cents a share.

Revenue rose 7.2% to $2.16 billion.

Analysts polled by FactSet expected Skechers to report adjusted earnings per share of 95 cents, on revenue of $2.24 billion.

Skechers reports amid industry-wide competition and as companies like Nike Inc. (NKE) cut costs and rework their product assortments. However, Wedbush analysts said they believed demand for Skechers was still strong, due in part to "a combination of compelling product innovation" and "a favorable 'comfort + value' proposition to the consumer.

Still, they said that Skechers' direct-to-consumer business needed to remain strong for the stock to stay solid. And Wall Street has worried about higher shipping costs for Skechers, as the conflict in the Red Sea diverts boats carrying goods away from the Suez Canal and as the Panama Canal faces drought conditions.

-Bill Peters

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07-25-24 2012ET

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