Skechers' (SKX) Robust International Business to Drive Sales

Skechers U.S.A., Inc. SKX is progressive well with its international business. The company’s international business is a considerable sales growth driver with Europe and China being significant markets outside the United States. The company intends to enhance global reach in the footwear market through its distribution networks, subsidiaries and joint ventures. In this regard, the joint venture in Mexico with its distribution partner is paying off well.

Notably, the company’s international wholesale business grew 18.2% in second-quarter 2019, while direct-to-consumer business improved 25.8%. The international wholesale business grew on account of a 30.7% increase in distributor business, 13.4% in joint ventures and 18.5% in wholly-owned subsidiaries. Management projects international and direct-to-consumer businesses to sustain momentum, and increase in mid-teen and high-single digits, respectively, in the remaining part of the year.

Further, the company's domestic e-commerce business grew 36.1% during the second quarter of 2019. Also, comparable-store sales climbed 4.9%, including e-commerce sales growth of 34.3%. It is is on track with product innovation, additional store openings and increasing distribution channels by entering agreements to boost sales and profitability.

Apart from these, the company continues to offer a diversified portfolio of brands that include a wide range of fashion, athletic, non-athletic, and work footwear at compelling prices. We believe that this multi-brand strategy enables it to roll out new products without cannibalizing its existing brands and helps to expand the targeted demographic profile of customers.

Skechers, which shares space with Deckers DECK, NIKE NKE and Steven Madden SHOO, is making investments to improve its infrastructure worldwide, primarily e-commerce platforms and distribution centers.

Driven by such initiatives and impressive second-quarter performance, management provided an upbeat view for the third quarter. For third-quarter 2019, management guided earnings in the range of 65-70 cents a share and net sales in the band of $1.325-$1.350 billion. The company had reported earnings of 58 cents and net sales of $1.176 billion in the prior-year quarter.

We expect solid yields from International business along with other efforts to drive growth.

7 Best Stocks for the Next 30 Days

Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers “Most Likely for Early Price Pops.”

Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.6% per year. So be sure to give these hand-picked 7 your immediate attention.

See them now >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Steven Madden, Ltd. (SHOO) : Free Stock Analysis Report
 
Deckers Outdoor Corporation (DECK) : Free Stock Analysis Report
 
NIKE, Inc. (NKE) : Free Stock Analysis Report
 
Skechers U.S.A., Inc. (SKX) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research