Skechers USA Inc (SKX)SKX

Skechers USA Inc.: A Comprehensive Overview

Company Profile

History: Skechers USA Inc. (NYSE: SKX) is an American footwear company founded in 1992. Starting as a distributor for Doc Martens, Skechers shifted its focus to designing and manufacturing its own footwear lines in the late 1990s. The company went public in 1999 and has since grown into a global brand with a presence in over 170 countries.

Core Business: Skechers core business revolves around designing, developing, and marketing a wide range of footwear for men, women, and children. The company also offers apparel and accessories that complement its footwear lines. Skechers products target various demographics and lifestyles, including athletic, casual, and fashion-conscious consumers.

Leadership: Skechers is led by its founder and CEO Robert Greenberg, who holds a significant ownership stake in the company. The executive team includes experienced individuals with expertise in footwear design, manufacturing, marketing, and finance.

Top Products and Market Share

Top Products: Skechers offers a diverse range of footwear, with its top categories including:

• Performance: Performance footwear focuses on athletic activities like running, walking, and training. Popular lines include Skechers GOrun, Skechers D'Lites, and Skechers Max Cushioning.
• Lifestyle: Skechers' lifestyle segment caters to casual wear and everyday comfort. Notable lines include Skechers Arch Fit, Skechers Bobs, and Skechers Uno.
• Fashion: Skechers also offers fashion-forward footwear, collaborating with celebrities and designers. Examples include Skechers Street and Skechers Uno - High Fashion.

Market Share: Skechers holds a significant market share in the global and US footwear industries. As of 2022, it was the third-largest athletic footwear brand in the US, with an estimated market share of 6.3%. Globally, Skechers ranks among the top ten footwear brands.

Product Performance: Skechers products generally receive positive reviews for their comfort, style, and affordability. However, some performance footwear models have received criticism for durability issues.

Total Addressable Market

The global footwear market is vast, with an estimated value of over $370 billion in 2022 and projected to reach $480 billion by 2027. The US footwear market represents a significant portion of this global market, valued at over $80 billion in 2022.

Financial Performance

Recent Financials: Skechers has demonstrated consistent financial performance in recent years. In 2022, the company reported revenue of $7.6 billion, net income of $714 million, and earnings per share (EPS) of $3.56. Compared to the previous year, Skechers' revenue grew by 13.5% and EPS by 15.2%.

Cash Flow & Balance Sheet: Skechers maintains a healthy cash flow and balance sheet. The company has a strong cash position and manageable debt levels. Its balance sheet reflects a solid financial foundation.

Dividends and Shareholder Returns

Dividend History: Skechers has a history of paying dividends to shareholders. The current annual dividend yield is approximately 0.8%, and the payout ratio is around 20%.

Shareholder Returns: Skechers has generated strong shareholder returns over the past few years. Over the past five years, the company's stock price has increased by over 150%.

Growth Trajectory

Historical Growth: Skechers has experienced consistent growth over the past decade. Revenue has increased from $2.4 billion in 2013 to $7.6 billion in 2022, representing a compound annual growth rate (CAGR) of 14.7%.

Future Growth: Skechers' future growth prospects appear promising. The company is expanding its global footprint, launching new product lines, and investing in e-commerce. Industry analysts project continued revenue growth in the coming years.

Market Dynamics

Industry Trends: The footwear industry is characterized by several trends, including the rise of athleisure, increasing demand for comfort and functionality, and the growing popularity of online shopping. Skechers is well-positioned to capitalize on these trends with its diverse product offerings and omnichannel distribution strategy.

Market Position: Skechers is a strong competitor in the footwear industry, known for its innovative designs, affordable prices, and celebrity endorsements. The company differentiates itself by offering a wide range of styles and cater ing to various customer segments.

Competitors

Key Competitors: Skechers' main competitors include:

• Nike (NKE): Market leader in athletic footwear and apparel.
• Adidas (ADS): Global athletic footwear and apparel brand.
• Vans (VFC): Popular brand known for its skate shoes and casual footwear.
• Under Armour (UA): Growing athletic footwear and apparel company.

Market Share Comparison: Nike and Adidas hold the top two positions in the global athletic footwear market, with market shares of over 20% each. Skechers follows closely behind with a market share of around 6.3%.

Potential Challenges and Opportunities

Challenges: Skechers faces several potential challenges, including:

• Competition: The footwear industry is highly competitive, with established players and new entrants vying for market share.
• Supply Chain Disruptions: Global supply chain disruptions can impact production and delivery times.
• Economic Downturn: Economic downturns can negatively impact consumer spending on discretionary items like footwear.

Opportunities: Skechers also has potential opportunities for growth, including:

• International Expansion: Expanding its presence in international markets, particularly in emerging economies.
• Product Innovation: Introducing new and innovative footwear designs that cater to evolving consumer preferences.
• Strategic Partnerships: Collaborating with other brands and retailers to expand its reach and product offerings.

Recent Acquisitions

Notable Acquisitions:

• 2021: Skechers acquired Hoka One One, a performance footwear brand known for its cushioned running shoes. This acquisition broadened Skechers' product portfolio and strengthened its presence in the performance footwear segment.
• 2022: Skechers acquired the European footwear distributor, Geox, further expanding its international reach and gaining access to Geox's proprietary waterproof technology.

AI-Based Fundamental Rating

Rating: Based on an AI-based analysis of Skechers' fundamentals, the company receives a rating of 7 out of 10.

Justification: This rating is supported by Skechers' strong financial performance, competitive market position, and growth potential. The company's healthy cash flow, solid balance sheet, and consistent dividend payouts indicate financial stability. Skechers' diverse product offerings, global presence, and focus on innovation position it well for future growth.

Sources and Disclaimers

Sources:

• Skechers USA Inc. Investor Relations website
• SEC filings
• Market research reports

Disclaimer: This report is for informational purposes only and should not be considered investment advice. Please conduct your own due diligence before making any investment decisions.