May 3, 2019

SKX – Market expectations are for Uniform ROA compression, and management has concerns about sales, projects, and e-commerce


  • Skechers U.S.A., Inc. (SKX:USA) currently trades near historical averages relative to UAFRS-based (Uniform) Earnings, with an 11.9x Uniform P/E, implying bearish expectations for the firm, and management has concerns about wholesale retail sales, store remodeling, and their e-commerce platform
  • Specifically, management may lack confidence in their ability to increase sales from wholly-owned subsidiaries and normalize ad spend. Moreover, they may be concerned about the impact of retail bankruptcies and soft demand on sales and the progress of their distribution center opening and store remodeling efforts. Furthermore, they may be exaggerating their ad coverage and the potential of their new e-commerce platform, and may be downplaying concerns about Mexican joint venture accretion. Finally, they may be concerned about their ability to maintain their performance trajectory, grow their women’s apparel business, and provide customers with products through any channel.
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