Analysts Are Bullish on Skechers as Company Continues to Steal Share From Athletic Giants

Ahead of Skechers’ Q4 release next week, analysts are upgrading the footwear stock as inventories level out and sales momentum persists.

Cowen analyst John Kernan in a Monday note upgraded the stock to outperform, and said Skechers is the second-most preferred casual sneaker brand in the U.S., with a 19% preference share, just behind Nike at 24%. The analyst added that Skechers’ website traffic grew 38% compared to last year, according to data from Similarweb.

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“Skechers’ value proposition continues to resonate based on our checks and is gaining preference in our survey for casual/lifestyle footwear from Nike and Adidas,” Kernan wrote. He added that he expects inventories to slow in Q4 and normalize into 2023.

In October, Skechers said it expects Q4 sales of between $1.725 billion and $1.775 billion and diluted earnings per share between 30 and 40 cents. This came after the company reported Q3 sales of $1.88 billion, a 20.5% increase over the same period last year.

Williams Trading analyst Sam Poser said in a note last week that the company is in a strong position to hit these targets in Q4, with more room for growth by the second quarter of 2023.

“Demand for Skechers across merchandise categories, gender and geographies remains robust,” Poser said, noting the positive response to the company’s hands-free slip-in footwear technology and as well as its kid’s products. “It’s important to keep in mind that Skechers sell shoes well in many merchandise categories, including athletic, casual, work and kids.”

Poser also noted how Skechers will likely benefit from what he predicts will be a lack of inventory in the marketplace as more retailers adopt conservative buying plans to account for the inventory excesses in the fall of 2022.

“Skechers has the most efficient supply chain in our coverage, and has brought in a large amount of spring 2023 orders early, and will be in position to meet the increased demand,” Poser said. The reopening in China, the weak U.S. dollar and strength in other international markets will also be a tailwind for Skechers’ global business, Poser noted.

Long term, Skechers is looking to hit $10 billion in annual sales by 2026. The 30-year-old business, which was honored with FN’s Company of the Year award in 2022, had three consecutive growth quarters last year, and grew by 20% in the first nine months of 2022.

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