Footwear Major Skechers Stock Sinks On Q4 Miss & Weak Outlook; Inventory Piles Up

Footwear and apparel company Skechers USA Inc SKX shares are trading lower on Friday.

The company reported fourth-quarter sales growth of 12.8% year-on-year to $2.21 billion, missing the analyst consensus estimate of $2.22 billion.

The increase in sales was attributed to an 18% increase in Domestic sales and a 9.8% increase in International sales.

Sales increased 24.8% in Europe, the Middle East and Africa, 3.3% in Asia Pacific and 14.2% in the Americas.

Wholesale sales grew 17.5% and Direct-to-Consumer improved 8.4%. Gross profit rose 13.1% Y/Y to $1.2 billion and the gross margin expanded 20 basis points to 53.3%. 

Operating margin expanded 80 basis points to 7.5%, and operating income for the quarter increased 27% to $165.5 million. EPS of $0.65 missed the analyst consensus of $0.74.

In the fourth quarter, the company repurchased 1.9 million shares of its Class A common stock at a cost of $120 million. As of December 31, 2024, $789.9 million remained available under the company’s share repurchase program.

The company held $1.2 billion in cash and equivalents as of December end. The number of stores at the end of December 31, 2024, totaled 5,296.

Inventory increased 25.8% to $1.92 billion in December-end, including elevated merchandise in-transit, partially attributable to the Suez Canal disruption.

Outlook: Skechers sees FY25 revenue of $9.700 billion – $9.800 billion, against the Street view of $9.88 billion. The company expects FY25 EPS of $4.30 – $4.500 versus the estimate of $4.84.

Skechers sees first-quarter sales of $2.40 billion – $2.43 billion versus the consensus of $2.49 billion and EPS of $1.10 – $1.15 against the estimate of $1.55.

Price Action: Skechers shares are trading lower by 7.39% at $70.03 at the last check Friday.

Photo: Roman Zaiets via Shutterstock.