What happened
Shares of Skechers (SKX 1.12%) skidded by 28% in March, according to data from S&P Global Market Intelligence.
That drop brings its stock price decline year to date to around 44%, and there may be more turmoil to come as the COVID-19 pandemic worsens.
Image source: Getty Images.
So what
Like many other companies with physical store locations, Skechers announced in mid-March that it had to temporarily close its company-owned retail stores in both North America and Europe in response to the worsening coronavirus situation. This announcement follows earlier closures of company-owned and third-party stores in a few severely affected international locations.
The company has also withdrawn its first-quarter guidance, as the financial impact from COVID-19 can't be reliably estimated at this point. More details will be provided at the company's first-quarter fiscal year 2020 earnings call.
With these closures, it's expected that the company will report significantly worse numbers on a year-over-year basis. As of Dec 31, the company held $936.9 million in cash and short-term investments, while total debt stood at around $115.4 million.
Now what
Investors need to brace for more bad news as COVID-19 continues to wreak havoc in both North America and Europe. The outlook for Skechers may worsen considerably in the weeks and months to come, with no respite until the virus outbreak is successfully contained.
Skechers is in a strong net cash position, and its track record and strong performance over the years should help it get through this crisis. Though there may be significant short-term pain ahead, the company should be confident of bouncing back once the pandemic eases.
