What happened
Shares of Skechers (SKX -0.46%) were moving higher today after the casual footwear stock posted better-than-expected results in its second-quarter earnings report.
As of 12:44 p.m. ET, the stock was up 9.7%.
Image source: Getty Images.
So what
Skechers said revenue increased 7.7% to $2.01 billion, driven by a 29.1% increase in direct-to-consumer sales. That result topped estimates at $1.93 billion.
International growth was particularly strong, with revenue outside the U.S. up 17.9%, including 27% growth in India and 29% in Germany. It also acquired its Scandinavian distributor, which will help boost international growth in the coming years.
The company also brought inventory back under control, with inventory down 18.3% to $332 million, which helped drive gross margin up 460 basis points to 52.7%. Although operating expenses also rose, the gross margin leverage led to a 69% jump in earnings per share of $0.98, easily beating estimates at $0.54.
COO David Weinberg said, "We were able to deliver our product more effectively and improve our inventory levels, which enabled the robust sales across our comfortable, innovative, stylish, and high-quality collections."
The company also continues to expand its store base with 4,705 total stores, which includes distributor, licensee, and franchise stores.
Now what
For the third quarter, the company expects revenue of $1.95 billion to $2 billion, which was slightly below analyst estimates of $2.07 billion. On the bottom line, it sees earnings per share of $0.70 to $0.75, which was also lower than expectations at $0.93.
However, investors seemed to overlook that as full-year guidance was solid at $7.95 billion to $8.1 billion in revenue, representing 7.9% growth at the midpoint, and within range of the consensus at $8.08 billion. It also expects earnings per share of $3.25 to $3.40, up from $2.38 in 2022 and ahead of the average estimates at $3.19. Over the long term, the company is targeting $10 billion in annual sales by 2026.
Skechers has historically been a volatile stock, but it's also found a niche in casual footwear and been an outperformer over the last decade.
At a price-to-earnings ratio of 16.7, the stock still looks like a good buy, especially in a global economic recovery.
