Millennial Tailwinds for Skechers?

Of all my stocks, I am most baffled by the market’s reaction to Skechers’ last earnings report. Anyway, macro tailwinds might be in place for lots of future growth for our favorite shoe company:

Skechers has been a major player in the “athleisure” movement, a fashion trend in which consumers wear athletic apparel away from the gym. MONEY found that athleisure products were among the 10 most popular purchases for millennials. This is important for two reasons. One, millennials account for roughly 28% of the population. Two, they have more disposable income, and, according to Advertising Age, will spend more than $200 billion annually by 2017. Skechers has positioned itself to take advantage of this demographic, and will achieve sustained long-term revenue growth, partially as a result of this. Many consumers have flocked to the company due to its low prices, and new emphasis on “fashion casual”, “athleisure”, and general fitness trends. I’m a big fan of current management, and believe further emphasis on these points will allow them to increase their market share in the future.

Read the entire article at http://seekingalpha.com/article/3977383-skechers-worth-doubl…

The article also talks about other possible catalysts like international growth and the Trans-Pacific Partnership.

Matt
Long SKX
MasterCard (MA) and PayPal (PYPL) Ticker Guide
See all my holdings at http://my.fool.com/profile/CMFCochrane/info.aspx

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Agreed, I too am baffled: SKX was the only holding in my portfolio to actually be down yesterday!

I am not sure whether that is because of the recent emphasis and publicity around NKE and UA or whether there is some undercurrent here I am not getting. Even accepting that SKX is very much a second-division choice, it is surprising that the apparent value is not discerned by the market.

On an amusing side, Sunday lunch included a few friends of my children in their mid-20s and the subject of trainers came up. I mentioned Skechers and they just looked at me in silence as if I was slightly mentally ill!

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Hi Streina, As a counterpoint to your kids friends, here’s an exchange I had with John Sergeant over on the Skechers Board. He was a skeptic, but whole bunch of us had told him how comfortable they were.
Saul

Saul, I’ve just ordered my first two pairs of Sketchers City Shoes based on your recommendation. I’ll let you know how I like them.
John

John, Hope they’ll be the right size if you ordered them without trying them on! Waiting to hear.
:wink:
Saul

Hey Saul, My 2 pairs of Sketchers arrived and I love them - very comfortable, perfect fit. I think I’m a convert!
John

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If Meb Keflezighi can win the Boston Marathon wearing SKX shoes - they’re plenty good enough for me. I bought my first pair for knock around/messing around. If that works - I’ll be look to SKX for my next pair of running shoes.

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What I see over and over again is Main Street catering to Millenials with the notion that “they have money to spend”. A LOT of millenials are still living at home, those that aren’t are complaining of low wages, they will spend $ on tech, and convenience, but it has not been my experience that they have a lot of extra spending money.

The markets SHOULD be going after the baby boomers, and Gen X’ers who are 40s-low 50s and who DO have extra money to spend. That’s the better target market for Sketchers, imho.

Wandern, who was born in the last year of the baby boomers

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I am 40. Went to the skechers store to try them. Bought a pair for my wife Friday and ordered mine online. We spent the last 4 days in Rome, my wife loved her new shoes describing them as unbelievably comfortable
My pair was delivered to my work today so I’ll know more tomorrow when i finally have them

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A LOT of millenials are still living at home, those that aren’t are complaining of low wages, they will spend $ on tech, and convenience, but it has not been my experience that they have a lot of extra spending money.

Hi Wandern, I believe in the contrary. It is precisely because most young adults are living at home that they do have excess disposable income to spend. No mortgage, no food, no utilities - just half the money to tuck away for savings, and the rest on consumer discretionary and tech.

That’s my gut feel of course.

Best,
–Kevin

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Agreed Kevin. Plus, I guess it depends on one’s definition of “a lot of extra spending money” but buying a pair of sneakers for $50-$75 isn’t exactly extravagant these days. I think there’s lots of room for Skechers to grow with the younger generation in the States.

Matt
Long SKX
MasterCard (MA) and PayPal (PYPL) Ticker Guide
See all my holdings at http://my.fool.com/profile/CMFCochrane/info.aspx

My wife bought me a pair of Skechers recently too. I love them. Every investor in SKX should go buy a pair!

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My wife bought me a pair of Skechers recently too. I love them. Every investor in SKX should go buy a pair!

Clearly I was wrong, but I bought a couple pair of Sketchers something like 6-7 years ago. They were very poor quality and the upper leather (maybe fake?) scratched and discolored quickly, rendering the shoes ugly before their time.

Since then I’ve avoided investing in the company. Maybe the quality has changed?

I think SKX is going after both ends of the market, the youngest kids with theme shoes, like Star Wars, cheap fashion shoes for teenagers, and comfort shoes for older people with foot problems and wide styles for big people with fat feet. They are smart about selling shoes.

Regarding millennials and brands, I occasionally refer to this type of article about top millennial brands.

Top 100 Millennial Brands November 2015
http://www.businessinsider.com/top-100-millennial-brands-201…

#96 DC Shoes
#79 Puma
#30 Under Armour
#27 Vans
#18 Converse (owned by Nike?)
#!4 Jordan (as in Nike Air Jordan)
#13 Adidas
#2 Nike

Karen
Ticker Guide: AMTD / PZZA • See my holdings here: http://my.fool.com/profile/CMF_KBecks/info.aspx

Long UA, Nike

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Don’t ever forget that the shoes business is bleeping competitive.

I listened to a Mad Money podcast with the Calvin Klein brand folks (PVH) and they said that CK men’s underwear is like the top men’s underwear for high market stuff. Interesting but I’m not sure I’m interested in men’s underwear domination! :wink:

Karen

Ticker Guide: AMTD / PZZA • See my holdings here: http://my.fool.com/profile/CMF_KBecks/info.aspx

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