From the last SKX conference call:
As we look at the coming year, our company-owned retail stores are on target with mid- to high-single digit same-store comps in January and we are continuing to gain market share. We have had a very strong start to the first quarter with January sales up approximately 35%…as well as a strong first week of February. Our backlogs were up 9.5% at December 31, in spite of being impacted by some distributors pulling forward orders from January to December. During the fourth quarter, our distributor sales increased 91.6% as compared to last year. Additionally, our incoming order rate in January was also very strong… which is resulting in increasingly improved backlogs for the first quarter.
Saul wrote:
Wow! And they predicted earnings of 50 to 55 cents, up 42% at the midpoint. I’m not particularly worried about them. And that estimate is based on a sales estimate of $902 million at the midpoint, up just 17% from $768 million last year. As January sales were up 35%, an estimate of sales up just 17% for the quarter seems very conservative. No, I may be quite wrong but I’m not worried about them.
Yes, the SKX business appears to be doing very well. But we should be reminded that SKX had an unusually weak March 2015 quarter last year. Remember the port problem and the weak dollar? Remember the delay in setting up the new European distribution center? These all suppressed the March 2015 result so we should expect a very strong March 2016 quarter compared the the year’s prior quarter.
On the other hand, the June 2015 quarter was a blowout quarter. They recovered from the port problems so some of the sales that normally would have fallen in the March quarter got delayed to the June quarter. On top of that, a bunch of revenue got pulled forward from the Sept 2015 quarter. This means that the June 2016 quarter will have a very, very difficult comparison to the June 2015 quarter.
Then the Sept 2015 was again very weak so we will once again have an easy comparison in Sept 2016.
Who knows how the stock might respond to the YoY growth results, but we shouldn’t get too excited about growth in March or September and shouldn’t get too disappointed by weak growth in June.