SKX Investment

The following post includes my thoughts on a personal investment in Sketchers (SKX). These are my personal thoughts and reasons for investing in the company. I am doing this so I will have something to look back on and hopefully learn from in the future. My only disclaimer is that some of my numbers could be wrong in the tables below so please double check before you simply take my word for it. I would love to hear your feedback to strengthen my own thoughts or to maybe even poke a hole or two in them.

Sketchers (SKX)     |          |          |          |          |           
$29.38   PE = 16.69 |          |          |          |          |           
                    |          |          |          |          |           
Earnings            | Q1       | Q2       | Q3       | Q4       | Year      
               2012 |(0.02)    |(0.01)    | 0.07     | 0.03     | 0.07
               2013 | 0.04     | 0.05     | 0.18     | 0.09     | 0.36
               2014 | 0.20     | 0.23     | 0.33     | 0.14     | 0.90
               2015 | 0.37     | 0.52     | 0.43     | 0.19     | 1.51
               2016 | 0.63     |          |          |          |           
                    |          |          |          |          |           
                    |          |          |          |          |           
Net Revenue         | Q1       | Q2       | Q3       | Q4       | Year      
(in millions)  2012 | $351.30  | $384.00  | $429.40  | $395.60  | $1,560.30 
               2013 | $451.60  | $428.20  | $515.80  | $450.70  | $1,846.30 
               2014 | $546.50  | $587.10  | $674.30  | $569.70  | $2,377.60 
               2015 | $768.00  | $800.50  | $856.20  | $722.70  | $3,147.40 
               2016 | $978.80  |          |          |          |           

I have been watching SKX for several months now, but not really studying them very much. I have decided to study them a little more because I have read several different posts that have all seemed very positive in relation to the company. The one common theme that I have noticed is that most individuals are unable to determine why the stock price itself is not performing. I have encountered a similar situation with a company before that I held on to for several years wondering why the stock price would not appreciate. It seemed that the stock would continually decrease or remain stagnant, even as the company reported very strong quarterly reports over and over. I remember after holding the company for about three years and seeing these great reports I started to become very frustrated because I could not understand why the stock price refused to increase. Unfortunately, I still don’t have the answer for why it took so long, but it finally did happen.

That company was Activision Blizzard (ATVI) and through that investment I learned that if a company is performing as ATVI was and still is then your investment dollars are in a good place. Now, I know that SKX has not been stuck for years at a stagnant stock price like ATVI was, but it is still a company that should be rewarded for great execution and the numbers back it up. For whatever reason the market simply refuses to reward the company, but in time the market and investors usually take notice. What most of us seem to do is get frustrated with the complacency of the stock price and try to move our funds to a different investment in an effort to manufacture returns. This is what I have found to happen with me anyway. While there is nothing wrong with doing this, for me personally, the safest place my hard earned money can be when investing is in a company that is executing.

I have determined that SKX is executing and seems to be a very healthy company. The earnings pattern that I listed in the table above as well as the revenue pattern, the simplicity of their niche business (comfortable, affordable, casual shoes), and the growing popularity of the brand are very simple and attractive qualities that this investment has. I know they are two totally different businesses, but I also see similarities in the stock price action of SKX today and ATVI from a few years back. ATVI’s stale stock price simply lasted longer. Therefore, I have designated a portion of my investing dollars to be invested in SKX. However, I intend to invest about 40% of those funds at this time and gradually invest the remaining 60% in the next few weeks and after their upcoming earnings report. I am doing this due to the comments that were made by management during the previous earnings report regarding the shifting of some of the current quarter orders to the previous quarter. I am a little concerned that this could have possibly inflated the first quarter earnings somewhat and in turn deflate second quarter earnings a bit. This could result in a buying opportunity at a lower price point. Now, how much of the remaining 60% of my funds that I have allotted for SKX will I hold until after the earnings report to invest is still up in the air. I really like this company and think it will be a winner, just as ATVI is, whenever the market decides to reward it. Therefore, I don’t want to be greedy and wait till after earnings in the hopes of getting another great buying opportunity when right now is a great opportunity. Didn’t I just say that one of the lessons I have learned is that the safest place my hard earned money can be when investing is in a company that seems to be executing? I could very well be fully invested before the upcoming earnings report.



I have been watching SKX for several months now…

Thanks Patrick, a very thoughtful and interesting post.

1 Like

Nice post on SKX, Patrick.

I’m not offering any advice on allocation, but may give you another reason stay with your 40/60 idea. In addition to what you mentioned about sales being pulled into the first quarter, the 2nd quarter last year was a tremendous quarter so they are facing tough comps.

On the flip side, the stock price does seems depressed and they have been posting excellent results quarter after quarter.

Lastly, has SKX made any mention of how the fire at their southeast Asian factory will impact results?




I can’t find any information regarding the fire at their Southeast Asian factory. I did send an email to Skechers to see if they could provide me with any information. I will post anything they send back to me to this thread.


Very good post Patrick,


I think VitaminD had the local intel on the fire situation - he might be able to give an update based on the local news coverage.

Unfortunately, I still don’t have the answer for why it took so long, but it finally did happen.

I’ll take a crack at that. I don’t follow ATVI, but it looks like sales declined in 2013 and 2014, and grew very little in 2015 (just a few percent). That was probably what held the stock in check. My guess is share price went up when expectations arose (because of something either analysts or the company said) that 2016 would be a big year – they’re actually supposed to grow sales 37%! And that’s after no real revenue growth since 2009! Sales have been > 4B and < 5B every year, and this year over 6B of revenue is expected.