This is horrible news…
Skechers USA Inc (SKX). late Wednesday reported its third-quarter earnings rose to $51.1 million, or $1 a share, from $26.8 million, or 53 cents a share, a year ago. The footwear company said its bottom line was hurt by foreign exchange losses and warehousing costs totaling 13 cents a share. Analysts surveyed by FactSet had forecast earnings of 91 cents a share. Revenue increased to $674.3 million versus $515.8 million.
…he says with his tongue firmly planted in his cheek.
No wonder this is the result… Shares of Skechers slumped 5.3% in after hours.
I think I will buy more tomorrow and then check back with Mr. Market in a year or so.
KLVanLiew
You should make it clear that SKX’s quarterly earnings of $1.00 a share, up from 53 cents, is the GAAP earnings. Adjusted earnings is even 13 cents better at $1.13.
PE ratio is well under 20 and it’s growing earnings at about 100%. More if you look at trailing earnings. Almost tripling trailing earnings actually.
Doesn’t mean it will go on forever, but we don’t have that guarantee with any company. Just saying…
Saul
2 Likes
Yes Saul, those details make up some of the rest of the story. Compelling, and why I intend to add more tomorrow.
Come and get your Skechers while you can. They’re on sale now and the next day they may be gone.
KLVanLiew
You should make it clear that SKX’s quarterly earnings of $1.00 a share, up from 53 cents, is the GAAP earnings. Adjusted earnings is even 13 cents better at $1.13.
Saul,
I didn’t think that SKX reports adjusted EPS. How did you arrive at $1.13?
Here’s what the company reported in it’s press release:
The Company’s diluted EPS for the third quarter of 2014 was negatively impacted by foreign currency exchange losses of $2.3 million net of tax or $0.05 per diluted share, as well as a $3.8 million net of tax or $0.08 per diluted share attributable to warehousing costs related to completing the first phase of the automation upgrade of the Company’s European Distribution Facility and transitioning from a third-party warehouse to a Company-owned facility in Chile. In total, these expenses reduced diluted EPS by $0.13 during the third quarter of 2014.
Correct me if I’m wrong, but I think that foreign exchange losses are real losses and going forward we might expect them to continue to impact international sales (with the US dollar gaining strength relative to other currencies) which are growing much faster than US sales. I don’t think that the warehousing cost should be added back either. So did you arrive at adjusted earnings from these two items or did you add back the usual items such as stock based compensation expense?
Chris
Chris, I also take out foreign exchange gains as neither they, nor the losses, reflect how the actual business is going.
As for the one time warehouse costs, in the conference call they were asked extensively about it. While changing the warehouse in Chili to in-house, they had to keep both of the warehouses open for most of the quarter while changing over, and pay salaries in both. That was all finished just before the end of the quarter.
As for the automation of the plant in Belgium, they had to close part of the plant while they were doing it, and then run three shifts, in the other part, with lots of overtime, to keep up with demand and they had to outsource part of the shipping as I remember.
I think that all of these are clearly costs that don’t reflect the ongoing business and I feel comfortable in eliminating all of them and in accepting the companies 13 cent estimate for the whole thing, which doesn’t seem excessive.
By the way, Wunderlich just raised all their estimates: In the report, Wunderlich Securities noted, “We are reiterating our Buy rating and $70 price target, and raising our FY14, FY15 and FY16 EPS estimates to $2.68 (from $2.58), $3.48 (from $3.37), and $4.26 (from $4.11),
Saul
3 Likes
The INVN report cited is a good example of the competitive devaluations being taken almost everywhere. Mostly against the dollar. Mauldin has discussed this at length
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At first glance a strong dollar sounds good for US workers, foreign made stuff is cheaper. The other side of the coin is if they work inside the US, a strong dollar leads to lower US company sales(it’s products are more expensive outside the US) which leads to lower profits , which leads to lower production, which leads to fewer employees being needed, which leads to people losing their jobs.
So I suppose that means that for most they get a slight benefit, for fewer,(those who lost their jobs ),there is a big loss.
The ones most likely to lose their jobs are people in the Middle Class, a group already in the process of slowly disapearing from the US.
More unemployment is not good for those unemployed or the US as a whole.