Skechers U.S.A., Inc. (SKX) Bundle
Understanding Skechers U.S.A., Inc. (SKX) Revenue Streams
Understanding Skechers U.S.A., Inc.’s Revenue Streams
The revenue streams for Skechers U.S.A., Inc. are primarily categorized into wholesale and direct-to-consumer segments, encompassing both domestic and international markets.
Breakdown of Primary Revenue Sources
As of September 30, 2024, total sales reached $6.76 billion, reflecting a significant increase from $6.04 billion in the same period of 2023, marking a growth of 11.9%.
| Revenue Source | Sales (2024) | Sales (2023) | Change ($) | Change (%) |
|---|---|---|---|---|
| Wholesale | $4.0 billion | $3.54 billion | $427.6 million | 12.1% |
| Direct-to-Consumer | $2.76 billion | $2.50 billion | $289.9 million | 11.6% |
Domestic wholesale sales amounted to $1.44 billion for the nine months ended September 30, 2024, a growth of 16.0% compared to the previous year. International wholesale sales increased to $2.53 billion, a rise of 15.5% year-over-year.
Year-over-Year Revenue Growth Rate
The company has demonstrated consistent revenue growth across various segments:
- International Sales Growth: Increased by 12.9% in the first nine months of 2024.
- Domestic Sales Growth: Increased by 10.3% during the same period.
Notably, the direct-to-consumer segment showed a domestic growth of 6.2% and an international growth of 40.3% in the Europe, Middle East, and Africa region.
Contribution of Different Business Segments to Overall Revenue
For the nine months ended September 30, 2024, the contributions from various segments were as follows:
| Segment | Revenue Contribution | Percentage of Total Revenue |
|---|---|---|
| Wholesale | $4.0 billion | 59.2% |
| Direct-to-Consumer | $2.76 billion | 40.8% |
Analysis of Significant Changes in Revenue Streams
During the nine months of 2024, direct-to-consumer sales grew by 11.6%, with a noticeable increase in the international markets. In contrast, wholesale sales increased by 12.1%, indicating robust demand across multiple regions. The average selling price decreased slightly, which was offset by an increase in sales volume.
Overall, the company's strategy to expand its direct-to-consumer business appears to be effective, contributing significantly to its revenue growth in both domestic and international markets.
A Deep Dive into Skechers U.S.A., Inc. (SKX) Profitability
Profitability Metrics
Gross Profit: For the nine months ended September 30, 2024, gross profit was $3,589,117 (in thousands), compared to $3,111,021 for the same period in 2023, representing an increase of 15.4%.
Gross Margin: The gross margin for the nine months ended September 30, 2024, was 53.1%, up from 51.5% in 2023, an improvement of 160 basis points.
Operating Profit: Earnings from operations for the nine months ended September 30, 2024, were $738,753, an increase from $654,493 in 2023, translating to a 12.9% increase.
Operating Margin: The operating margin for the nine months ended September 30, 2024, was 10.9%, slightly up from 10.8% in 2023.
Net Profit: Net earnings attributable to the company for the nine months ended September 30, 2024, were $540,145, compared to $458,617 in 2023, reflecting a 17.8% increase.
Net Margin: The net profit margin for the nine months ended September 30, 2024, was 8.0%, compared to 7.6% for the same period in 2023.
Trends in Profitability Over Time
The following table summarizes the profitability metrics over the last two years:
| Metric | 2024 (9 months) | 2023 (9 months) | Change (%) |
|---|---|---|---|
| Gross Profit | $3,589,117 | $3,111,021 | 15.4% |
| Gross Margin | 53.1% | 51.5% | 160 bps |
| Operating Profit | $738,753 | $654,493 | 12.9% |
| Operating Margin | 10.9% | 10.8% | 10 bps |
| Net Earnings | $540,145 | $458,617 | 17.8% |
| Net Margin | 8.0% | 7.6% | 40 bps |
Comparison of Profitability Ratios with Industry Averages
As of September 30, 2024, the following profitability ratios were compared to industry averages:
| Ratio | Company | Industry Average |
|---|---|---|
| Gross Margin | 53.1% | 50.0% |
| Operating Margin | 10.9% | 9.5% |
| Net Margin | 8.0% | 6.5% |
Analysis of Operational Efficiency
Operating expenses for the nine months ended September 30, 2024, totaled $2,850,364, which is 42.2% of sales, a slight increase from 40.7% in 2023. The breakdown of operating expenses is as follows:
| Expense Type | 2024 (9 months) | 2023 (9 months) | Change ($) | Change (%) |
|---|---|---|---|---|
| Selling Expenses | $603,534 | $493,964 | $109,570 | 22.2% |
| General and Administrative | $2,246,830 | $1,962,564 | $284,266 | 14.5% |
| Total Operating Expenses | $2,850,364 | $2,456,528 | $393,836 | 16.0% |
Debt vs. Equity: How Skechers U.S.A., Inc. (SKX) Finances Its Growth
Debt vs. Equity: How Skechers U.S.A., Inc. Finances Its Growth
The company reported a total debt of $420.8 million as of September 30, 2024, which includes $371.4 million in current installments and $49.4 million in long-term borrowings.
Debt Levels
As of September 30, 2024, the breakdown of the company's debt is as follows:
| Debt Type | Amount (in thousands) |
|---|---|
| Short-term Borrowings | $208,100 |
| Long-term Borrowings | $49,351 |
| Total Debt | $420,789 |
Debt-to-Equity Ratio
The debt-to-equity ratio is calculated as total debt divided by total equity. As of September 30, 2024, the total equity was $4.36 billion, resulting in a debt-to-equity ratio of 0.096.
Comparison to Industry Standards
The industry average debt-to-equity ratio for the footwear industry typically ranges from 0.5 to 1.0. This indicates that the company is significantly lower than the industry average, reflecting a conservative approach to leveraging debt.
Recent Debt Issuances and Credit Ratings
The company has utilized its revolving credit facility, which has a limit of $750 million, with an additional $250 million available through an accordion feature. As of September 30, 2024, there was $175 million outstanding under this facility. The company has maintained a strong credit rating, with compliance to financial covenants as of the latest reporting date.
Refinancing Activity
In the nine months ended September 30, 2024, the company reported net proceeds from long-term borrowings of $137.1 million. This refinancing activity has allowed the company to manage its debt levels effectively while funding growth initiatives.
Balancing Debt Financing and Equity Funding
The company balances its debt financing with equity funding through share repurchase programs. On July 23, 2024, the Board authorized a new share repurchase program allowing the company to purchase up to $1 billion in shares. In the nine months ended September 30, 2024, the company repurchased $210.1 million of common stock.
The company’s liquidity position remains robust, with cash and cash equivalents of $1.35 billion as of September 30, 2024. This strong liquidity supports ongoing operations and growth strategies while maintaining a conservative debt profile.
Assessing Skechers U.S.A., Inc. (SKX) Liquidity
Assessing Liquidity and Solvency of Skechers U.S.A., Inc. (SKX)
Current and Quick Ratios
The current ratio of Skechers U.S.A., Inc. as of September 30, 2024, is 2.6, indicating a strong liquidity position. The quick ratio, which excludes inventory from current assets, stands at 1.5, suggesting that the company can meet its short-term liabilities without relying on the sale of inventory.
Analysis of Working Capital Trends
As of September 30, 2024, Skechers reported working capital of $2.3 billion, an increase from $2.1 billion at the end of 2023. This growth in working capital is primarily attributed to an increase in cash and cash equivalents, which rose from $1.19 billion to $1.35 billion over the same period.
Cash Flow Statements Overview
For the nine months ended September 30, 2024, the cash flow from operating activities was $454.7 million, down from $918.7 million in the prior year. This decline reflects a decrease in cash generated from changes in working capital. The cash used in investing activities was $331.1 million, compared to $309.0 million in the previous year, with significant capital expenditures of $283.4 million. Financing activities generated $27.6 million, contrasting with a cash outflow of $118.6 million in the same period last year.
| Cash Flow Category | 2024 (in millions) | 2023 (in millions) |
|---|---|---|
| Operating Activities | $454.7 | $918.7 |
| Investing Activities | ($331.1) | ($309.0) |
| Financing Activities | $27.6 | ($118.6) |
| Net Change in Cash | $164.1 | $484.7 |
Potential Liquidity Concerns or Strengths
Despite a decrease in operating cash flow, the company maintains a robust liquidity position with cash and cash equivalents totaling $1.35 billion as of September 30, 2024. Additionally, there is $571.1 million available in unused credit capacity on the revolving credit facility, with a further $250.0 million accessible through an accordion feature, providing a strong buffer against liquidity concerns.
Overall, Skechers U.S.A., Inc. demonstrates solid liquidity and solvency metrics, with a favorable current ratio, substantial working capital, and strong cash reserves, positioning the company well for future operational needs and potential growth investments.
Is Skechers U.S.A., Inc. (SKX) Overvalued or Undervalued?
Valuation Analysis
In assessing the financial health of the company, several key valuation metrics are crucial for determining whether the stock is overvalued or undervalued.
Price-to-Earnings (P/E) Ratio
The P/E ratio is an essential indicator of a company's valuation relative to its earnings. As of September 30, 2024, the P/E ratio stands at 16.5, calculated based on a trailing twelve-month earnings per share (EPS) of $3.54.
Price-to-Book (P/B) Ratio
The P/B ratio provides insight into how the market values the company's equity relative to its book value. The current P/B ratio is 2.1, with a book value per share of $14.25.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
This ratio helps investors understand the company's valuation in relation to its earnings before interest, taxes, depreciation, and amortization. The EV/EBITDA ratio is 10.8, indicating a moderate valuation compared to industry standards.
Stock Price Trends
Over the past 12 months, the stock price has experienced noticeable volatility. As of October 2024, the stock price is approximately $58.23, reflecting a 15% increase from the same period last year when it was around $50.67.
Dividend Yield and Payout Ratios
The company does not currently pay a dividend, which is a factor to consider for income-focused investors. The payout ratio remains at 0%, indicating that earnings are being reinvested into growth opportunities.
Analyst Consensus on Stock Valuation
Analyst consensus indicates a favorable outlook for the stock, with the majority rating it as a Buy. Recent reports suggest a target price range of $65.00 to $70.00, reflecting optimism about future growth prospects.
| Metric | Value |
|---|---|
| P/E Ratio | 16.5 |
| P/B Ratio | 2.1 |
| EV/EBITDA Ratio | 10.8 |
| Current Stock Price | $58.23 |
| 12-Month Stock Price Change | 15% |
| Dividend Yield | 0% |
| Analyst Consensus | Buy |
| Target Price Range | $65.00 - $70.00 |
Key Risks Facing Skechers U.S.A., Inc. (SKX)
Key Risks Facing Skechers U.S.A., Inc.
The financial health of Skechers U.S.A., Inc. is subject to several internal and external risks that can significantly impact its performance. Below are the key risk factors identified as of 2024:
Industry Competition
The company operates in a highly competitive footwear industry, facing competition from both established brands and new entrants. In the third quarter of 2024, the company reported a 15.9% increase in sales, but this growth is accompanied by ongoing pressure from competitors. The average gross margin for the footwear industry is around 50%, and maintaining a competitive edge requires constant innovation and marketing investments.
Regulatory Changes
Changes in trade regulations and tariffs, particularly affecting imports from Asia, pose a risk to operational costs. The effective tax rate for the company was 14.7% for Q3 2024, down from 19.5% in Q3 2023, influenced by adjustments in international operations and tax regulations. Additionally, the OECD's Pillar Two framework, which proposes a global minimum corporate tax rate of 15%, may affect future tax liabilities.
Market Conditions
Economic fluctuations and changes in consumer spending can adversely affect sales. For the nine months ended September 30, 2024, the company reported a significant $464.0 million decrease in net cash provided by operating activities compared to the previous year. This decline is attributed to changes in working capital, highlighting vulnerability to market conditions.
Operational Risks
Operational challenges include supply chain disruptions, which have been exacerbated by global events. The company recorded $331.1 million in net cash used in investing activities for the nine months ended September 30, 2024, indicating substantial investments aimed at mitigating these risks. Furthermore, labor costs increased by $48.4 million due to retail expansion efforts.
Financial Risks
The company has significant financial commitments, with $208.1 million in short-term borrowings as of September 30, 2024. Additionally, the interest expense reported was $6.0 million for Q3 2024. The reliance on debt financing increases financial risk, especially during economic downturns.
Strategic Risks
Strategic missteps, such as unsuccessful marketing campaigns or product launches, can impact brand equity and sales. The company’s total operating expenses increased by $130.9 million, or 15.2%, reflecting higher expenditures on brand demand creation. This indicates a need for careful strategic planning to ensure effective allocation of resources.
Mitigation Strategies
The company has implemented various strategies to mitigate these risks, including:
- Investments in direct-to-consumer channels, with sales increasing by 11.6% to $2.8 billion.
- Maintaining a strong liquidity position with cash and cash equivalents of $1.354 billion as of September 30, 2024.
- Establishing a new share repurchase program, allowing for up to $1.0 billion in buybacks.
| Risk Factor | Description | Impact |
|---|---|---|
| Industry Competition | High competition in the footwear market | Sales growth pressure |
| Regulatory Changes | Changes in tax laws and trade regulations | Increased operational costs |
| Market Conditions | Economic fluctuations affecting consumer spending | Decreased cash flow |
| Operational Risks | Supply chain disruptions and labor cost increases | Higher operational expenses |
| Financial Risks | High levels of short-term borrowings | Increased interest expenses |
| Strategic Risks | Potential missteps in marketing and product launches | Negative impact on brand equity |
Future Growth Prospects for Skechers U.S.A., Inc. (SKX)
Future Growth Prospects for Skechers U.S.A., Inc.
Analysis of Key Growth Drivers
Key growth drivers for the company include:
- Product Innovations: Continuous development of new footwear lines has resulted in an increase in consumer interest, with sales increasing by 15.9% in Q3 2024 compared to Q3 2023, reaching $2.3 billion.
- Market Expansions: The company has seen a 16.4% increase in international sales, contributing significantly to overall growth.
- Acquisitions: Although no major acquisitions were reported for 2024, prior investments into international markets have laid a foundation for future growth.
Future Revenue Growth Projections and Earnings Estimates
The company's revenue for the nine months ended September 30, 2024, was $6.76 billion, a 11.9% increase from $6.04 billion in 2023. Earnings per share for the same period increased to $3.54 from $2.96.
Strategic Initiatives or Partnerships That May Drive Future Growth
Strategic initiatives include:
- Direct-to-Consumer Growth: Direct-to-consumer sales increased by 11.6% to $2.8 billion.
- Expansion of Retail Stores: Capital expenditures of $283.4 million in 2024 are primarily allocated to new retail locations and omnichannel capabilities.
- Global Distribution Infrastructure: An investment of $70.1 million is directed towards enhancing distribution capabilities.
Competitive Advantages That Position the Company for Growth
The company's competitive advantages include:
- Brand Recognition: Strong brand presence in footwear, which is reinforced by innovative marketing strategies and product offerings.
- Operational Efficiency: Gross margin improved to 53.1% in the first nine months of 2024, up from 51.5% in 2023, driven by lower costs per unit.
- Financial Stability: Cash and cash equivalents stood at $1.35 billion as of September 30, 2024.
| Financial Metrics | 2024 | 2023 | % Change |
|---|---|---|---|
| Total Sales | $6.76 billion | $6.04 billion | 11.9% |
| Gross Margin | 53.1% | 51.5% | 160 bps |
| Net Earnings | $614.2 million | $537.8 million | 14.2% |
| Cash and Cash Equivalents | $1.35 billion | $1.19 billion | 13.9% |
Skechers U.S.A., Inc. (SKX) DCF Excel Template
5-Year Financial Model
40+ Charts & Metrics
DCF & Multiple Valuation
Free Email Support
Article updated on 8 Nov 2024
Resources:
- Skechers U.S.A., Inc. (SKX) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Skechers U.S.A., Inc. (SKX)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Skechers U.S.A., Inc. (SKX)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.