Analysis and valuation Skechers USA Inc.
Analysis and valuation Skechers USA Inc. (Ticker:SKX)
Skechers USA, Inc. (SKX) is an American lifestyle and performance footwear company. Headquartered in Manhattan Beach, California, the brand was founded in 1992 and is now the third-largest athletic footwear brand in the United States.
Products offered include various styles of women's shoes, men's shoes, girls&boys shoes, performance shoes, and work shoes.
Allied products offered are apparel, bags, eyewear, toys and more.
-Its products are available for sales at department and specialty stores, athletic and independent retailers, boutique and internet retailers.
Products offered include various styles of women's shoes, men's shoes, girls&boys shoes, performance shoes, and work shoes.
Allied products offered are apparel, bags, eyewear, toys and more.
-Its products are available for sales at department and specialty stores, athletic and independent retailers, boutique and internet retailers.
We provide our consumers with stylish, high-quality, and comfortable products at a reasonable price We have a diverse product offering of 31 brands across all genders, age ranges, and categories We are focused on innovation and have the ability to quickly adapt products in response to trends
SKX is selling its product through these three channels
- International Wholesale
- 47% of Revenue
- 22,5% Compound Annual Sales Growth ('15-'19)
- 46,4% Gross Margin
- Global Direct-to-Consumer
- 29% of Revenue
- 22,5% Compound Annual Sales Growth ('15-'19)
- 60% Gross Margin
- Domestic Wholesale
- 24% of Revenue
- 0,6% Compound Annual Sales Growth ('15-'19)
- 35% Gross Margin
In the last 5-years, SKX underperformed the Footwear & Accessories Industry Index by -89%!
Nike and Adidas are the two top-selling global brands and leading in the US athletic footwear market, which is still the biggest one with 2019 sales of USD 14.718 million. It is expected to grow annually by 3,7% (CAGR 2020-2025)!
Under Armour and New Balance are catching up and want to take a bigger piece of the cake!
Top 5 Markets - 2020 - Athletic footwear
| 1. United States | US$15,325m |
| 2. China | US$11,631m |
| 3. United Kingdom | US$2,975m |
| 4. Japan | US$2,493m |
| 5. Germany | US$2,246m |
Valuation (relative):
The relative valuation looks very interesting. SKX with its P/E of 11.8 is the lowest compared to the competitors, which are all over a P/E of 20! The same applies to Price-to-Book, Price-to-Sales and Earnings Yield!
Capital Structure:
The long-term debt is very low at $50 Million, only increased last year due to the change of reporting of operating leases into the balance sheet. The current liabilities are mainly Accounts Payable of $765 Million with Current Assets dominate by Inventory of roughly $1 billion, Cash and equivalent of $825 Million and Receivables of $700 Million. I had to double-check the inventory and the days the inventory stays in the company, as they are almost 143 days for SKX compared to Nike's best-in-class 93 days but it is a closer game with Inventory to assets, where SKX 38% are slightly higher than Nike's 37%! The Debt/Equity ratio is a good number but the FCF/Sales is the lowest with 3.8% compared to Nike's 8.3% (even here best-in-class). Of every 100 dollars in revenue, only ~4 dollars turns into FCF! Here we see the effect of a big inventory that they are not able to sell fast enough!
Profitability & Growth
The revenue has been growing steadily the last 7 years with over 10 percent (CAGR) after the loss-making year of 2011! The Operating Income grew a little bit faster but has slowed down the last years to a similar just above 10 percent. ROE is hovering at around 15% and as well on the lower side compared to the competition. IT must be really difficult to go in for a fight with Nike and Adidas, which are powerhouses of sport, with huge amounts of branding and marketing efforts!
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