Skechers (SKX): Q4 Sales Miss Guidance, Stock Drops

Key Highlights:

* Q4 CY2024 revenue of $2.21 billion, meeting analyst estimates (12.8% YoY growth).
* GAAP EPS of $0.65, 12.9% below consensus.
* Revenue guidance for FY2025 at $9.75 billion midpoint, 1.3% below estimates.
* EPS guidance for FY2025 at $4.40 midpoint, 9.6% below estimates.
* Operating margin steady at 7.5%.
* Store count increased to 5,296.

Company Overview:

Skechers (SKX) is known for comfortable and affordable footwear.

Sales Growth:

* 5-year sales CAGR of 11.4%, below the consumer discretionary sector benchmark.
* Recent demand slowdown, with 2-year CAGR of 9.8%.
* Q4 YoY revenue growth of 12.8%.
* Forecasted year-on-year increase of 7.3% in Q1 FY2025.

Free Cash Flow:

* Limited capital return opportunities due to weak cash profitability.
* Free cash flow margin averaged 7.3% over the past two years.

Key Takeaways:

* EPS miss and lowered guidance impacted stock price, dropping 12.3%.
* Longer-term business quality and valuation should be considered for investment decisions.

Additional Insights:

* Omnichannel and e-commerce experiences are increasingly preferred by consumers.
* Software and technology are driving demand for tools in various industries, including footwear.