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Analysts at the firm said that given the uncertainty of the consumer and US wholesale channel, they are swapping into stocks that are less speculative and have quality earnings growth with a clean balance sheet.
“We are more optimistic on SKX’s international business and gross margin structure,” the analysts wrote. “We believe SKX can drive +mid teens earnings growth in the medium term driven by product innovation, international, and gross margin expansion.”
Despite the challenging US wholesale environment, the analysts said Skechers’ direct-to-consumer trends indicate strong underlying demand, “which should lead to restocking as the channel clears.”
“We believe SKX will exit the year with a higher GM compared to 2019, including a significant y/y benefit from lapping higher freight costs, with further opportunity for expansion as the mix of DTC and international revenue increases,” they added.
